Latest news with #DrGilFeiler
Al Bawaba
3 days ago
- Business
- Al Bawaba
Russia's Economic Resilience: The Role of China, BRICS, and Strategic Partnerships in Sanctions Evasion
Dr. Gil Feiler Introduction Despite facing unprecedented Western sanctions following its invasion of Ukraine in February 2022, Russia's economy has demonstrated remarkable resilience. This resilience stems not merely from domestic adaptations but significantly from strategic partnerships with China, BRICS nations, and other sympathetic countries that have provided crucial economic lifelines. While Russia's economy has indeed faced challenges, including inflation, currency volatility, and restricted access to Western technology and markets, it has managed to maintain functionality through diversified trade relationships and sanctions circumvention mechanisms. The transformation of Russia's economic partnerships represents a fundamental shift in global trade patterns, with implications extending far beyond bilateral relationships. This article examines the multifaceted assistance Russia receives from China and BRICS countries, analyzes the factors contributing to Russian economic resilience, and provides forecasts for the sustainability of these trends. China: Russia's Primary Economic Lifeline Trade Volume and Growth Patterns Trade between China and Russia reached a record high last year in 2024, underscoring their deepening economic partnership despite Western sanctions. China's exports to Russia totaled US$115.28 billion during 2024, while China's imports from Russia reached US$129.88 billion, representing China's position as Russia's largest trading partner. However, recent August 2025 data reveals significant volatility in this relationship. Trade between Russia and China fell 9.1% year-on-year in the first half of 2025, totaling $106.48 billion. Despite this decline, overall trade remains substantial, though below 2024 levels, as China continues to sustain Russia's economy and war effort. This decline reflects multiple pressures including renewed concerns following the US Treasury's December 2023 announcement of potential secondary sanctions on entities assisting Russia's military-industrial base. The trade relationship shows unprecedented levels reflecting deepening economic ties amid shifting global geopolitics, growing from over $140 billion in 2021 to about $190 billion in 2022. Energy Cooperation and Strategic Imports China's assistance to Russia extends far beyond conventional trade relationships. The energy sector represents a cornerstone of their cooperation, with China becoming increasingly dependent on Russian oil, gas, and liquefied natural gas (LNG). Ambassador Zhang Hanhui stated that China plans to increase its imports of Russian liquefied natural gas (LNG) this year. He added that there is an increased demand from Chinese buyers. This commitment provides Russia with guaranteed revenue streams and helps offset losses from European market restrictions. The planned Power of Siberia-2 gas pipeline, designed to transport fifty billion cubic meters of natural gas annually from Siberia to China, represents a long-term strategic commitment that ensures Russia's energy export capabilities remain viable despite Western sanctions. Technology Transfer and Sanctions Circumvention Despite falling oil and car shipments dragging down headline trade figures, China remains central to sustaining Russia's economy and war effort in 2025. Russia's ability to sustain its war effort against Ukraine depends largely on Chinese support, especially in evading sanctions and accessing critical technology. Dual-use shipments from China to Russia exceeded USD 4 billion in 2024, showing the sophistication of this relationship. Exports fell sharply after February 2022 amid sanctions concerns, yet quickly recovered throughout 2022 and 2023. A renewed decline occurred following US Treasury's December 2023 secondary sanctions announcement, but Chinese exports rebounded in the second half of 2024, suggesting successful adjustments to circumvent restrictions. Chinese companies continue serving as crucial intermediaries, facilitating transactions and providing alternative supply chains for Russian businesses. However, this relationship involves calculated risks, as China remains cautious about transactions that might expose Chinese businesses to secondary sanctions. BRICS and Expanded Partnerships Evolution and Expansion of BRICS The BRICS bloc has experienced dramatic expansion, evolving from its original five members (Brazil, Russia, India, China, and South Africa) to become a 20-country organization comprising 10 full members and 10 partner countries as of 2025. This expansion now includes Ethiopia, Iran, Egypt, Saudi Arabia, UAE, and most recently Vietnam as a partner country in July 2025, with Nigeria joining the partnership in January 2025. This expanded BRICS+ now represents extraordinary global influence: 44% of world GDP at purchasing power parity, 56% of the world's population, and 25% of the world's landmass. BRICS accounts for 40% of existing internet users and has over 1200 satellites in orbit. Intra-BRICS trade reached US$614.8 billion as of 2022, providing Russia with multiple partnership opportunities and alternative economic frameworks outside Western-dominated systems. India's Strategic Balancing Act India represents a particularly interesting case within BRICS regarding Russian relations. Russia remains India's most prominent defence supplier, accounting for 36 percent of total arms imports in 2023. Despite pressure from Western allies, India has maintained its defense cooperation with Russia while significantly increasing oil imports at discounted rates. India's position reflects broader BRICS sentiment toward sanctions, where Most BRICS members have sought a middle ground, while other members have largely ignored Western sanctions. This middle-ground approach provides Russia with continued access to Indian markets while allowing India to maintain strategic autonomy. Brazil and South Africa's Measured Approach Brazil and South Africa have adopted more cautious positions, balancing their BRICS commitments with Western relationships. However, both countries have refrained from implementing unilateral sanctions against Russia and continue trade relationships within legal frameworks. Their positions demonstrate that even measured support from BRICS members provides Russia with economic breathing room. Iran and Sanctions-Evading Expertise Iran's inclusion in BRICS brings particular value to Russia, given Iran's decades of experience operating under international sanctions. The two countries have developed sophisticated mechanisms for sanctions evasion, including barter trade systems, alternative payment mechanisms, and joint technology development programs. Iran's expertise in maintaining economic functionality under sanctions provides a valuable blueprint for Russian adaptation strategies. Beyond BRICS: Additional Support Networks Middle Eastern Partnerships Several Middle Eastern countries have emerged as crucial partners for Russia. The United Arab Emirates has become a significant transshipment hub for Russian goods, while Saudi Arabia has coordinated with Russia through OPEC+ to maintain oil price stability. These partnerships provide Russia with alternative market access and financial mechanisms outside Western oversight. Central Asian and Former Soviet Republics Kazakhstan, Uzbekistan, Kyrgyzstan, and other former Soviet republics have maintained economic ties with Russia despite international pressure. These countries serve as intermediaries for trade flows and provide land-based transportation routes that bypass maritime restrictions. Their continued cooperation reflects both geographical necessity and historical economic integration. Turkey's Strategic Position Turkey has played a particularly important role as a NATO member that has maintained economic ties with Russia. Turkish businesses have served as intermediaries for various transactions, and Turkey's unique position allows it to facilitate trade flows while maintaining relationships with both Russia and Western allies. Factors Behind Russia's Economic Resilience Domestic Adaptations and Import Substitution Russia's economic resilience stems from multiple factors beyond external assistance. The country has accelerated import substitution programs, developing domestic capabilities in previously import-dependent sectors. Government-led initiatives have prioritized food security, pharmaceutical production, and basic manufacturing, reducing dependence on Western suppliers. Currency and Financial System Adaptations Russia has successfully adapted its financial systems to operate with reduced access to Western banking networks. The development of alternative payment systems, increased use of national currencies in bilateral trade, and expansion of gold and cryptocurrency reserves have provided financial flexibility. The Russian ruble, while experiencing volatility, has demonstrated surprising stability compared to initial post-sanctions predictions. Resource Wealth and Geographical Advantages Russia's vast natural resources provide inherent economic advantages that sanctions cannot easily eliminate. The country's position as a major supplier of energy, metals, and agricultural products ensures continued demand from countries unwilling or unable to source alternatives. Geographical proximity to Asian markets has become increasingly valuable as trade patterns shift eastward. Authoritarian Economic Management Russia's centralized political system has enabled rapid economic policy adjustments and resource reallocation. The government's ability to direct economic activity, control information flows, and mandate corporate behavior has facilitated adaptation to sanctions pressures more quickly than might be possible in more decentralized economies. Challenges and Vulnerabilities Technology Gap and Innovation Constraints Despite partnership assistance, Russia faces growing technology gaps in advanced semiconductors, sophisticated manufacturing equipment, and cutting-edge software. These limitations increasingly constrain productivity growth and technological competitiveness, creating long-term vulnerabilities that partnership arrangements cannot fully address. Demographic and Labor Market Pressures Military mobilization and emigration have created labor shortages in key sectors, while demographic decline poses long-term economic challenges. These internal pressures may limit Russia's ability to fully capitalize on alternative partnership opportunities. Financial System Limitations and War Costs While Russia has developed alternative payment mechanisms, the exclusion from major international financial networks creates ongoing costs and inefficiencies. Direct financial expenditure for waging the war was estimated at US$250 billion through June 2024, rising to over 20% of annual GDP. Additionally, Russia employed an off-budget financing mechanism with over US$200 billion from preferential bank loans made to defense contractors, compelled by the Russian government. The development of parallel financial systems requires significant resources and may limit transaction volumes compared to established networks. Russia's GDP is projected to remain relatively stable at $1.6 trillion by the end of 2025, but defense and security spending now accounts for a substantial portion of government expenditure, constraining other economic priorities. Future Forecast and Sustainability Analysis Short-term Outlook (2025-2027) The current pattern of China-BRICS assistance to Russia is likely to continue in the short term, though with some modifications. China's recent trade volume decline may represent a 'new normal' of more cautious but sustained engagement. BRICS expansion will provide Russia with additional partnership opportunities, though these may develop gradually as new members establish operational frameworks. The sustainability of current assistance levels depends heavily on three factors: the evolution of secondary sanctions enforcement by Western countries, China's assessment of costs versus benefits in supporting Russia, and the broader geopolitical climate including potential changes in the Ukraine conflict. Medium-term Trajectory (2027-2030) Medium-term sustainability faces greater uncertainties. Russia's partnerships provide current stability but may prove insufficient for long-term growth and technological advancement. The country risks falling further behind in technological innovation, potentially making it a less valuable partner for countries like China that prioritize technological leadership. However, if current partnerships deepen and institutionalize through formal agreements, alternative payment systems, and joint development projects, Russia could establish a more permanent alternative economic framework. The success of BRICS initiatives for alternative financial systems and de-dollarization efforts will significantly influence this trajectory. Long-term Implications (2030 and Beyond) Long-term sustainability depends on fundamental questions about global economic architecture. If BRICS countries successfully create alternative international institutions and payment systems, Russia could maintain economic functionality indefinitely outside Western-dominated frameworks. However, if technological gaps widen and partnership countries prioritize relationships with Western economies, Russia's position could become increasingly precarious. The demographic challenges facing Russia pose particular long-term concerns that external partnerships cannot easily address. Economic partnerships can provide trade opportunities and financial assistance, but they cannot resolve fundamental domestic constraints on growth and development. Conclusion Russia's economic resilience despite unprecedented Western sanctions demonstrates the effectiveness of strategic partnerships with China, BRICS nations, and other sympathetic countries. These relationships have provided crucial assistance through increased trade volumes, sanctions circumvention mechanisms, alternative financial frameworks, and technology transfers. China's role as Russia's primary economic partner has been particularly vital, though recent trade volume fluctuations suggest this relationship may be entering a more cautious phase. The expansion of BRICS and the development of alternative economic institutions provide Russia with growing opportunities to maintain economic functionality outside Western-dominated systems. Countries like India, Iran, and various Middle Eastern partners have contributed to Russia's sanctions resilience through continued trade relationships and specialized expertise in operating under international restrictions. However, this resilience faces significant challenges. Technology gaps, demographic pressures, and financial system limitations create vulnerabilities that external partnerships cannot fully address. The sustainability of current assistance patterns depends on evolving geopolitical circumstances, secondary sanctions enforcement, and the long-term strategic calculations of partner countries. The forecast suggests continued but potentially modified support in the short term, with medium and long-term sustainability depending on the success of alternative international institutions and Russia's ability to address domestic economic constraints. While Russia has demonstrated remarkable adaptability, the ultimate test of its economic resilience will be whether current partnership arrangements can support not just survival, but sustainable growth and technological advancement in an increasingly complex global environment. The Russian case illustrates both the possibilities and limitations of alternative economic partnerships in challenging established international systems. As this economic experiment continues, its outcomes will have profound implications for global trade patterns, international institutions, and the future architecture of the world economy.
Al Bawaba
4 days ago
- Business
- Al Bawaba
American Economic Sanctions on Russia: A Comprehensive Analysis of Economic Impacts and Strategic Implications
Dr. Gil Feiler Economic sanctions have become a cornerstone of American foreign policy, representing a middle ground between diplomatic protest and military intervention. The relationship between the United States and Russia has been particularly characterized by cycles of sanctions imposition and removal, reaching unprecedented levels following Russia's actions in Crimea (2014) and subsequent military operations in Ukraine (2022). As of August 2025, the sanctions regime against Russia represents the most comprehensive economic pressure campaign in modern history, with continuing evolution and adaptation on both sides. Recent developments in 2025 indicate that the Russian economy now appears to be experiencing the full effects of international sanctions, with the first signs appearing at the end of 2024. Simultaneously, the UK announced that the Crude Oil Price Cap on Russian oil will be reduced from $60 barrel to $47.60 on 2 September 2025, representing continued tightening of energy-related restrictions. The central research questions guiding this analysis include: To what extent do American economic sanctions influence Russian policy decisions? How do these measures affect not only Russia but also former Commonwealth of Independent States (CIS) nations and Middle Eastern economies? What are the comparative outcomes of sanctions versus non-sanctions approaches in achieving American strategic objectives? Historical evidence suggests a complex relationship between economic pressure and Russian policy modification. During the Cold War era, the Soviet Union demonstrated selective responsiveness to economic pressure, particularly when combined with internal economic difficulties. The Jackson-Vanik Amendment, which linked trade benefits to emigration policies, eventually contributed to increased Jewish emigration from the Soviet Union, though this success required decades and coincided with broader systemic changes. More recently, Russia's responses to sanctions have been characterized by adaptive resilience rather than direct compromise. Following the 2014 Crimea-related sanctions, Russia implemented import substitution policies, strengthened ties with non-Western partners, and developed alternative financial mechanisms. Rather than reversing its territorial claims, Russia demonstrated economic pivot capabilities that reduced immediate sanction effectiveness. The post-2022 sanctions regime represents the most comprehensive economic pressure campaign in modern history. Recent analysis indicates that trade between Russia and US has fallen 90% since 2021, fundamentally altering bilateral economic relationships. However, this dramatic reduction in bilateral trade has simultaneously blunted the impact of additional proposed tariffs or sanctions, as there are fewer economic connections left to sever. Current evidence from 2025 suggests that the Russian economy now appears to be experiencing the full effects of international sanctions, with the first signs appearing at the end of 2024. This delayed impact reflects the time required for comprehensive sanctions to permeate through complex economic systems and exhaust adaptive capacity. Russian leadership appears more likely to compromise on issues perceived as peripheral to core national interests. However, on matters deemed fundamental to national security or territorial integrity, economic pressure alone has historically proven insufficient to compel major policy reversals. The current sanctions regime tests this traditional pattern, as economic pressure reaches unprecedented comprehensiveness and duration. Economic Adaptation and Sanctions Circumvention Russia has demonstrated considerable capacity for sanctions adaptation through several mechanisms. These include developing alternative payment systems (such as the System for Transfer of Financial Messages), strengthening economic ties with China, India, and other non-aligned nations, and implementing comprehensive import substitution programs in critical sectors. The effectiveness of sanctions in compelling compromise is further complicated by Russia's natural resource advantages. Energy exports provide significant leverage, particularly during periods of global energy price volatility. This resource wealth creates both vulnerability to market-based sanctions and potential for economic weapon deployment against sanctioning nations. Impact Analysis: Russia and Former CIS Countries Direct Economic Effects on Russia Comprehensive sanctions have produced measurable economic impacts on Russia across multiple sectors, with effects becoming particularly pronounced in late 2024 and early 2025. The financial sector has experienced significant stress through exclusion from SWIFT systems, asset freezes, and restricted access to international capital markets. These measures have increased transaction costs, limited investment flows, and complicated international trade execution. Recent evidence indicates that the sanctions have decreased Russia's trade with sanctioning states, though with heterogeneous effects across different European Union members. More significantly, there has been substantial trade diversification between Russia and third countries that have mitigated some sanction effects, demonstrating the complex global economic adjustments prompted by comprehensive sanctions regimes. The technology sector faces particular challenges through export controls on semiconductors and advanced technology components. According to 2024 analysis, the primary military vulnerability of Russia lies in its ammunition manufacturing capacity. The Russian Ministry of Defence forecasts that around 4 million 152mm artillery shells and 1.6 million 122mm shells need to be manufactured or procured by 2024 to secure significant territorial gains, with current capacity imposing limitations on achieving this target due to ongoing reliance on Western components. Energy sector sanctions represent perhaps the most significant long-term challenge for Russian economic stability. The UK's announcement in July 2025 that the Crude Oil Price Cap on Russian oil will be reduced from $60 barrel to $47.60 beginning September 2, 2025, represents continued tightening of energy-related restrictions. This reduction, combined with existing restrictions on technology transfer for oil and gas extraction and market access limitations, threatens future production capacity. Nevertheless, alternative market development, particularly in Asia, has partially offset Western market losses. Spillover Effects in Former CIS Nations Former Soviet republics experience sanctions impact through multiple transmission mechanisms, with effects becoming more pronounced as sanctions mature and deepen. Trade relationships with Russia expose these economies to secondary effects, while their own relationships with Western nations create complex political and economic pressures. Recent developments indicate strengthened cooperation frameworks between Russia and CIS countries in response to sanctions pressure. In August 2025, Russia agreed upon oil and gas standards with countries of the Middle East, CIS, and Africa, with about 370 standards created in the Russian oil and gas industry. This technical cooperation represents an attempt to build alternative economic partnerships and reduce dependence on Western standards and technologies. Belarus continues to face direct sanctions due to its alignment with Russian policies, experiencing similar financial and trade restrictions. This has accelerated economic integration with Russia while limiting Western investment and trade opportunities. The Belarusian economy has become increasingly dependent on Russian support mechanisms, reducing policy autonomy. Central Asian republics face particular challenges balancing relationships with both Russia and Western nations. Kazakhstan, despite maintaining relatively neutral positions, has experienced banking sector complications due to Russian sanctions compliance requirements. Energy transit relationships create additional complexities, as these nations must navigate between maintaining Russian partnerships and avoiding secondary sanctions. The ongoing sanctions regime has intensified pressure on CIS countries to choose between economic integration with Russia through frameworks like the Eurasian Economic Union (EAEU) or maintaining access to Western markets and investment. This binary choice has become starker as sanctions expand and deepen over time. Economic Integration and Dependency Patterns The Eurasian Economic Union (EAEU) framework has gained renewed importance as member states seek alternatives to Western economic integration. However, this deepening integration also increases vulnerability to Russian economic fluctuations and sanctions impacts. Member states face difficult choices between economic integration benefits and potential isolation from Western markets. Alternative Approaches: The Influence of Non-Sanctions Policies Engagement and Economic Integration Strategies Historical periods of U.S.-Russia cooperation provide insights into alternative influence mechanisms. The Partnership for Peace program and various bilateral trade agreements during the 1990s demonstrated that economic integration could create mutual dependencies that influenced policy coordination, though these approaches also faced significant limitations during periods of geopolitical tension. Economic engagement strategies offer several potential advantages over sanctions approaches. They create stakeholder communities within both countries that benefit from continued cooperation, potentially providing political pressure for conflict resolution. Additionally, engagement allows for more precise incentive structures that can reward specific policy changes rather than imposing broad punishments. Comparative Effectiveness Analysis Non-sanctions approaches have demonstrated effectiveness in specific circumstances, particularly when addressing technical or economic issues rather than fundamental security concerns. Cooperative frameworks in areas such as nuclear security, space exploration, and scientific research have maintained functionality even during periods of broader political engagement strategies face significant limitations when addressing core security concerns or territorial disputes. The reset policy pursued in the early 2010s achieved limited success in arms control areas but failed to prevent or resolve conflicts over Georgia, Crimea, and Ukraine. This suggests that engagement alone may be insufficient for addressing fundamental strategic Approaches and Conditional Engagement The most effective approaches may combine elements of both pressure and engagement, creating clear pathways for relationship improvement while maintaining consequences for unacceptable behaviours. This approach requires careful calibration to avoid undermining either incentive structure while maintaining credibility in both cooperative and competitive elements.
Al Bawaba
30-07-2025
- Business
- Al Bawaba
Oil Price Outlook: August 2025–July 2026
Dr. Gil Feiler Oil markets enter a phase of moderate fundamentals with Brent expected to average ~$66–69 USD/barrel in H2 2025, gradually declining to around $58 USD in mid-2026. This forecast reflects a confluence of rising non‑OPEC+ supply, shifting demand dynamics—particularly in non‑OECD economies—and recurring geopolitical risk episodes. The short‑term upside remains tied to conflict‑driven disruptions, whereas structural oversupply is likely to cap prices in the medium term. Market Fundamentals: Supply & Demand Dynamics Three leading agencies—the EIA, IEA, and OPEC—converge toward global demand growth of 0.7–1.3 million barrels per day (mb/d) in 2025 and 2026, with key divergences in estimates of supply growth. Demand: The IEA forecasts demand growth of around 700 kb/d in 2025 and again in 2026, led by emerging markets such as India and China  . OPEC maintains a more optimistic view, expecting 1.3 mb/d annual growth across both years, particularly in non‑OECD regions . Supply: The EIA anticipates non‑OPEC+ supply and NGL growth of ~1.4–1.8 mb/d in 2025 and ~0.9 mb/d in 2026, while the IEA projects supply expansion of 1.3–1.5 mb/d annually as U.S. shale and projects in Brazil, Guyana, and Canada ramp up . Together these assumptions point to a gradual shift toward a mild oversupply environment, especially as inventory builds resume later in 2025. Price Forecast Trajectory Near Term: Aug–Dec 2025 Output increases from OPEC+ (notably ~0.41 mb/d in August) and steady non‑OPEC growth are expected to create supply surplus, partially offset by regional geopolitical risks from the Middle East . The EIA forecasts Brent averaging ~$69 in 2025, with WTI near $65 bbl, reflecting upward revisions due to risk premiums, though inventory builds remain a downward force . Goldman Sachs, in its April 2025 update, forecasts Brent ~$63, WTI ~$59 for 2025, anticipating a mild surplus of ~0.8 mb/d, and deeper surplus of 1.4 mb/d in 2026 . Consensus analyst polls reinforce this with average price predictions for Brent near $67–68 and WTI around $64–65. Mid to Long Term: 2026 (Jan–Jul) Beyond year‑end, rising inventory levels and continued non‑OPEC production growth are expected to exert downward pressure. The EIA projects Brent to average ~$58 bbl in 2026 and WTI at around $55–56 bbl. Goldman Sachs' outlook aligns, projecting Brent ~$58 and WTI ~$55 amid strong market imbalance and trade‑induced demand softness. Risk Scenarios & Sensitivity Analysis Upside risks: Iran's threat to close the Strait of Hormuz in June 2025 hints at potential strikes that could disrupt ~20% of global crude flows, potentially forcing prices above $100 during acute volatility episodes • Downside risks: A sharp deceleration of Chinese or U.S. demand due to trade wars or recession could weaken price support beyond the base forecast. Inventory trends and spare capacity drive expected price compression. OECD inventories are likely to grow from 61 to 66 days of supply by end‑2026, supporting the bearish forecast Large-scale new production capacity, particularly in the U.S. and Guyana, combined with slow OPEC+ easing of voluntary cuts (approx. 2.2 mb/d phased out Sept 2024 to mid‑2025), is set to tip the balance further . On the demand side, China's oil import growth has slowed despite rapid renewables expansion and electric vehicle adoption, signaling structural demand weakening in transport fuels. Conclusion In summary, the academic consensus—anchored on reputable institutional forecasts—indicates: Brent crude: expected to average USD 66–69 in late 2025, declining to ~USD 58 by mid‑2026. WTI crude: likely averaging USD 63–65, sliding to USD 55–56. These projections take account of oversupply trends, subdued demand forecast, and moderate geopolitical risk premiums. Short‑term volatility (e.g. ~$80–100) remains possible from conflict escalation, but absent severe disruptions, the prevailing trend favors gradual price compression driven by expanded supply and softening global demand fundamentals.
