Summary:

Russia’s invasion of Ukraine is turning into a war of attrition, as the battlefield has become more static and decisive battles are being fought on the home front. The Russian invasion lost momentum precisely because the Ukrainian army was effective in disrupting the supply chains of the invading force. This destroyed much of Russia’s material advantage, and turned what was considered ‘a walk in the park’ into a real war with socioeconomic consequences. Moreover, the war is now undermining the once unquestionable political monopoly of the Kremlin. As the military confrontation transformed from a war between armies, to a war between societies, the confrontation between economic systems became as significant as defence systems. In sum, the resilience of each country’s power in the battlefront relies on its resilience in the home front.

In theory, this standoff should favour Ukraine given it can count on the support of the most advanced economies in the world. The ability of the Russian economy to control its budget deficit, maintain revenue, and source the technological inputs required to produce ammunition will greatly determine the outcome of the war. That is why a discussion on logistics systems is of geopolitical significance.

This study attempts to provide a comprehensive overview of how the war in Ukraine has affected ‘who gets what, how, and where.’ Examining the geopolitical significance of supply chains, this analysis contributes to an assessment of how continuity and change are negotiated in the context of the Russian war economy. The study argues that Western sanctions have been extremely effective in eroding Russian revenue and making the procurement of key technological inputs far more expensive. However, sanctions have been extremely ineffective in denying Russia access to key dual technologies and disrupting revenue altogether. This failure reflects a deeper systemic challenge in the war between open market economies and state-controlled economies.

Russia’s state-controlled economy has a greater ability to accommodate its political and economic policy against short-term considerations. Beyond Russia’s relations with the post-Soviet space in the Caucasus and Central Asia, Russia has also been able to rally support in China and the Indian subcontinent. Largely, this accommodation entails the substitution of crude military power with effective economic diplomacy. In making this case, this study offers a review of Eurasian logistics networks, offering a glimpse of how all states in the region accommodate their foreign and economic policy to the Ukrainian crisis. Iran, the Caucasus, and Central Asia are ‘having a good war,’ seizing economic opportunities that may have a long-term effect.

The catalytic effect of the war in Ukraine on the relationship between Russia, Turkey, Iran, India, and China is not predictable. The United States and, to a lesser extent, Europe have yet to project the vision of an enduring partnership in the emerging status quo. This is true of logistics but also what this sector reflects, namely ‘value chains,’ networks that contribute to the production of goods and services across the Eurasian landmass. Although the combined economic significance of the West in the global economy is unmatched, the alliance rallying behind Ukraine has been less able to project a common vision for the emerging status quo. Russia maintains the initiative in building partnerships with the economic powers that can tilt the balance, namely Iran, India, Turkey, the UAE, and China. At least in part, the Russian advantage is its ability to rally state-owned companies and oligarchic interests behind broad foreign and security policy objectives.

Read the full piece here.

Disclaimer: The views expressed in this piece are those of the individual author and do not reflect the views of The Foreign Policy Centre.

Ilya Roubanis (PhD, European University Institute) is a British-born International Relations analyst of Greek heritage. He is a fellow of the Observatory on Contemporary Crisis (Madrid) and the International Relations Institute in Athens (IDIS). For over a decade, he has worked in the South Caucasus as a government affairs consultant, risk analyst, and journalist.