Economic Statecraft – 2025
Time of Uncertainty, Hopes and Worries

The most optimistic trend of the past year has of course been the further development of BRICS. Russia made full use of its chairmanship both to promote its vision of future development in the world and to expand and strengthen its international ties, which once again demonstrated the failure of attempts by unfriendly countries to isolate Russia in the international arena, Konstantin Khudoley writes.

New Year’s tidings are usually accompanied by a rise in optimism among most people — we sum up the results of the past 12 months, make wishes for the future, and hope to achieve great success. This fully applies to the sphere of international relations, although the word “uncertainty” cannot be avoided when defining the current state of affairs. We are experiencing a turning point when international relations are being transformed; some aspects of the passing order have already been consigned to history, but the features of the new system are only just beginning to appear and how and at what pace they will develop in the future remains still far from clear.

First of all, we should mention the end of the era of arms race limitation and arms control. During the Cold War, the USSR and the USA created huge arsenals of weapons, including nuclear ones, which could have repeatedly destroyed all life on our planet. However, at some point, both superpowers realised that an uncontrolled arms race could lead to unpredictable consequences and did not correspond to their fundamental interests. Hence the emergence of a series of multilateral and bilateral treaties on arms limitations, and, in the best years, their reduction. Now this system of treaties is gradually eroding, and this process has already become irreversible in many cases. Of course, these treaties are partly outdated, and life has revealed a number of weak points and shortcomings. However, the main thing is that now in many countries (not only in the largest and most developed ones!) the opinion has prevailed that building up military potential is more in their interests than limiting the arms race. The growth of military spending and the emergence of new weapons programmes will most likely be one of the main trends in global development in the medium and perhaps long term. Self-restraint and compromises, inevitable in any such treaty, do not correspond to this line. Therefore, old treaties will gradually die out, and the emergence of new ones is not yet in sight.

Another important trend is the further fading of the Helsinki process. For almost five decades, the system of pan-European cooperation and security was based on two things — economic interaction (a huge role here was played by the supply of energy resources, especially cheap gas, from Russia to European countries, and the purchase of new technology and equipment), as well as cooperation within the OSCE in many aspects of politics, security, and humanitarian ties. Western sanctions have dealt a serious blow to economic ties, which both sides previously considered mutually beneficial, and the termination of Russian gas transit through Ukraine from January 1, 2025, creates a qualitatively different situation in many ways. This, of course, is not a knockout blow for the Russian economy, as our ill-wishers are trying to present, but Russia’s place in the European gas ring can be filled — at least partially — by others. The losses of the EU, especially of small countries, are also undoubted, since gas from other sources will be more expensive than gas from Russia. The OSCE’s “finest hour” as a platform for important multilateral negotiations has undoubtedly passed away and its activity has been reduced to a minimum by now. However, Russia’s withdrawal from the OSCE, as some politicians and experts are calling for, would not be right. It would be more appropriate to think about revamping the organisation to bring it in line with modern realities.

The Ukraine crisis has been escalating for almost its entire duration, and the danger of it exceeding certain limits remains present. Donald Trump’s statements about his readiness to establish direct contact with Russian President Vladimir Putin initially provided some hope for progress, but no concrete steps have followed. Of course, it takes time to prepare for negotiations of this level, and given that the positions of the United States and Russia on this issue are not just different, but sometimes opposite, the chances of a quick shift for the better are quite slim. In the near future, regardless of whether negotiations begin or not, both Russia and the West will do everything possible to strengthen their positions. Therefore, it is hardly realistic to expect the conflict to end or even partially de-escalate in the near future. At the same time, if no progress for the better occurs in the coming months, then a further aggravation of the situation can be expected in the fall.

The events currently taking place in connection with the arrival of the new US administration highlight another important trend that may develop in the future. We are talking about the role of major corporations in international relations. They have almost always been present, but now we are witnessing a qualitative shift — Elon Musk, the richest man on our planet, and the business corporations belonging to him are entering the arena of world politics, and clearly claim to play a global role. One can evaluate differently Musk’s attacks against British Prime Minister Keir Starmer, statements in support of the Alternative for Germany party, assistance in the release of Italian journalist Cecilia Sala from arrest in Iran and other actions, but they clearly show the degree of his desire to influence global processes and even the domestic policies of large and developed countries. At the same time, despite his close ties with Donald Trump, Musk retains a significant degree of independence. Apparently, in the future he will continue to play his own game, which in some cases may coincide, and in others not, with the policy of Trump. Regardless of how further events will develop, including the relationship between Trump and Musk, a precedent, as it seems to us, has been created and therefore other big business interests will try to follow Musk.

The most optimistic trend of the past year has of course been the further development of BRICS. Russia made full use of its chairmanship both to promote its vision of future development in the world and to expand and strengthen its international ties, which once again demonstrated the failure of attempts by unfriendly countries to isolate Russia in the international arena. The association has been replenished with new members. The summit in Kazan once again demonstrated that in modern conditions, interested countries, despite their civilisational differences, varying political and socio-economic systems, as well as religious and cultural specifics, can jointly agree on issues of interest to all of them. This is much more in line with today’s realities than the bloc discipline of the Cold War.

This year we celebrate the 80th anniversary of the Victory in the Great Patriotic War, the defeat of Nazi Germany and its henchmen. One of the results of this was the creation of the UN, which will also celebrate its 80th anniversary. For many years, the UN played an important, and sometimes key role in maintaining peace. Now the UN faces the difficult task of adapting to the new situation in international relations. This process has clearly dragged on, and the reform of the UN Security Council alone is unlikely to change the situation, even if the current disagreements regarding this issue could be quickly overcome. Certain changes in the nature of the UN’s activities are also necessary, as well as the emergence of new areas in which the UN would become a catalyst for development. The proper strengthening of the authority and influence of the UN, and not attempts to replace it with any other organisation, can become an important factor in the successful development of all mankind.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.