Who is stronger, the West or Russia?

4 Juni 2015
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4 Juna 2015, Comments Komentari isključeni za Who is stronger, the West or Russia?

Despite the Minsk agreement on cessation of hostilities between the Ukrainian government forces and pro-Russian rebels, the conflict in Ukraine continues. What is even more dangerous is that the end of war is not on the horizon. The reason for this lies in the fact that the forces who want a piece of Ukrainian territory annexed to Russia are supported by Moscow, while the integrity of Ukraine is supported by the United States and the European Union.

Even though at first glance it seems that the game is played by two equally strong political and economic blocks, there are huge advantages on the side of one of them. Before we start with the presentation of the facts, it is important to go back to the time before the conflict, and see who has moved the boundary of influence in its favor, the West or Russia.

In February 2014, just before the war began, Ukraine’s President was the pro-Russian oriented Viktor Yanukovych, meaning that Ukraine was under the stronger influence of Russia than Europe. After his overthrow and expulsion, the government in Kiev was taken over by pro-European political forces, while rebel forces retained a chunk of the territory in the eastern part of the country, with Russia annexing the Crimea at the same time.

Strategic shift 

Many would say that Russia has made progress. However, cold and simple data are telling a different story. Before the war, Russia has not only had the Crimea under its control, but the whole Ukraine. After the conflict started, Moscow managed to keep only the Crimea, and the eastern part of the country was retained under the control of the forces that want to secede from Ukraine. This evidence is showing that the strategic shift has happened at the expense of Russia. Ukraine and its people have paid the highest price.

While in Ukraine there’s a military conflict on the ground, the economic war is taking place on the world stage. Since political games are played by power and numbers, and not much room is left for emotions, we will offer some simple data that are easy to compare. Such analysis can be used to anticipate the further development of the situation and to presume which side will be able to hold out longer.

We will not talk here about the military balance of power on the ground, but the economic capacity of the opposing blocks. That war is currently being fought in the economic arena by introducing sanctions in both directions, with the aim to force one of the parties to retreat. Meanwhile, maneuvering moves take place, the sides are making new alliances, and some markets are closing while some new markets are opening.

According to estimates made by the “CIA Factbook” Russia is quite lonely on their side. In 2014, it had the population of 142,470,272 and the gross national income of 3.57 trillion US dollars. Some may argue that Russia is not alone and that it still has support from China or Belarus. Nevertheless, here we are treating Russia as a country with sanctions imposed by the European Union and the US, while sanctions were not imposed to Russia’s supporters. This is why Russia stands alone in this analysis.

Also, it is important to emphasize that the assessment of the gross income in the CIA Factbook website is done according to the purchasing power of the population, as it is done in all countries that will be mentioned later. Although the data does not necessarily have to be precise, it still portrays fairly accurate percentages of the economies in question.

In the beginning, we will compare Russia to Germany, as the leading European economic power. In 2014, Germany had 80,996,685 inhabitants and the gross income of 3.62 trillion dollars. Therefore, Germany’s economy alone has a higher gross income than Russia – a difference of 50 billion US dollars, meaning that Germany, with the population size that is slightly more than half of Russia’s, nevertheless remains more productive. When it comes to knowledge, technology and products, everything is absolutely in favor of Germany.

Detailed analysis

In 2014, the population of the entire European Union was 511,434,812 inhabitants with the GDP of 17.61 trillion dollars. The economy of the European Union is stronger by 14.04 trillion dollars compared to the Russian economy. The structure and composition of the economy, followed by technology and knowledge, are much in favor of the EU.

Since sanctions to Russia have been imposed by the EU and the US together, it is necessary to add the details of the US population and economy to this equation. In 2014, the population of the US was 318,892,103 and the gross income amounted to 17.46 trillion dollars.

It is important to reiterate that these data are macro-indicators which are not going into detailed analysis nor predict the outcome of the Ukrainian crisis. At the same time, they are very important indicators that tell about the overall relationship in the economic war being waged between the two blocks.

To recap, the final calculation is: Russia on one side with 142,470,272 inhabitants and the GDP of 3.57 trillion dollars; on the other side are the EU and the United States with 830,326,915 inhabitants and the GDP of 35.07 trillion dollars.

If these blocks continue clashing only on the economic battlefield, the numbers show who could endure longer. However, it should be noted that in this tuckering out other important factors also play a role, such as, for example, the expectations of the people.

Russian citizens can endure crisis longer because most of them have experienced poverty during their lifetime, including waiting in lines to get basic staples. At the same time, American and European citizens, because of incomparably better standards of living, have much higher expectations and are not ready to accept a significant reduction in their standards of living. Other conclusions can be drawn by the readers themselves.

Adnan Kapo

About Adnan Kapo

Adnan Kapo has worked as an economic and foreign policy advisor to the Chairman of the Presidency of Bosnia and Herzegovina Dr. Haris Silajdzic, during the mandate from 2006 to 2010. Then, he served as an Advisor for Economic Affairs and the United Nations to the Foreign Minister of Bosnia and Herzegovina. In addition to his experience gained in international relations, Mr. Kapo was the CEO of an investment group which delivered major projects in Bosnia and Herzegovina. Besides diplomacy and business, he has also gained work experience in the field of banking, working for Wells Fargo Bank in the United States, which is among the 10 leading commercial banks in the world. Moreover, Mr. Kapo has also worked as a journalist and consultant for marketing and PR. He received Bachelor’s Degree in Political Science in the United States of America (Arizona State University), and postgraduate diploma (MBA – International Management) from the University of Delaware, the sixth oldest University in the United States of America. Currently, Mr. Kapo is a PhD candidate at the University of Sarajevo, Faculty of Economics. In 2014, he was awarded with the “Golden Medal” by the City of Sarajevo for successful management and completion of the biggest investment project in Bosnia and Herzegovina. Born in Sarajevo in 1972.