Strategy revisits land as factor of production

Recent events force every business and every country to revisit land as factor of production when framing business strategy. The ongoing conflict in Ukraine accentuated this trend globally. Here are some snippets on this subject:

Resources are located in earth as well as in space. Right now the concentration is on earth consisting of land per se and the ocean bed. There are two types of countries and businesses. Resource rich and resource poor. America and India are indeed resource rich but when compared to Russia and Eurasian land -mass both are resource poor.

Russia which has the largest land area as well as Arctic Ocean bed, by far the most resource rich country in the world. Let us for the moment turn to Mackinder’s theory. Sir Halford John Mackinder British geographer is considered as the original thinker in both geopolitics and geostrategy whose concept of geography as a pivot land exemplified in his Heartland Theory where Eastern Europe was equated as the heartland and whoever control this heartland would control the world. This pivot land theory gives Russia immense power.

Further enunciation was provided by Nicholas Spykman, who improved upon Mackinder in his Rimland Theory where coastal regions of Eurasia are designated as Rimland due to land and sea interface that enables them to dominate the globe. He specifically pointed out that Eurasian Heartland fits this phenomenon. Interestingly, both Mackinder and Spykman had Russia in their mind after Russia won control in Crimea thence the Black Sea aftermath of Turkish-Russian wars.

The strategy underpinning both of their assertions is Russia remains the elephant in the room against whom a land power in the West or from across Atlantic could not wage war against Russia to any successful conclusion. Either the antagonists would be defeated in the battlefield or need to flee. A sea-power sails away and an air power flies away.

Now the question in geoeconomics is whether this pivot land or rimland as the case may be able to allow the use of land as the factor of production in order to improve upon the natural benefits bestowed upon Russia. Put it other way whether Russia can use her riches in effective and efficient manner to enhance manufacturing.

The short answer is yes, she can. Provided Russia sets in motion a conciliatory & complimentary approach to both America in the west and China in the East. Putin did that in his inimical manner. Here are pointers where he re-visited his business strategy navigating amid geoeconomics:

1. In association with China addressed both USA & EU calling for the implementation of open trade policy

2. Used discounted oil price to counter sanctions imposed against Russian oil export by the West

3.  When Trump introduced third party sanctions mainly targeted against China & India, Putin indirectly persuaded India to split away from American orbit.

4. When Trump forced countries to choose between America and the Global South, Putin threw his support to the latter emphasizing BRICS as an alternate power centre.

5. Finally, Putin met with Trump in Alaska heralding new era of US-Russian co-operation ignoring the Atlanticists.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

Did sanctions hurt Russia?

This is a billion dollar question in geoeconomics. Russia is a top notch enemy to the west led by America when it comes to the matter of being targeted with crunching sanctions. You name it Russia have it? But had this sanctions ploy hurt Russia. Let me assess how Russia beat sanctions regime imposed upon her:

Sanctions play havoc in all three areas: geopolitics, geoeconomics and geostrategy. My ambit is geoeconomics only. Here are ways and means Russia used to deflect the impact of sanctions and what is more, made use of it to further her interest in the global stage.

1. As Putin ascended the throne as supremo of Russia he re-formulated the sweet old Soviet system. By the way, readers must not forget the adage: you can take a Russian out of Soviet but you can’t take Soviet out of a Russian. Therefore, Putin’s fond remembrance of the old Soviet ways always lingered in his psyche. The first thing he did was to engage in an undeclared war against oligarchs. Yeltsin gave them quite a leeway in Russian polity. Putin packed them one after another. When the collective West imposed sanctions there were no notable oligarchs to rally around the west to bring pressure upon the Putin club.

2. What the western society elicited was to sow the seeds of protest against the Putin hierarchy ending in a regime change. Instead the public rallied around the Putin apparatus as these sanctions were rightly interpreted as against Russia as a state and not to overthrow Putin and his team. Since many of the regime changes attempted by American led west against strongmen such as Gadhafi and Saddam ended in the destruction of the countries they led previously, Russian public drew the right conclusions and gave unstinted support to Moscow.  

3. Putin played a different ball game. He called the West “our friends”. He praised their culture, technology and export orientation, in sum he never criticised the psyche of the West but branded the leaders of individual countries in EU & America as power hungry and intent upon the destruction of Russia as a whole. His make-up was pro-peace and not pro-war. Ostensibly, the western leaders got painted as pro-war and anti-peace.

4. Putin pounced on the jugular.  Discounted oil as geoeconomics strategy was unveiled. He could do that because average cost of Russian oil production is just around US$ 25 per barrel. Therefore, when ceiling of oil at US$ 60 per barrel was imposed, Putin was ready and willing to supply oil even at fairly discounted price to the market. Main beneficiaries India & China were elated. In fact, India bought Russian oil and either tended upon to purify & improve or just simply re-export at US$ 60 per barrel, thereby gaining a big windfall.

5.Unintentionally sanctions gave a major fillip to Russian military hardware complex not only to enhance military hardware & software production, but made it much cheaper than the US & EU production cost. Ukraine war gave much more leeway. Rising military production could only be partly used in the Ukraine theatre and the excess need to be exported. Russian forage into African countries, especially in the Sahel region that evicted French Gendarme was a simply a master stroke in business strategy that brought name, fame and tons of gold.

So much so Russia being the second largest gold producer of gold and now filled with incoming gold too, recently announced that gold trading would begin in St. Petersburg landing a knock-out punch on London gold exchange. Before venturing into sanctioning others America led West must craft their business strategy navigating amid geoeconomics!

Cheers!

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mailcosmicgems@gmail.com

Blog:   Business Strategist

 

 

Trump tariff consolidates BRICS

Sometimes strategy returns unintended consequences. Trump tariff business strategy instead of damaging BRICS gave a fillip to the group to consolidate amongst themselves and support each other in using the force of the tariff blow against Trump to get him boxed out:

This is a grand Judo/Aikido technique that redirects the force of the blow towards the opponent who delivered it in the first place. As a proponent, Sun Tzu used this technique in military warfare. It can be similarly executed in business warfare as well where an action of the opponent could be tuned into a counter blow where confidence of the person who punched first gets shattered. Here are few of the outcomes.

1.  Leaders of the BRICS countries started to call each other. Even the arch enemies India & China did this in the broad daylight to annoy Trump to shake his belief that India is the weaker party.

2. Iran assiduously got into the centre of action where its foreign minister played more than useful role in getting the fellow members to toe the line against Trump mania.

3. BRICS agreed for a collective response instead of individualist ones. They agreed to ignore the Tariff and started work not on counter tariff steps but on non-tariff sanctions and export licensing system against USA.

4. BRICS immediately announced that this is Trump’s proxy war using financial and trade related restrictions against the three biggies namely Russia, India and China the so called Primakov Triangle.

5. When Trump threatened to enforce secondary  sanctions against countries such as China & India who are  buying oil from Russia and Iran his bravado was not only ignored by both of these countries, who went on the spree to  buy more.

6. De-dollarization was given further fillip where use of domestic currency for bilateral trade was strengthened. In order to do so payment system that is currently in use in Russia & China are to be combined as a solo one to become a conduit.

7. A settlement system is being studied where all the currencies of the individual members are to be aligned under a Central Settlement Unit which would be maintained by the BRICS National Development Bank.

8. Lula de Silva, President of Brazil nonchalantly declared that he does not mind any quantum of tariff rate as Brazil can survive without America. The point here is, USA cannot forego Brazilian goods.

From the above happening one can draw a lesson: business warfare in the form of tariff is outdated and the West led by America has to come to terms with BRICS while navigating business strategy amid geoeconomics!

Cheers! 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist