Bury Geopolitics, bang on Geoeconomics

Gone are the days when America sneezes the globe catches the cold. Then it was America a lone star in any conceivable activity of post-war re-development. All three hats fit America’s head: geopolitics, geostrategy and geoeconomics. Time up to choose geoeconomics over the other two.

Geopolitics is hinged upon the power play in terms of politics, diplomacy, persuasion and also the aspect of command & control. United Nations being formed, Bretton wood sisters being organized, the globe looked at the American led group to be the saviour of world.  Cold war apart most if not all countries had vast population eulogizing American as Samaritan.

The predication came with the collapse of the bipolar world where earlier USA & Soviet Union had an unwritten law of keeping the distance and more than that keeping away from pressing the nuclear button. Throwing caution to win Gorbachev trusted Reagan and dismantled his massive Soviet State that consisted nations stretching from Eastern Indian Ocean to Western Atlantic. As Reagan exited presidency, America started to toy with the idea of unipolar world where the coteries of west European nations banded together in the NATO alliance beginning to set the “rules based international order” (RBIO) where American set the rules and the rest of the world had to follow suit.

Geopolitics is the key concept that drove western nations to be manacled under a single capitalistic system. Trade is the flow, Dollar is the conduit, and the system would not tolerate any disobedience. Then came the bolt from the blue. China begin to rise. USA ignored Napoleonic dictum. “There lies a sleeping giant. Let him sleep! For when he wakes, he will shake the world". On the contrary America befriended China using Ping-Pong diplomacy tactfully arranged by Pakistan.

Investments poured in from America to China. In fact an entire production system dismantled and shipped to Beijing gave China new found identity as an industrialized nation. Progress in the beginning was slow as it picked up it was soaring the heights of Himalaya. Richard Nixon who met Mao in February 1972, laid the foundation of Chinese revival. Soon the dragon filled the vacancy of veto carrying status in the UN Security Council vacated by Taiwan.

After a half century later in 2022 China is a peer competitor to USA. Not only that she is indeed, a near competitor to America led west in other geo areas: geostrategy, geotechnolgy and now in geoeconomics.

It is time for the American led west to bring some sense of balance into their foreign policy. Geopolitics must be given a fitting burial. The new challenge is not in politics or geo strategy but in geo technology and overarching geoeconomics. Bang on geoeconomics if you wants to survive America!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

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