Russia’s problems with other countries have played a significant part in the country’s economy. Either for good or bad Russia’s involvement on different confrontations have always had a direct impact on its economy, either by internally debilitating it or by developing new relations through alliances. The following pages will review how its involvement in the conflicts have almost always meant drastically changes, starting from World War 1(from now on referred as WW1).
Long before WW1 started Germany, Austria-Hungary and Italy formed an Alliance which was named as the Triple Alliance. The alliance was formed as a form of protection, if any of the three countries were attacked by France or Russia the others would support the attacked country. France and Britain felt concerned about the Triple Alliance but Britain was even more concerned with Germany’s growing Navy fleet, so in response both countries signed the Entente Cordiale literally translated as “friendly understanding”, three years later Russia also felt that Germany might be a threat on the near future so they decided to join Britain and France to create the Triple Entente, however, contrary to the Triple Alliance the Triple Entente did not have any requirements for the countries to go to war on behalf of others, they only had a moral commitment to support the countries.
By the year 1914 Russia had made a considerable progress regarding its economy, it was annually generating about 9 million tons of different type of metals, around 10 million ton of grain and around ten million tons of petroleum. Its Army at the time was sad to be the largest in the world, nevertheless, the county’s roads were very poor that along with poor railways made an ineffective deployment of soldiers which is why Germany was sure that they could handle the threat Russia represented.
When the war initially started Germany was slaughtering Russian forces, in the battle of Tannenberg only ten thousand of the one hundred and fifty thousand were able to escape while the Germans only lost 20,000. The main problem was that the Russians did not have enough rifles to arm their troops, which were not properly trained, this way so many Russians died, as the untrained and unarmed men were sent into battle the stack of bodies was rising.
By 1916 2 million Russians were dead or with a life threating wound, and almost seven hundred and fifty thousand were being held as prisoners. Russia had no choice but to swarm its battlefields with millions of peasants, causing its industry to decrease its productivity in all field but the one that was felt the most was food, due to the lack of working hands food was not abundant causing a four hundred percent increase on food prices. Several of the failures of war were attributed to Russia’s leader and finally caused the fall of the Russian empire in 1917, leaving the country in a state of revolution and decolonization. This opened the way that led to a new communist state.
The first reviewed confrontation with other countries shows that the toll was so big that it did end the Russian empire but, it also gave way to the creation of the Soviet Union and just like the WW1 had a great impact on how the USSR was formed the WW2 also played a great part on shaping modern Russia to what it is today. The confrontation with the different countries and finally with Germany left the western regions of the Soviet Union in a complete wasteland, Stalin had a “scorched earth” policy to prevent the Germans from getting any usable land as loot of war. The same land was scorched by the retreating Germans this included around thirty thousand factories and almost seventy thousand km of railway track, the Soviet Union was left with no men, no machinery and no kettle of any kind which led to starvation during and after the war.
Due to the alliance, the US offered financial aid to Russia, similar to the one Europe was received by the Marshal Plan but, Russia rejected the aid offered, oppose to what was expected the Soviet Union recovered quickly and its economy started to experience economic growth. The success of this post-war recovery plan from the Soviet Union was largely due to it mass manpower, this could be forced on some areas, there were also around ten and eleven million men coming back from the war to help rebuild the country.
Even with this mass manpower being placed when it came to losses the Soviet Union was the most affected party from WW2, around half of the casualties of the conflict belonged to the USSR, nowadays Russia reported a total loss of 26.6 deaths from WW2, and they also claim that two thirds of those were civilians who could have helped rebuild the economy at a much faster pace.
The USSR took about sixty-five billion dollars in loot. But on year two thousand Russia claimed that they would return the first of some trophy art that was taken from WW2 as they were also trying to restore some of their damaged treasures at home.
Long after the war ended it continued to affect the mind of the Russians, it should be no surprise as the conflict impacted every family within the union, the legacy of the conflict had a strong impact on the following generations as it can be appreciated in the poem elaborated by soviet veteran Yuri Levitansky, he wrote: “I don’t still dwell on that past war, the war still dwells inside of me, and tongues of the Eternal Flame are licking at me steadily.”. It is important to understand that this poem was written in the early 1980s more than 40 years after the war but, even today every once in a while, Russian news report children killed by live ammunition that was left from the war.
Despite all of this hardships WW2 open the way for the Soviet Union to rise as one of the top 2 military powers in the world, Stalin convinced his US and British counterparts that the Soviet Union would keep the territory gained through the pact signed with Hitler, The USSR had also won islands from Japan, whom today still doesn’t recognize them as Russian territory.
The previous cases provide an idea of how have Russia’s international conflicts have affected the economy both in good and ways. The last case and most recent one shows that on an overview most of the Russian conflicts with other countries tend to affect the economy not only of the country but of the region on a negative way.
Conflict between Russia and Ukraine has always been present but, the most recent conflict involved the annexation of the Crimea from Ukraine to Russia, it is imperative to understand that in the past Ukraine and Russia where part of the founding members of the Soviet Union and during their history Crimea was originally from Russian until 1954 when the Soviet government transferred it from Russian Soviet Federation to the Ukrainian Soviet socialist republic.
Within Crimea, there were to major parties, one that supported the Ukrainian government and the other that supported the pro-Russian government. In February of 2014, Russia’s military movement included incursions into the Ukrainian territory, Russia took advantage of the fall of the Ukrainian president to mobilize Russian soldiers without insignias into Crimea.
The Russian forces took control of the building of the Supreme Council of Crimea, they raised Russian flags over the building and held an energy session which voted to terminate the Crimean government. On may the 25th they also held a referendum for its autonomy from Crimea but, the Russian forces took all mobile phones as the members where coming in and did not allowed any independent journalist inside, some of the members reported that they were being threatened to vote in favor of Russia and that they even voted on behalf of some of the members that were not present.
A majority of the world leaders saw the annexation as a violation of international law and as a violation to the agreements signed by Russia which is why several members of the G8 to suspend Russian from the group, this gave way to individual countries to start emitting sanctions against Russia, the UN also stated its resolution of not recognizing the annexation and they also called upon all states and international organizations for them to do the same.
These sanctions changed, once again, the way the economy was being handled in the region, the first sanctions back in 2014 was only from the US, it consisted in travel bans and freezing the US assets against any individual who had collaborated or participated with Crimea’s annexation. Later on, that same year Canada and the EU included similar bans but they did include specific targeted sanctions. The second round of sanctions came again from the US, imposing business bans, no transactions were being made with 7 Russian officials, seventeen Russian companies and the Russian state oil company. Lastly, the third round started with the US banning more companies and individual, several countries slowly joined the sanctions and increased their own sanctions to further the scope of the sanctions to include more and more companies and individuals.
As the years have passed one cannot be certain that Russian companies have been gravely hit by the sanctions, the energy supply to Europe has not been compromised so far. On the other hand, it has certainly compromised the investments within Russia and the movements of technology for the proper exploitation of gas and oil so it could be said that the real implications are yet to come.