The First Global War unleashed by Russia’s invasion to Ukraine confines military operations to these two countries but does not exclude any State from the conflict because it reveals the axis of confrontation to be dictatorship against democracy. After one year at war, militarily noteworthy are Russia’s failure as well as Ukraine’s performance, but judging by the global aftermath, it appears that who is really winning is China.
Russia is bogged down in a protracted war, is enduring an erosion of its military and internal politics, and the pressure caused by international sanctions. Ukraine is the battleground and as the victim of aggression it suffers death, devastation, war crimes, an internal as well as international exodus of refugees, ecological havoc, and the insecurity of having to depend on international help to continue resisting.
The war is global because none of the States is impartial and all partake in one of the two battling sides; democracy, or dictatorship. All endure the increase in the prices of energy along with the increase of the prices of oil, gas and coal, higher prices for food, the obstruction of the provisioning of goods and services, the interruption of the chain of supplies, and inflation.
The World Bank has reported that Russia’s invasion to Ukraine “prevents the economic recovery, subsequent to the pandemic, in emergent countries…” Beyond the rise in prices of energy and foodstuffs, in Latin America “the war has adversely affected the availability of fertilizers” because Russia and Ukraine are suppliers.
Due to the invasion, several western companies have withdrawn from Russia in different ways. Starbucks interrupted its operations in March of 2022 and in May “it made the decision to leave and no longer have its brand’s presence in this market”; McDonald’s, after more than 30 years of operation announced in May of 2022 that it was selling its business in Russia. Burger King withdrew its corporate support to the business there.
Coca-Cola, Heineken, PepsiCo and other brands of beverages, have given up their operations, suspended sales and sold assets. Nestlé announced the suspension of its investments. IBM and Intel, announced the suspension of their business in Russia, Amazon’s cloud division halted new subscriptions, Microsoft suspended all new sales of products and services in Russia while declaring that “it would continue contributing to Ukraine’s cyber security”.
The Renault automotive company decided to sell its business in Russia along with the sale of its participation in the Lada automotive brand. Ford, with 50% in Ford Sellers, decided to suspend its operations in Russia. Toyota, Volkswagen, and Nissan announced they were stopping the manufacturing of cars in Russia and suspended their exports to this market. Boeing and Airbus suspended their support to Russian airlines.
British Petroleum, Equinor, Shell, and the mining company Rio Tinto, announced the sale of their participation, their departure from joint ventures, the elimination of their investments and/or the removal of their business. H&M with 168 stores in Russia, suspended its activities, IKEA closed its stores, Proctor & Gamble cut down its products’ portfolio, UNILEVER suspended imports and investments. Moody’s, Goldman Sachs, JP Morgan Chase, and other banking and financing companies suspended their operations and/or closed their businesses.
The long list of companies and operations sold, closed, withdrawn, and discontinued in Russia has left the market open for China who, because of this war, has opened up to Russia and the opportunity to take the market spaces in the Americas and the rest of the world that Russia can no longer continue selling to.
To mitigate the sanctions imposed on Russia for its invasion to Ukraine, China is now Russia’s main economic support. China is now buying energy from Russia, is substituting the western suppliers, and is actively seeking to replace the U.S. Dollar with the Chinese Yuan.
In 2022, China has bought from Russia 45% more oil, 54% more coal, and 155% more gas that the previous year. Trade between China and Russia has increased by more than 30% up to $190 billion dollars. Sales of Chinese cars in the Russian market have increased from 10% to 38%. Chinese smart phone sales went from 40% to 95% of the market. In January of 2022, the Chinese Yuan had less than 1% of trading in the Russian stock market exchange and now it has nearly 50%. According to data reflected on the Society for Worldwide Interbank Financial Telecommunications (SWIFT), Russia is today the third “extraterritorial commercial center” for the Chinese Yuan.
At the recent visit of Wang Yi, China’s Chief Diplomat to Moscow, Russian President Vladimir Putin declared that the relations with China “are reaching new horizons and are fundamental to stabilize the world order.” Everything we have seen so far, however, shows that because Russia’s invasion to Ukraine, Putin is subordinating Russia to China who, up to now is winning the war because it has taken Russia’s economy and market.