In the quarter century since the fall of the Soviet Union, the role of U.S. imperialism as the pre-eminent world power has declined significantly. The long-term downward trend in the profit rate has fostered deindustrialization, the hypertrophy of fictitious capital and soaring public and private debt, while a decline in the organic composition of capital (the ratio of constant capital to variable capital and surplus value) through bankruptcies has not occurred on a scale big enough to restore robust growth. Instead, having absorbed the shocks of the 2008 financial crisis and recession, the state has sought to transfer the thrust of the blow to the working class in the form of austerity. Combined with the disastrous military adventures in Afghanistan and Iraq (as well as destabilizing interventions in Libya, Syria, Yemen and elsewhere), the erosion of the material foundations of the most powerful empire in human history has created new possibilities for geopolitical realignments.
Within this global context China and Russia have emerged as challengers to U.S. hegemony. China, which remains what Marxists call a deformed workers’ state (integrating significant market mechanisms into an essentially state-run planned economy), presents a peculiar and historically unique example of a non-capitalist country that exhibits some of the attributes normally associated with capitalist powerhouses (see “Whither China?” 1917 No.31). Despite the farcical presentation of Russia as universal bogeyman in American politics, it has become a remarkably effective imperialist impediment to Washington (albeit relatively weaker economically), changing the geopolitical calculus in Europe and the Middle East and helping to define the evolving capitalist world order.
Buoyed by rising oil prices in the first decade of this century, Russia’s capitalist oligarchy under Vladimir Putin’s government consolidated a strong independent state and managed to stabilize Russian capitalism, which had suffered from open plunder, disintegration and massive capital flight after the 1991 counterrevolution. Comparatively poor in technology in many industries, heavily reliant on natural resources and suffering from an underdeveloped banking sector, Russian capitalism has nevertheless developed highly oligopolistic giant corporations, fusing industrial and financial activities, with innumerable connections to the state. These corporations, beginning in Russia’s neocolonial “near abroad,” have made enormous overseas investments. In tandem, Moscow has projected Russian state power with considerable success, starting with its war with Georgia in 2008 and continuing ever since. Russia has made the journey from a weak and exploited capitalist country – one whose economy was disarticulated and pillaged by powerful foreign entities – to an independent imperialist state, though one marked by important elements of backwardness.
Many leftists in the West, perhaps from a healthy antipathy to their own imperialist masters and the disgusting Russophobic hysteria that has gripped Washington in particular, have sought to deny the fact that Russia is an imperialist power (see the section “Russian Imperialism and Other Disputes” on our website concerning a dispute in the IBT over the question). This reaction is understandable given the frequent equation of China and Russia as “existential threats” to “Western democracy” and the rank hypocrisy of Western imperialists who shriek at “Russian meddling” in the affairs of foreign countries. Yet Marxists have an obligation to present a clear and accurate account of the world we seek to change, not ignore politically inconvenient facts.
Following V.I. Lenin, Marxists use the term “imperialist” not as an epithet but as a description of a relationship of inequality and exploitation under capitalism in its “highest stage” rooted in material reality. The exploitative economic relations between an imperialist country and the more economically backward countries it oppresses are the basis of the Leninist conception of modern imperialism. On this foundation stand states and a state system (or geopolitics) that reinforce and shape the base in a dialectical manner. For Marxists, exploitation refers to surplus extraction (under capitalism, surplus value extraction). Over the long run, an imperialist country will receive a net transfer of surplus value back from the colonial and semi-colonial/neocolonial countries to which it exports capital.
At its most fundamental level, “imperialism” refers to the capitalist mode of production on a global scale in the era of socialist revolution. In other words, capitalism has moved from its historically progressive to its historically regressive phase, marked by the transition from competitive to monopoly capitalism, and it is therefore ripe for expropriation worldwide.
Previously, many socialists believed that every country was destined to pass through the stages of development traversed by the first capitalist countries (Britain, France, Germany, the U.S., etc.). Yet the analysis put forward by Lenin, Leon Trotsky and other Marxists demonstrated that development through to “advanced capitalism” was blocked for newcomers by the pioneer capitalist states, which sought to overcome economic crises by using their material advantages to super-exploit weaker countries. The result was the deformed development of the exploited countries within a complex and evolving system that moved from direct colonial pillage to neocolonial exploitation in the form of the export of capital by giant corporations and by the state bodies designed to support them (see “Imperialism & Global Inequality,” 1917 No.31).
This system, imperialism, which emerged in the last quarter of the 19th century, is marked by two sets of divisions between countries. On the one hand, there is the division between the rich and powerful minority benefitting from the world order (the imperialist countries) and the poor and weak majority, which is exploited. On the other, there are the divisions that arise among the imperialist states, as competition for spheres of influence and exploitation leads to economic and eventually military conflict.
Imperialism originated in Western Europe and North America due to the “overripe” development of capitalism, i.e., the maturation of the system marked by a falling rate of profit compelling capitalists to make profitable investments in more backward countries whose own development became distorted or stunted as a result. These origins have led some leftists to adopt a rather mechanical and one-sided view of the Leninist theory of imperialism in which the imperialist quality of a country is determined by its attainment of the “highest stage of capitalism” through the “classic” pattern of development seen in Britain and the United States. Practically speaking, this approach looks for telltale signs of this development, e.g., a high organic composition of capital or high labor productivity, and then qualifies or disqualifies a given country on that basis. Yet this interpretation of Lenin’s theory of imperialism is at odds with Lenin’s own dialectical understanding, and it was not shared by the theory’s most significant developer, Trotsky.
It is necessary to distinguish between two connected but distinct levels of analysis – that which applies to the system or epoch as a whole and that which applies to individual countries within the system. It should be clear from reading Lenin’s Imperialism: The Highest Stage of Capitalism that his discussion of the rise of the imperialist stage is at the general-historical level. Lenin draws on elements of the development of monopoly capitalism from different countries, tying them together to reconstruct the essential features of the global epoch as a whole. This is similar to the method employed by Marx in Capital. Marx analyzes developments in several different countries (above all Britain, the leading capitalist country at the time) to distill the essence of the bourgeois mode of production. In both cases, Marx and Lenin use examples and provide statistics from individual countries (and discuss differences between them), but they never suggest that every country must possess all the features they describe at the level of abstraction of “capital” or “imperialism.” Actual capitalist societies or imperialist countries will necessarily depart from the general reality to some degree.
In his 1917 preface to Imperialism, Lenin says that the work was meant to reveal “the economic essence of imperialism,” and he laments that the Tsarist censor had forced him, while discussing annexations, “to quote as an example – Japan! The careful reader will easily substitute Russia for Japan, and Finland, Poland, Courland, the Ukraine, Khiva, Bokhara, Estonia or other regions peopled by non-Great Russians, for Korea.” In his 1915 pamphlet “Socialism and War,” Lenin observes that pre-modern “military and feudal imperialism” was a dominant feature of Tsarist Russia, but added: “In Russia, capitalist imperialism of the latest type [finance capital] has fully revealed itself in the policy of tsarism towards Persia, Manchuria and Mongolia.” In an article entitled, “Imperialism and the Split in Socialism” (October 1916), Lenin picks up on the comparison of Tsarist Russia and Japan, situating them within the framework of the theory of imperialism he elaborated in his seminal pamphlet of the same name: “In Japan and Russia the monopoly of military power, vast territories, or special facilities for robbing minority nationalities, China, etc., partly supplements, partly takes the place of, the monopoly of modern, up-to-date finance capital.”
In Imperialism, Lenin provides the following characterization:
“Imperialism, or the domination of finance capital, is that highest stage of capitalism in which this separation reaches vast proportions. The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means that a small number of financially ‘powerful’ states stand out among all the rest.” [emphasis added]
The wording of this formulation might suggest that only those states that are “financially powerful” are imperialist, but the passage is located in a section in which the weakness of and predominance of foreign ownership in Russian banking are stressed. For instance, Tsarist Russia possessed only about a fifth as many securities as Britain, then the leading financial country (Japan had less than a tenth). Approximately three quarters of the “working capital” in the Russian banking system was actually controlled by daughter companies of foreign banks, mostly French and German. In this instance, the specific features of two particular examples of an imperialist country (Russia and Japan) are clearly not a match for the features ascribed to the epoch as a whole. Yet, to Lenin, both countries were imperialist in the sense of “modern, up-to-date finance capital,” albeit in an uneven and contradictory way.
In the section of Imperialism entitled “Export of Capital,” Lenin refers to “surplus capital” in relation to the tendency toward monopolization. While he does not spell out exactly what relationship this has to a falling rate of profit triggered by a rising organic composition of capital, Lenin does observe that monopoly capitalists prefer to invest at least part of their surpluses generated at home in “more backward countries” for “the purpose of increasing profits.” He continues:
“The export of capital is made possible by a number of backward countries having already been drawn into world capitalist intercourse.… The need to export capital arises from the fact that in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and the poverty of the masses) capital cannot find a field for ‘profitable’ investment.”
Apart from “the backward state of agriculture and the poverty of the masses,” there is no other concrete explanation from Lenin as to why “surplus capital” is exported to more economically backward countries, though it is likely he had in mind Marx’s value-theoretic account of the falling rate of profit. Lenin himself simply proceeds with an empirical discussion of the amount of capital exported by the leading imperialist powers (Britain, France and Germany). Tsarist Russia, which could hardly be said to be “overripe” in terms of capitalist development, is described only as a recipient of investment. Nonetheless, for Lenin it was indisputably imperialist in the modern sense.
An essential piece of the methodological puzzle is provided by Trotsky in his magnum opus, The History of the Russian Revolution. It is here that Trotsky, discussing the development of capitalism in Russia, stresses its combined and uneven character:
“Unevenness, the most general law of the historic process, reveals itself most sharply and complexly in the destiny of the backward countries. Under the whip of external necessity, their backward culture is compelled to make leaps. From the universal law of unevenness thus derives another law which, for the lack of a better name, we may call the law of combined development – by which we mean a drawing together of the different stages of a journey, a combining of separate steps, an amalgam of archaic with more contemporary forms.”
Tsarist Russia was not an “advanced capitalist country” – at least not in a “pure” sense. Indeed, the tendency toward the combination of social forms (which exists in advanced capitalist countries but “reveals itself most sharply” in backward ones) meant that advanced capitalism was intertwined with semi-feudal relations in Tsarist Russia, and it is this backward side that was repeatedly emphasized by Trotsky. In “Results and Prospects,” he wrote that “the main characteristic of Russian social development is its comparative primitiveness and slowness,” while in The Revolution Betrayed he recalled:
“Russia took the road of proletarian revolution, not because her economy was the first to become ripe for a socialist change, but because she could not develop further on a capitalist basis. Socialization of the means of production had become a necessary condition for bringing the country out of barbarism. That is the law of combined development for backward countries.”
So what distinguished Tsarist Russia from neocolonial countries, whose economies were also forged in the nexus of advanced capitalism and pre-existing “backward” structures? Clearly it is insufficient, from a Marxist perspective, simply to isolate economic criteria such as the organic composition of capital or labor productivity to determine a country’s imperialist status. Such analysis must be part of a richer materialist appreciation that places a country in its historical and global context. In The History of the Russian Revolution, Trotsky observes:
“Russia’s participation in the war [WWI] was self-contradictory both in motives and in aims. That bloody struggle was waged essentially for world domination. In this sense it was beyond Russia’s scope. The war aims of Russia herself (the Turkish Straits, Galicia, Armenia) were provincial in character, and to be decided only incidentally according to the degree in which they answered the interests of the principal contestants.
“At the same time Russia, as one of the great powers, could not help participating in the scramble of the advanced capitalist countries, just as in the preceding epoch she could not help introducing shops, factories, railroads, rapid-fire guns and airplanes. The not infrequent disputes among Russian historians of the newest school as to how far Russia was ripe for present-day imperialist policies often fall into mere scholasticism, because they look upon Russia in the international arena as isolated, as an independent factor, whereas she was but one link in a system.”
Trotsky argued that since Russia was “one of the great powers,” it “could not help participating in the scramble of the advanced capitalist countries” for world domination, though its low economic base placed severe limitations on its aspirations. As a capitalist great power in the age of imperialism, it had inevitably become a finance-capital imperialist despite combining advanced capitalist structures with backwardness (including what Lenin called “military and feudal imperialism”). The important point is not to “look upon Russia in the international arena as isolated, as an independent factor,” but to view the situation dialectically, holistically and in its historical development. From this perspective, what distinguished Tsarist Russia from China was not so much its economy (though the industrial centers of Russia were extremely important) but its independence from imperialist domination and its exploitation of other, weaker countries:
“In one sense Czarist Russia was also a colonial country, and this found its expression in the predominant role of foreign capital. But the Russian bourgeoisie enjoyed the benefits of an immeasurably greater independence from foreign imperialism than the Chinese bourgeoisie. Russia itself was an imperialist country.”
— Trotsky’s introduction to Harold R. Isaacs, The Tragedy of the Chinese Revolution, 1938
This “greater independence from foreign imperialism” allowed Russia to participate as a small-fry exporter of capital to its colonial hinterland. It exported capital not because capitalism had become “overripe” in the Tsarist Empire but because its backward autocracy and remnants of feudalism placed limits on the development of an internal market and because – as an independent player in a world shaped by the “highest stage of capitalism” – it had to compete with its great power rivals. Such competition entailed the enrichment of Russian industry by the construction of foreign operations. As we noted in “Imperialism, Tsarist Russia & WWI,” 1917 No. 39:
“In the last decades of the Romanoff dynasty, Russian capital flowed abroad, while simultaneously finance capital from France and other more advanced countries poured into Russia to construct factories, railroads and other components of a modern industrial economy. According to Professor Alexander S. Bulatov of Moscow’s Russian Foreign Trade Academy:‘Russian firms started to invest abroad in the last decades of the nineteenth century. Capital was exported primarily to China and Persia, as well as to Mongolia. During the period 1886-1914, Russian capital exports amounted to about 2.3 billion rubles (equivalent to $33 billion at 1996 prices).’
—Transnational Corporations, 7(1), April 1998”
In relative terms, Tsarist Russia was not a big player in the realm of capital export, and it exported capital to weaker peripheral countries in part to overcome aspects of its own backwardness. Marxist historian Harold R. Isaacs, in The Tragedy of the Chinese Revolution (which was endorsed by Trotsky in a complimentary introduction), noted a similar motivation for Japanese imperialism, which unlike its more advanced rivals was not “rooted in highly developed heavy industries woven into vast units by a powerful financial mesh”:
“Japanese capitalism rests on a light industrial foundation and a feudally backward agrarian system, and has a comparatively weak although highly concentrated financial superstructure. A latecomer into the family of imperialist nations, Japan has sought for forty years to master China in order to create an unimpeded channel for the outward flow of its own products and to secure basic raw materials, mainly coal, iron, and cotton, that it so lamentably lacks. Because of its economic weakness, Japan was less able than its great rivals, Britain and the United States, to withstand the pressure of the world depression that began in 1929. The closing of world markets to Japanese goods led directly to the invasion of Manchuria in 1931.”
It is difficult to know for certain, but it seems rather likely that Tsarist Russia extracted comparatively little surplus value from the countries to which it exported capital and that it was a net importer of capital when investment from other imperialist countries is taken into account. Yet it was an imperialist country in the modern, Leninist sense of the term because it was a capitalist great power in the imperialist epoch – a country that used its base of finance capital and independence from other imperialists to compete in attempting to exploit weaker countries, dominating them economically and militarily within the framework of the capitalist mode of production in its era of decay.
The weaknesses of Tsarist Russia contributed to it being the first “link” in the imperialist chain to be smashed by socialist revolution. Had this not happened, it is plausible to imagine a capitalist Russia being reduced to a neocolony following WWI. The emergence of a workers’ state in October 1917 removed Russia from the normal mechanisms of international capitalism and allowed for dramatic economic growth. Despite its subsequent degeneration under Stalinism, the existence of the Soviet state had repercussions on the international arena for most of the rest of the century. Its 74-year lifespan also profoundly shaped the development of Russia, which once again became a capitalist country in 1991.
In the decade that followed the capitalist counterrevolution and dissolution of the Soviet Union in 1991, Russia’s economy was privatized through a program of imperialist-backed “shock therapy” aimed nominally at kickstarting market mechanisms but in reality designed to weaken and subjugate the country. The process benefitted foreign corporations but also created a new layer of wealthy “entrepreneurs” – capitalists who, in many cases, successfully converted themselves from managers of state-owned enterprises into the owners of privatized companies. The new capitalists were often indistinguishable from organized criminals, and they funneled large amounts of money to overseas bank accounts from which they could withdraw the cash to purchase luxury goods. The government of Boris Yeltsin oversaw the descent of Russia into this venal form of crony capitalism and the decline of Russia’s power on the world stage (see “Russia: A Capitalist Dystopia,” 1917 No. 24).
With the ascension of Vladimir Putin at the beginning of the century, however, things began to turn around, as the ultra-rich “oligarchs” were mostly brought to heel, and the country’s haemorrhaging of capital slowed considerably. The new direction of government policy coincided with a massive concentration of capital into a handful of large monopolies (or oligopolies) mainly in the natural resources sectors but extending into other areas of the Russian economy. David Collins observes in his 2013 book, The BRICS and Outward Foreign Direct Investment:
“During the early 2000s there was a strategic shift in the domestic business environment that led to general improvements in [Russia’s] economy and saw the creation of SOEs [state-owned enterprises] in key industries, either with the assistance of public finance or through more efficient administrative measures. During the period since 2000, the Russian economy has become largely concentrated in the hands of several large corporations. It is believed that the high concentration of income in the Russian economy was one of the major motivators behind the globalization of Russian firms. In 2001 the Russian investment bank Troika Dialog calculated that around 70 large financial and industrial groups controlled 40 per cent of the Russian GDP.”
The early to mid 2000s was the period in which the Russian bourgeoisie consolidated itself as an imperialist power. Its economy remains heavily monopolized, as Alexander Bulatov notes:
“400 leading companies (with sales greater than 15 billion roubles; i.e. US$700-750 million by purchasing power parity) produced 41 per cent of GDP in 2014…, and many of them were monopolies (Gazprom, Norulsky Nikel, Russian Raylways, Aeroflot, Transneft) or leading oligopolies (LUKOIL, Rosneft, Sberbank, Rostelecom, Megafon) in their industries.”
—Transnational Corporations, 24(2), 2017
The level of development of the contemporary Russian economy is uneven. In comparative rankings of competitiveness (which include factors such as innovation, corruption and property rights), Russia is not in the top tier. The World Economic Forum’s Global Competitiveness Report 2017–2018, for instance, ranked Russia 38 out of 137 – behind some neocolonial countries like the United Arab Emirates and Indonesia (but ahead of imperialist Italy). Aggregate labor productivity in Russia is low compared to other imperialists, just over half of the European average and about one-third that of the U.S. (Moscow Times, 10 August 2015). There are few Russian-made consumer goods that are household names in the West, whereas even some non-imperialist countries like South Korea boast products well known in Europe and North America.
Yet alongside this relative backwardness are significant elements of advanced capitalism:
“[Russia’s] service sector activity is, as a proportion of total value added, closing in on levels observed in the EU. In 2010, services accounted for 68 per cent of total value added in Russia, compared to the EU average ratio of 79.7 per cent, and ratios of 50 per cent for China and 49.7 per cent for Indonesia.
“Thus, it is clear that over two decades of economic transformation in Russia has resulted in an economy that is closer in structure to its rich EU neighbours than it is to some other large, low- and middle income countries.”
—European Parliament, “The Economic Significance of Russia’s Accession to the WTO,” June 2012
Every imperialist country builds upon the economic foundations established in its pre-imperialist phase. Russia’s trajectory is unique in that the pre-history of its contemporary imperialism runs through the creation of a degenerated workers’ state. Russian imperialism of the 21st century lags less far behind its adversaries than Tsarist Russian imperialism did before 1917 – and it is the material legacy of the Soviet Union that has made that possible. As well as inheriting a highly educated workforce, Russian capitalism has benefited from (and made advancements in) technologies that were heavily developed in the Soviet Union, including weapons and aerospace.
Russia is the world’s second-largest arms exporter after the U.S. and a global leader in the production of weapons technology. Since its recovery following the economic disarray of the 1990s, Russia has accounted for an annual average of 25 percent of global arms exports, nearly as much as Germany, France, Britain and China combined (“Russia’s Role as an Arms Exporter,” Chatham House, March 2017).
The economic sanctions that Washington imposed on Russia in 2014 are aimed not merely at punishing the annexation of Crimea but also at undermining an economic competitor, including in the multi-billion-dollar arms industry. The U.S. has not, however, been entirely successful at dissuading countries from purchasing Russian-made weapons:
“India’s defence minister visited Moscow last week to finalise a $6bn purchase of S-400 missile systems. The deal appears set to go through despite US efforts to stop it, including an offer from Lockheed Martin to move the production of F-16 fighter jets from Texas to India. Turkey, a member of Nato, agreed to accelerate an S-400 deal when Russian President Vladimir Putin visited Ankara recently. Recep Tayyip Erdogan, the Turkish leader, said ‘the S-400 deal is made, and this matter is closed’.”
—Financial Times, 13 April 2018
One of the reasons that even traditional U.S. allies would run the risk of angering Washington is the technological sophistication of Russian weapons:
“‘The S-400 is among the most advanced air defence systems available, on par with the best the West has to offer,’ said Siemon Wezeman, senior researcher with Stockholm International Peace Research Institute’s (SIPRI) arms transfers and military expenditure programme.”
—Al Jazeera, 8 October 2018
Russia’s recent intervention in Syria provided an opportunity to test its advanced technology in the field. This has become a selling point for Rosoboronexport, which controls foreign sales for Russian arms manufacturers:
“At the fifth Bahrain International Air Show 2018 (BIAS), Rosoboronexport will feature Russia’s most advanced weapon systems, including the S-400 long-range air defense missile complex, the Pantsyr medium-range surface-to-air missile/gun system, Sukhoi Su-35 fighter jets, unmanned aerial vehicles, electronic warfare systems and the newest Ilyushin Il-76MD-90A military transport planes.
“‘The weapons labelled “made in Russia” enjoy enhanced demand as they have proven their worth in rough combat and climatic conditions at sea, on the ground and in the air. And this demand is growing: Rosoboronexport’s order book has recently exceeded the mark of $50 billion, a considerable share of which has been formed by contracts with Arab states,’ [CEO Alexander] Mikheyev said.”
—Tass, 12 November 2018
Despite comparative weakness in some areas, Russia’s aerospace industry also remains a world leader. In September 2018, Loren Thompson, chief operating officer of the Lexington Institute (which is partly funded by defense contractors Boeing and Lockheed Martin) wrote a piece in Forbes complaining that “U.S. satellite makers are becoming increasingly dependent on other countries, especially Russia, for a technology essential to the functionality of their products”:
“[T]he industry is gradually migrating to so-called electric propulsion technology, and there the key offshore provider is Russia. Even as Congress has been pressing the military to end its reliance on Russian rocket engines, America’s satellites are becoming more dependent on a type of in-space propulsion where Russia has emerged as the global leader.”
Russian nuclear technology is also advanced, and the country’s reactor designs “dominate all others” in the export category:
“While China’s internal nuclear build-out is the largest in the world, countries in the position to buy reactors have been overwhelmingly choosing Russia and its VVER1200.…
“Customers buying the VVER1200 cover the range, from developing nations undertaking their first nuclear steps, like Bangladesh, to advanced nations with extensive nuclear power experience who are expanding their fleet, like Finland.
“Even China, with its rapidly maturing capabilities and nuclear export ambitions, finds something compelling in the Russian offering, recently agreeing to purchase four more VVER1200s.”
—Forbes, 3 July 2018
In early 2018, the state nuclear energy corporation Rosatom unveiled an innovative floating nuclear reactor, confirming the view of experts that Russian nuclear technology remains a major player in the international market: “‘They are light-years ahead of us,’ Jacopo Buongiorno, a professor of nuclear engineering at the Massachusetts Institute of Technology, said of the Russian floating power program” (New York Times, 26 August 2018). The Economist (2 August 2018) complains that, in the post-Fukushima era, “one country now dominates the market for design and export of nuclear plants: Russia.” Indeed, Rosatom is building multi-billion-dollar nuclear power plants in several dependent countries, including Turkey’s first nuclear plant, worth $20 billion (Ibid.).
Beyond military goods, aerospace and nuclear energy, Russian capitalists can also compete globally in the chemical and metallurgy industries (see Ye.Yasin et al., “Russian Manufacturing Revisited: Industrial Enterprises at the Start of the 2008 Financial Crisis,” Bank of Finland). Indeed, according to the United Nations Conference on Trade and Development (UNCTAD), Russia’s “Metallurgy and chemicals are already competitive in world markets and operate without major subsidies” (World Investment Report 2012). Russia is the third-largest steel exporter on the planet, and its largest buyers include Turkey, Mexico, Belgium and the United States (Global Steel Trade Monitor, November 2018). A recent report by Deloitte noted that “the US and EU introduced anti-dumping duties on Russian steel that affected domestic players in the sector,” though the effects of this economic warfare were offset to some degree by increased domestic demand for metals in the oil and natural gas sectors (“Russian manufacturing industry overview,” May 2016).
Russia’s oil and natural gas giants (Rosneft, Lukoil and Gazprom) have at times partnered with foreign companies in order to access advanced technologies, though they are hardly backward corporations. Western sanctions have hampered the export of energy technology to Russia, but Russian capitalists have sought to make up the difference. In October 2018, the head of Novatek (a liquefied natural gas producer), Leonid Mikhelson, reported that the company had developed the capacity to exceed current needs:
“‘We are seeing the birth of a new industry in Russia,’ said Mikhelson, adding that Novatek has developed technology to liquefy gas.
“Russia has up to now relied on companies such as French oil major Total to build new plants and provide technology.”
—Reuters, 3 October 2018
Russian company TMK, which manufacturers technically sophisticated pipelines, has helped Russia’s energy companies access enormously profitable resources:
“Despite US and European sanctions and ever-increasing technical demands that some analysts said would be beyond Russian producers, the country’s oil and gas industry is booming, riding a surge in prices and a weaker rouble, and encouraged by initial successes in the largely untapped Arctic.”
—Financial Times, 5 June 2018
When sanctions deprived it of the advanced technology required to access Arctic oil, Rosneft simply developed its own. The Tsentralno-Olginskaya-1 oil well is “one of the most technologically challenging ever attempted in Russia. With the deposits located beneath the icy, frequently frozen waters of the Laptev Sea, cutting-edge horizontal drilling techniques will be used to reach up to 15,000m from the main site” (Financial Times, 19 April 2017).
Gazprom Neft (the oil arm of the natural gas giant and Russia’s third-largest oil producer):
“became the first Russian company to demonstrate shale oil fracking expertise with a 1km-long horizontal well 2.3km below ground at a site in the vast Bazhenov field, estimated to be the world’s largest shale oil deposit. Gazprom Neft was able to use homegrown technology that it was forced to develop after the sanctions prompted its international partners to walk away from the project.”
Russia’s energy sector not only dominates the country’s commodity exports, it dominates Russian capital export as well.
One of the measures of capital export is foreign direct investment (FDI), which refers to the investments made by one country in another, including buying a minimum of 10 percent equity in foreign companies. Traditionally, neocolonies have had limited outward FDI but greater inward FDI, as they are marginal capital exporters but significant capital importers, while imperialist countries tend to be both major capital exporters and capital importers.
There are serious limitations to using FDI as a measure of capital export, particularly from the standpoint of Marxist analysis. In a June 2018 article in Finance & Development (published by the International Monetary Fund [IMF]), Jannick Damgaard (senior economist at the National Bank of Denmark), Thomas Elkjaer (senior economist in the IMF’s Statistics Department) and Niels Johannesen (professor of economics at the University of Copenhagen) reported that “a stunning $12 trillion – almost 40 percent of all foreign direct investment positions globally – is completely artificial: it consists of financial investment passing through empty corporate shells with no real activity”:
“This type of financial tax engineering is a worldwide phenomenon that cuts across advanced and emerging market economies. In emerging market economies such as India, China, and Brazil, 50 to 90 percent of outward foreign direct investment goes through a foreign entity with no economic substance; the share is 50 to 60 percent in advanced economies such as the United Kingdom and the United States.… Globally, the average is close to 40 percent.”
It is difficult to ascertain exactly how much of Russia’s FDI is “round-tripping,” i.e., fraudulent transactions in which capital is sent abroad to avoid taxes and then returned to the home country. Damgaard, Elkjaer and Johannesen, based on a recent IMF working paper by Damgaard and Elkjaer (“The Global FDI Network: Searching for Ultimate Investors,” 2017), present figures indicating that around 25 percent of Russia’s outward FDI passes through foreign shell companies. The real percentage is likely much higher, possibly even as high as that of Britain or the U.S. Economist Kari Liuhto of the University of Turku estimates that while it is “impossible to state exactly what the precise amount of genuine outward FDI in Russian OFDI stock is[,]…if one excludes Cyprus and tax havens from the Russian OFDI stock, one may conclude that less than a half of the Russian OFDI could be characterized as genuine OFDI” (“Motivations of Russian firms to invest abroad,” 2015).
Conventional economics provides no good way to directly measure the Marxist concept of surplus value extraction through capital export. However, despite the very real limitations of FDI data, it is instructive to compare broad changes in Russian FDI figures with those of other countries over the past quarter century, as Russia’s transformation into an imperialist power in the early to mid 2000s is reflected in a shift in its FDI profile. Graph 1 presents figures for the flow of Russia’s outward FDI as a percentage of the world’s total outward FDI, which is of course dominated by imperialist countries. For comparison, the outward FDI figure is also given for Brazil, a neocolonial country that, as a regional power in South America, has exhibited some of the capital-exporting characteristics of imperialist powers and is often compared with Russia. From the early 1990s to the mid 2000s, Russia and Brazil followed a similar trend, from negligible foreign investors to emergent foreign investing powers. However, since the mid 2000s, Russia has maintained and increased its standing, averaging about 3% of the world’s total outward FDI flow in the decade 2007-2017. In that same decade, Brazil receded back to its previous status as a marginal capital exporter, accounting for only 0.2% of the world’s total outward FDI flow. For comparison, Canada had 4.1%, Italy 2.1% and Spain 2.6% in the same period.
Graph 1: Russian and Brazilian outward FDI flow as % of world total, 1993–2017 (data from UNCTAD)
The trend of Russia’s outward FDI since the mid 2000s indicates a departure from the profile of a neocolonial country and a convergence with the profile of an imperialist country. This transformation is further evident in Graphs 2 and 3, which present the absolute outward FDI figures (in millions of U.S. dollars) for Russia and three comparatively strong neocolonies (Brazil, India and Saudi Arabia) and for Russia and three second-tier imperialist countries (Canada, Italy and Spain).
Graph 2: Outward FDI flow, Russia and selected neocolonies, USD millions, 1992–2017 (data from UNCTAD)
Graph 3: Outward FDI flow, Russia and selected imperialist countries, USD millions, 1992–2017 (data from UNCTAD)
Bulatov notes that in Russia “FDI flows, offshore entities and conduit countries carry significant weight – 90 per cent of outflows and 97 per cent of inflows, with a focus on the Caribbean in outflows and Western Europe in inflows” (Transnational Corporations, 24(2), 2017). This is not to say that 90 percent of Russia’s outward FDI is round-tripping – indeed, the proportion is much lower. Russian capitalists use tax-haven countries and “special purpose enterprises” not only to round-trip money back to Russia but to export capital to third countries for genuine profitable investment. The practice of using “conduit” countries (or “offshore hubs”) as intermediaries for foreign investment in third countries is called “trans-shipment.” Bulatov goes on to explain:
“Leading conduit countries are Luxemburg, Ireland, Austria, Switzerland, the United Kingdom and the Netherlands. The last two, in addition to special purpose entities, have international financial centres and their own nets of offshore entities. The United Kingdom has 14 British overseas territories (including Cayman and the British Virgin Islands) and 3 crown dependencies (Jersey, Guernsey and the Isle of Man), which are offshore jurisdictions financially served by the City of London. The Netherlands has a smaller financial centre and a web of offshore jurisdictions – the Caribbean dependent territories of the Netherlands (Curacao, Bonaire, Sint Maarten, Sint Eustasius, Saba and Aruba).”
The complexity of examining the web of Russian foreign investments, which are often camouflaged by intermediaries, is highlighted by the example of telecom giant VEON (formerly VimpelCom), which is headquartered in Amsterdam. The sixth-largest mobile network operator in the world (with business in Russia, Pakistan, Algeria, Bangladesh, Ukraine and some central Asian countries), VEON is majority-owned by LetterOne Investment, itself based in Luxemburg but controlled by Russian billionaire Mikhail Fridman’s Moscow-based Alfa Group Consortium (Reuters, 24 July 2017). Although the source of the capital ultimately traces back to Russia, any investments LetterOne might make in VEON would be registered as outward FDI from Luxemburg while VEON investments abroad are booked as Dutch outward FDI.
Another key conduit country for Russian capitalists is Cyprus. Bulatov points out that:
“…at least five leading Russian Federation banks (VTB, Alfa Bank, AvoVAZbank, Privatbank, Promsvyazbank) have affiliates in Cyprus, as do numerous financial and investment affiliates of other Russian Federation parent companies. This island country is the most attractive offshore jurisdiction for Russian Federation investors…, not due to its corporate tax rate for offshore companies (which is higher than in many other offshore entities at 12.5 per cent) but due to numerous tax treaties with other offshore entities (which provide easy conduits to offshore entities with lower taxation rates) and also because the civil code of Cyprus is based on United Kingdom law.”
Bulatov reports that in 2014 Russia’s outward FDI stock (accumulated flow) in Cyprus was $105 billion, while the inward FDI stock in Russia from Cyprus was $101 billion (representing approximately 27% of Russia’s total stock for both measures). Undoubtedly some of the “Cypriot” capital exported to Russia was of German and other non-Russian origin, though a majority was almost certainly Russian.
Curiously, “Cyprus” is the largest foreign investor in Ukraine, with just under $14 billion FDI stock, as of January 2015. Nominally, Russia, with $2.7 billion FDI stock, is only the fourth-largest source of FDI in Ukraine, behind Cyprus, Germany and the Netherlands. However, accounting for trans-shipment, the OECD estimated the real level of Russian investments to be about $9.9 billion. Part of the figure included investments from “Dutch” company VEON.
The Eurasian Development Bank (EDB) has created its own database (taking trans-shipment and round-tripping into account) to better estimate real foreign investments by and in Eurasian countries (“Monitoring of direct investments of Russia, Belarus, Kazakhstan and Ukraine in Eurasia,” EDB Centre for Integration Studies, 2014), and its findings demonstrate that standard FDI measures can both exaggerate and minimize the real situation. For instance, in 2016, the EDB database shows the real Russian FDI stock in Cyprus to be negligible ($50 million) compared to the $150 billion reported using conventional means. The real figure for Russian FDI stock in the Netherlands was only $1.1 billion compared to the nominal $60 billion (“EAEU and Eurasia: Monitoring and Analysis of Direct Investments 2017,” EDB Centre for Integration Students, 2017). Conversely, standard accounts put Russian FDI in Pakistan and Bangladesh at zero, whereas the EDB database reveal $1.2 billion and $1.1 billion in FDI stock, respectively. Other large discrepancies reported for countries with supposedly miniscule Russian investments are Iraq ($4.3 billion in real investments, mostly by Lukoil), Egypt ($3.3 billion), Poland ($1.1 billion) and Romania ($1.6 billion).
In 2016, Russia’s total real outward FDI stock in Eurasia (excluding the Commonwealth of Independent States (CIS) and Georgia) was $85.7 billion. While Italy, Germany and Britain hosted about 40 percent of that amount, most of the rest was invested in neocolonies like Bulgaria, Poland, Romania, Estonia, Latvia, Lithuania, Greece, Serbia, Turkey, India, Vietnam and Mongolia. That same year, Russia had an additional $34.8 billion in FDI stock in Georgia and the CIS (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan) (“Monitoring of Mutual Investments in CIS Countries 2017,” EDB Centre for Integration Studies, 2017). Based on these figures, Russia has something on the order of $75 billion invested in neocolonies in Europe and Asia alone.
This demonstrates that, while Russian investment in imperialist countries is comparatively small, in neocolonies it can be hugely significant. Not only are Russian capitalists making profits from weaker countries, but it is often on a scale that can give Russia considerable leverage over those countries. Liuhto notes: “Compared to the EU, the USA and China, the importance of the Russian OFDI in some CIS countries is gargantuan. Russia covers, for instance, the bulk of the Tajik inward FDI stock and some 40-60 % of the Belarusian and Uzbek inward FDI stock” (“Motivations of Russian firms to invest abroad,” 2015). The Eurasian Development Bank’s database indicates that Russian investments also account for 50-75 percent of inward FDI stock in Abkhazia, South Ossetia and Armenia, 30-50 percent in Iraq and North Korea and other significant proportions in Pakistan and Ukraine. Russia invests approximately $1 billion annually in Kazakhstan, where about one-third of foreign companies are Russian (The Astana Times, 11 September 2017).
Writing with colleague Peeter Vahtra, Liuhto argues that the astronomical increase in Russian outward FDI in the early to mid 2000s fed into a virtuous circle of capitalist development in Russia:
“Russian companies have enhanced their international competitiveness by gaining increased access to natural resources, acquiring strategic assets worldwide and obtaining segments of the global market. High oil and raw material prices have yielded increasing export revenues, which have, in turn, supported the international expansion of Russian enterprises.”
—“Foreign operations of Russia’s largest industrial corporations – building a typology,” Transnational Corporations 16(1), April 2007
In The BRICS and Outward Foreign Direct Investment, Collins confirms the link between increased oil and natural gas revenues from sales and the increase in foreign capital export:
“Modern Russian MNEs [multinational enterprises] now display a high degree of horizontal and vertical integration of production capacities which also include distribution networks and banking, linking services to non-services outward FDI. Most Russian companies operating abroad retain strong ties with domestic natural resources. Until recently, most Russian MNEs were in the oil and gas, metallurgy, and electricity generation and distribution industries. Russian firms have exploited the ties to their natural resources base as collateral to raise loans for FDI, particularly during periods where the prices for these commodities were highest.”
The geographic orientation of Russian outward FDI has shifted somewhat over time. According to Amar Anwar and Mazhar Mughal in 2014 (“Why do Russian firms invest abroad? A firm level analysis”), Russian firms initially made major investments in nearby post-Soviet states:
“These investments mostly sought access to natural resources (for example Lukoil’s operations in Azerbaijan or the Russian steel maker Mechel’s investments in Kazakhstan), or to capture the countries consumer markets (for example Mobile TeleSystems’ investments in Ukraine’s and most other former Soviet Republics’ telecommunication networks, or electricity producer and supplier RAO UES’s operations in Armenia, Georgia, Moldova and Ukraine). However, preference for these Commonwealth of Independent States (CIS) countries has gradually waned.”
Russian investments have now expanded much further afield. In association with Russian investment fund United Capital Partners and Netherlands-based Trafigura Group, Rosneft recently purchased 98 percent of Essar Oil, the second largest private oil refining company in India, for close to $13 billion (The Indian Express, 15 October 2017).
The Canadian Broadcasting Corporation reports:
“Russia may have as much as $25 billion US tied up in Venezuela, largely in oil and gold, according to the Latin American Institute of the Russian Academy of Sciences.
By comparison, U.S. foreign direct investment in Venezuela was $6.6 billion in 2017, according to the Office of the U.S. Trade Representative, mainly in manufacturing and ‘information services.’”
—cbc.ca, 31 January 2019
As is typical of high-risk imperialist ventures, not all Russian overseas energy investments work out:
“In Venezuela, crumbling oil output is a threat to Russia’s Rosneft, which has invested billions of dollars in projects in the country, and is also owed around $1.6bn by the country’s state-owned oil producer PDVSA.
“Rosneft said in its 2018 annual report that it would only make a ‘final investment decision’ in 2020 on whether to develop two gasfields it acquired last December.
“Rosneft, in which the Russian government owns a majority stake, also faces potential issues in the semi-autonomous Iraqi region of Kurdistan, where it has spent $1.8bn to secure oil deliveries and pledged $400m more to develop new fields.
“That has angered the federal government in Baghdad, which insists all oil deals inside the country should be negotiated with them.”
—Financial Times, 5 June 2018
While capital export from the highly monopolized energy sector predominates, Russian corporations in other industries have made significant investments abroad, securing important markets and establishing an external revenue base. According to the EDB, the major sectors of Russian outward FDI in 2016 were oil and gas (34.3 percent), communication and IT (19.7 percent), finance (12.9 percent) and mechanical engineering (6 percent). Collins notes:
“In 2004, Russia’s leading mobile operator MTS acquired a 74 per cent share in Uzbekistan’s leading operator, Uzabunorbita. Russia’s second-largest mobile operator VimpelCom acquired a stake in Kazakhstan’s second-largest operator, KaR-Tel in 2005. VimpelCom also has operations in Tajikistan and the Ukraine, with plans to expand into Vietnam and Cambodia. Mobile TeleSystems (MTS) is a market leader in wireless communication in various CIS countries, including the Ukraine, Uzbekistan, Turkmenistan, Armenia, and Belarus. It is the largest company of Sistema Holdings, which itself has acquired licences to operate in India with plans to enter China and Bangladesh. VimpelCom is the most active globally expanding MNE among the Russian telecom firms.”
…“Russian telecommunications firms are rapidly catching up with the natural resources-based and heavy manufacturing-based conglomerates on the global scene.
“In software and IT services, Russia is behind only the US in the number of companies that operate internationally in this sector. There are also some globally active technology-based Russian MNEs, particularly in information and communications technology. The anti-virus internet firm Kaspersky was created in 1997 and had developed a global presence by the end of 2005, expanding into 10 foreign locations including in Asia, Europe, and the US. Another Russian high technology firm, NT-MDT (Nanotechnology-Modular Devices and Tools) established an affiliate in Ireland in 2005 to carry out assembly, testing, and after-sales services as well as research and development. The Russian holding company GIS acquired French microelectronics manufacturer Altis Semiconductor in 2007.… The Russian IT sector is now perceived to be highly stable and is consequently able to attract capital from private and institutional investors to fuel internationalization.”
Wladimir Andreff reports:
“…Russian OFDI started booming in the 2000s in more modernised parts of the manufacturing industry with Sistema group (which owns MTS) in telephone production, Sitronics in telecom equipment, Vimpelcom, Altimo, Megafon and Alfa Group in telecom, Korolev Rocket and Space Corporation Energia in aeronautics, RTI Systems in aerospace and missile production, NPO Mashinostroyenia in military equipment. Big Russian insurance and financial companies and big banks have developed and internationalised in the formerly underdeveloped (Soviet) services industry such as Sberbank, VTB, Gazprombank, Alfa-bank and Bank of Moscow.”
—“Outward Foreign Direct Investment from BRIC countries,” The European Journal of Comparative Economics 12(2), 2015
Digital Sky Technologies (DST) Global, headquartered in Hong Kong but owned by Russian tech billionaire Yuri Milner and supported in part by VTB Bank, has invested billions of dollars in Facebook, Twitter, Spotify, Airbnb, Alibaba and other internet companies (New York Times, 5 November 2017). Milner has also invested several hundred million dollars in India (iPleaders.in).
None of this is to suggest that Russia is on the same economic level as first-tier imperialist countries, although it compares on many measures with lesser but well-established imperialists. While Russian industrial corporations have made massive investments abroad, “no one Russian MNC has entered yet the list of top 100 biggest non-financial MNCs ranked by UNCTAD according to the value of their foreign assets” (Andreff). That list is dominated by the U.S., Britain, Germany, Japan and France. Like Russia, Canada has none, and the Netherlands has only one entry (the Amsterdam-based French telecom Altice), as do Belgium and Australia. Russia’s banking system (i.e., financial capital in the narrow sense of the term) is comparatively weak, having, for instance, no presence on UNCTAD’s list of the top 50 financial transnational corporations (TNCs). Nor does Belgium, while Italy, Spain and Canada each have only one.
The reasons why Russian corporations invest abroad are complex, but it is clear that the astronomical growth of Russia’s outward FDI in the mid 2000s was accompanied by a shift away from capital flight to profit-seeking and market-procuring through various means. One study explains “the changing strategies of outward investing Russian firms: in the early 1990s, they were mostly privately owned TNCs, seeking ‘safety nests’ abroad to protect themselves from domestic uncertainty; these days, State-owned or -influenced TNCs dominate Russian capital exports, motivated by a desire to control the value chain of their products” (Kalman Kalotay and Astrit Sulstarova, “Modelling Russian outward FDI”). UNCTAD adds that Russia’s profile differs from that of the other so-called BRIC countries:
“In contrast to TNCs from other BRICS countries, the main aim of Russian TNCs is not simply to secure the supply of raw materials to their home country, but also to expand their control over the value chains of their own natural resources, to build sustainable competitive advantages vis-à-vis other firms, and to strengthen their market positions in key developing countries. For example Rosneft formed [a] joint-venture with CNPC (China) to develop oil extraction projects in the Russian Federation and downstream operations in China.”
Another study observes:
“The typical FDI motives of Russian multinationals, especially in mergers and acquisitions (M&As), are quests for markets and resources.… Their FDI can also be strategic-asset-seeking, especially for Russian machinery MNEs from the ‘second echelon’.… For example, Borodino group acquired Jobs and some other Italian companies in 2007–2009 to strengthen its machine-tool division. Efficiency-seeking FDI is driving Russian MNEs’ investments abroad only in a few countries where labor costs are lower than in Russia. Such FDI is more typical for mid-sized MNEs. For instance, the Russian leader of the clothing industry, Gloria Jeans, has built several workshops in Ukraine.”
—“Global Expansion of Russian Multinationals after the Crisis: Results of 2011,” Vale Columbia Center on Sustainable Investment, April 2013
Imperialist countries invest in neocolonies for a variety of reasons: to obtain natural resources and markets; to secure spheres of influence for geopolitical purposes; and to make super-profits by exploiting cheap labor. Russian investments are based on the same motives, though as a newcomer on the imperialist stage, strategic/geopolitical calculations are likely more prominent than they are for other imperialists – Russia appears to have a longer-term perspective aimed at securing further markets and spheres of influence. Moscow often brokers deals to cut the price of its energy commodities in exchange for domination of local markets and access to investment opportunities. Yet Russia, although its own labor costs are very low compared to other imperialist powers, still engages in “efficiency-seeking” investment as well. While it invests in imperialist countries and in neocolonial countries where wages are higher (e.g., Poland), it also exports capital to several neocolonial countries where wages are lower than in Russia (see Graph 4).
Graph 4: Nominal monthly wage 2017 (national currency converted to USD end of 2018). Data from ILO, Global Wage Report
It is characteristic of imperialist powers that they form more or less temporary alliances with each other, in a series of shifting and competing blocs. During the Cold War period, under the “Washington Consensus,” this setup was remarkably stable, but since then the cracks have already shown. The U.S. has tried to minimize the influence of Russia in the global capitalist institutions it dominates, such as the IMF, World Bank, the WTO and G7 (previously the G8, including Russia), which themselves represent uneasy alliances between the U.S. and its EU and Japanese competitors. But Russia is not isolated in the global capitalist system. Aside from exercising its geopolitical muscle in the UN Security Council, Russia has initiated and/or participated in competing bodies, including the Eurasian Economic Union and the Shanghai Cooperation Organization, along with China. In a sense, Moscow’s diplomacy and geopolitical strategy reflect a defensive posture, as its sphere of influence in Eastern Europe has been encroached upon by Western imperialism since the fall of the Soviet Union. Vladimir Putin has indicated on several occasions a willingness to cooperate, essentially as a junior partner, with the U.S., which has nonetheless spurned his advances. It is in this context that Russia has sought to reassert itself as a global power befitting its transformation from an economically disintegrating neocolony in the 1990s into a viable, albeit economically weak, imperialist state in the 2000s. Its efforts have been unexpectedly successful.
In August 2008, Russia quickly smashed the attempt by Georgia to regain control of South Ossetia, demonstrating to the world a capacity to exercise its considerable military power independently of the will of Western imperialism. The war hawks in Washington, such as the late Senator John McCain, were virtually frothing at the mouth at the audacity of Russia in attacking their client state in the Caucasus. In Ukraine in 2014, following the overthrow of the Moscow-friendly Yanukovych government by Western-backed far-right forces, Russia assisted separatist rebels in Eastern Ukraine and annexed Crimea, home to the important Russian naval base in Sevastopol.
The complicated civil war in Ukraine and the geopolitical tug-of-war between Western and Russian imperialists undergirding it are conflicts in which Marxists take no sides. While we support the right of all nations to self-determination, in the case of the interpenetration of different peoples in Eastern Ukraine, it is impossible to resolve this question equitably for all sides under capitalism. The presence of an inter-imperialist territorial struggle even complicates more “traditional” national questions. A majority of Crimeans voted to re-join Russia, and under normal circumstances Marxists would defend their right to do so. However, in the present context, we cannot affirm either the right of Russia to keep Crimea or the right of imperialist-backed Ukraine to retake it – to do so would mean promoting one or the other side in the inter-imperialist conflict between Russia and the West in which revolutionary internationalists should be dual defeatist.
Russia’s boldest move on the geopolitical chessboard has been to insert itself in the Middle East in an attempt to secure existing military and economic interests and minimize American meddling in the region. Moscow’s intervention in the Syrian civil war on the side of Bashar al-Assad was a decisive factor in shifting the balance of power back to the regime. Washington’s decision, announced in December 2018, to withdraw all U.S. troops from Syria due to military victory over ISIS was in effect a declaration of defeat – a major blow to the influence of the traditionally dominant imperialist powers in the region to the advantage of Russia.
Russia’s claiming of Crimea was primarily designed to protect the port at Sevastopol and the passage through the Kerch Strait into the Black Sea and then the Mediterranean. Russian vessels in the Mediterranean are based on the Syrian coast at Tartus, where Moscow’s support to the Assad government was rewarded in January 2018 with an agreement to vastly expand the existing naval base to house larger and nuclear-armed warships and for Russia to hold sovereignty over the territory. An accompanying deal covers the Khmeimim airfield, which was built in 2015 to facilitate Russian intervention in the war but is now being developed as a long-term Russian base in the Middle East (dw.com, 20 January 2017).
While no one is currently making much money out of war-torn Syria, there is potential for future gain. With naval and air bases established, Russia is now in a better position to protect and expand existing investments in Iraq and elsewhere in the region. Moscow and Damascus have been negotiating lucrative contracts for Russian capital:
“In accordance with an energy cooperation framework agreement signed in late January, Russia will have exclusive rights to produce oil and gas in Syria.
“The agreement goes significantly beyond that, stipulating the modalities of the rehabilitation of damaged rigs and infrastructure, energy advisory support, and training a new generation of Syrian oilmen. Still, the main international aspect and the key piece of this move is the final and unconditional consolidation of Russian interests in the Middle East.”
—Oilprice.com, 14 February 2018
Russia’s intervention in support of the Syrian government mirrors interventions of rival imperialists (the U.S., Britain and France in particular) in favor of anti-regime forces. Although these interventions have been less successful and at times less direct, the conflict as a whole is defined by inter-imperialist rivalry. As in Ukraine, Marxists have no side in the Syrian civil war or the imperialist struggle weaving through it and demand the departure of all imperialist forces from the region. We oppose all attacks on civilian populations and recognize the right of communities, including the Kurds, to defend themselves against genocidal pogroms.
The spectacular re-emergence of Russia as an imperialist power is both symptom and cause of the increasingly fractured system of inter-imperialist relations. The international situation is very fluid. A rapprochement between Russia and the U.S. is not out of the question, though the American military-industrial-intelligence complex appears determined to foreclose that option. As Russia turns east to strengthen its alliance with China, a bloc between Russian imperialism and its German/EU imperialist competitors also remains a possibility.
German capitalists reacted badly to the Western sanctions demanded by Washington following the events in Ukraine in 2014 and were stung by Moscow’s cancellation of the South Stream oil pipeline. Germany depends on Russia for about half of its natural gas imports, 40 percent of its crude oil imports and 30 percent of coal imports – somewhat more than other West European countries (New York Times, 11 July 2018). When Trump provoked Germany at the July 2018 NATO summit for being “captive to Russia because it’s getting so much of its energy from Russia,” Chancellor Angela Merkel tersely replied that Germany “can make our own policies and make our own decisions” (Ibid.). Nord Stream 2 (“owned entirely by Gazprom”), promising to double “the capacity of the existing trans-Baltic link, Nord Stream 1, which has been operational since 2011,” is scheduled for completion by the end of 2019 (Financial Times, 17 July 2018). Germany’s eager commitment to this project has sown divisions between Berlin and other, more American-inclined, European capitals.
Despite the fluidity in relations among the major imperialist powers, it is certain that the contradictions of global capitalism are likely to produce convulsive changes in the short and medium terms. Trade wars and shooting wars between imperialist powers are appearing ever more real possibilities in the coming period. In this context, it is the duty of revolutionaries to advance the perspective of working-class independence from the bourgeoisie and to advocate defeatism toward all imperialist powers. As always, the main enemy is at home. But for revolutionaries in imperialist powers this cannot mean, and for Leninists never has meant, support to the great power rivals of one’s own imperialists. Only proletarian socialist revolution, which requires building revolutionary parties across the globe, can save humanity from the nightmare of capitalism and imperialist war. In 1934, as the storm clouds of World War II were gathering, Leon Trotsky and his co-thinkers noted in “War and the Fourth International”:
“Lenin’s formula, ‘defeat is the lesser evil,’ means not defeat of one’s country is the lesser evil as compared with the defeat of the enemy country but that a military defeat resulting from the growth of the revolutionary movement is infinitely more beneficial to the proletariat and to the whole people than military victory assured by ‘civil peace.’ Karl Liebknecht gave an unsurpassed formula of proletarian policy in time of war: ‘The chief enemy of the people is in its own country.’ The victorious proletarian revolution not only will rectify the evils caused by defeat but also will create the final guarantee against future wars and defeats.”
…“It is indisputable at any rate that in our epoch only that organization that bases itself on international principles and enters into the ranks of the world party of the proletariat can root itself in the national soil. The struggle against war means now the struggle for the Fourth International!”