While the Ukraine-Russia conflict continues to escalate, militarily and in the media, significant shifts are occurring on the economic front, particularly on the West’s economic boycott of Russia. And specifically, the embargo on Russian oil and gas.
In a notable development, Sahra Wagenknecht, leader of the newly launched Sahra Wagenknecht Alliance for Reason and Fairness announced that if her German party forms the government in Brandenburg after September’s elections, she will advocate for resupplying the PCK refinery in Schwedt with Russian oil.
Wagenknecht cites economic reasons for this stance: "This would be preferable to the laborious and costly process of importing oil while being unable to fully operate the refinery. We cannot accept the Russian oil embargo, which we consider a misguided policy, and we demand that this error be rectified."
The refinery is operating at 76 per cent production capacity and incurring high costs, compared to near-full capacity and lower costs before the embargo.
Germany, Europe's largest importer of Russian oil and gas, faces a potential collapse of the boycott's effectiveness if these restrictions are lifted. The embargo has impacted nearly all European economies, resulting in significant costs that might have been mitigated through peaceful resolutions, proactive diplomacy, and a thorough understanding of historical and current European-Russian relations.
Russia has prevailed through the ages
At the beginning of the 19th century, Tsarist Russia defeated Napoleon after he had advanced across vast areas of Europe. Nearly a century later, 14 European countries intervened to suppress the Bolshevik Revolution, aiming to protect substantial European economic interests in Russia following the fall of Tsar Nicholas II's regime.
Despite the new Lenin-led Soviet government's declaration to respect international obligations, including safeguarding the economic and commercial interests of foreign investors, military intervention persisted.
Even though Russia was economically weak and embroiled in a civil war between the Bolsheviks and remnants of Tsarism, this intervention failed to overthrow the new regime.
In the 1940s, the inability of Nazi Germany to overcome the Soviet Union and the eventual capture of Berlin by the Red Army are well-documented.
If militarily weak and economically backward Russia at the start of the 20th century could repel Western attacks, the current Russia—militarily strong, economically advanced, and rich in natural resources—demands a recalibrated approach.
The head of the German party highlighted that after two-and-a-half years of economic boycott, the performance of the Russian economy is now among the strongest compared to the larger EU economies, underscoring the need for pragmatic - and revised - policies.
Russia's capacity to confront external pressures is influenced by several historical and geographical factors. The country, as vast as a continent, faces challenging climatic conditions across much of its territory. Its substantial natural resources enable it to be largely self-sufficient in key areas such as food and energy.
Additionally, Russia boasts large markets capable of absorbing industrial output, advanced technological capabilities for innovation and self-development, and significant military and human resources.
Its geopolitical influence and international alliances further enhance its strength.
Global partners of substance
Despite the impact of the economic boycott, the Russian economy has managed to mitigate damage through strategic adjustments. The country has opened new economic, trade, and financial channels with developed and emerging markets such as China, India, the GCC countries, Brazil, and South Africa.
These partnerships have enabled Russia to import in sizeable volumes and to market its entire oil and gas production outside European markets, benefiting from high oil prices and strengthening its financial position.
The core issue is not about supporting one side over the other, but rather recognizing war as an undesirable outcome to be avoided, irrespective of media narratives. Ultimately, economic realities will prevail.
Economic interests - especially for large corporations, including those in the energy sector - will assert themselves, as the influence of capital outweighs ideological power.
Mohammed Al Asoomi
The writer is a specialist in energy and Gulf economic affairs.
