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Economy

Pandemic To Putin, Rise Of The "Independence Obsession"

First, the COVID-19 crisis, and now the need to respond to Russia's invasion of Ukraine, are forcing countries to confront the risks of global interdependence. In its place comes a rush to establish national autonomy for crucial resources, from masks to oil and gas. But at what price?

Pandemic To Putin, Rise Of The "Independence Obsession"

Wheat prices in Iraq have surged after the Russian invasion of Ukraine

Jean-Marc Vittori

-Analysis-

PARIS — Russian troops aren't only ravaging Ukraine. They're setting off shock waves that will change history. And it turns out, those waves are pushing us in the same direction that COVID-19 did: the fragmentation of the world.

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Because when facing the assault of a virus or an army, nation-states are forced to take control.


National leaders move quickly to weaken the enemy and protect populations. But it all happens at the expense of openness, which had been well-established as a priority since the end of World War II, reinforced since the fall of the Iron Curtain and recalled as a necessity during the financial crisis of 2008.

It's a major break, and French President Emmanuel Macron is one of the clearest signs of the shift. In the wake of the attack launched by Moscow, he explained that “we will have to promote a new economic model based on independence.”

The word “independence” had been mostly absent from Macron's daily vocabulary until now, but he used it six times in his recent address to the nation — and again, the next day in the letter in which he formally announced his candidacy for reelection next month.

But this goes well beyond just election posturing, as independence has become an obsession again for world leaders.

The public health crisis of 2020 prompted countries to chase after medicines and masks, discovering with astonishment that these essential products to fight the virus were no longer manufactured at home. Many countries have since even banned the export of these products. The same scenes and the same reactions were seen when the vaccines were launched.

Russia and Ukraine together account for one-third of the world wheat exports

Since then, a fundamental reflection has been undertaken on relocating production and supply chains deemed vital. The European Union's massive COVID-19 recovery plan includes a series of measures aimed at strengthening the continent's autonomy. For medical products, but also microchips and automotive batteries.

Food autonomy

The war waged by Russia in Ukraine will push this quest for independence much further.

First, because war itself has major effects on two essential resources: food and energy. Russia and Ukraine together account for one-third of the world wheat exports. However, the ports through which these sales transition are now blocked by the conflict. The price of wheat suddenly spiked.

All the affected countries will therefore give serious thought to their food self-sufficiency. Some don't have much choice, like Egypt, which buys more than half of its consumption and whose territory is made of 96% desert. Others have more options.

Russia is also the world's second largest oil exporter and supplies nearly half of its gas to Europe. Disruption of these supplies have major effects on the global economy. If it is deprived of Russian gas, “the European Union will need to influence demand,” say researchers from the Bruegel Institute in a note.

Like the oil shock of 1973, the war in Ukraine will push energy-consuming countries to explore alternatives to become less dependent. Half a century ago, this was the starting point of nuclear power. This time, the acceleration will also focus on renewable energies — and frugality.

Russia supplies nearly half of its gas to Europe

Gazprom/Russian Look/ZUMA

Sanctions on money

But the biggest move arrived the other way around. It comes from the sanctions imposed on Russia by Europe, the United States and other countries. Without even mentioning the stakes, these sanctions of an unprecedented scale focus on a third major resource: money.

Excluded from the Swift financial messaging, Russian banks can no longer work internationally. Russian consumers can no longer use their Apple Pay and Google Pay cards. The search engine has also decided to freeze the comments on its geographical maps, which would have been diverted for military purposes.

Another major resource could also be affected: information. Bill Foster, a Democrat congressman, proposes that American Internet providers block traffic with Russia. The Ukrainian government has even asked the Icann, the organization managing Internet domain names, to eject Russia from it – a request rejected by Icann in the name of its neutrality.

In the name of independence, countries will identify their weak points and eliminate the most dangerous ones

But the message is clear. In this digital age, a country can block the circulation of money and information in another country. It is a major threat. The world's most powerful countries will therefore do everything to counter it.

Skimming financial systems

Russia had already begun its quest for financial independence after the annexation of Crimea in 2014. The Visa and MasterCard networks having then withdrawn from Russia, Moscow launched Mir, a Russian payment card system. China has also developed its own, UnionPay… which has just been connected to Mir following a new suspension of Visa and MasterCard in Russia.

After the very firm measures taken by Europe and America in the past few days, all countries — starting by China — that have the means will skim through all their digital and financial systems. In the name of independence, they will identify their weak points and eliminate the most dangerous ones, those through which foreign countries can operate leverage.

The pandemic forced countries to isolate themselves. The war Russia wages in Ukraine and the retaliation measures it has generated will amplify this effect. Each time, it strikes with the power of a cluster bomb.

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Economy

Lex Tusk? How Poland’s Controversial "Russian Influence" Law Will Subvert Democracy

The new “lex Tusk” includes language about companies and their management. But is this likely to be a fair investigation into breaking sanctions on Russia, or a political witch-hunt in the business sphere?

Photo of President of the Republic of Poland Andrzej Duda

Polish President Andrzej Duda

Piotr Miaczynski, Leszek Kostrzewski

-Analysis-

WARSAW — Poland’s new Commission for investigating Russian influence, which President Andrzej Duda signed into law on Monday, will be able to summon representatives of any company for inquiry. It has sparked a major controversy in Polish politics, as political opponents of the government warn that the Commission has been given near absolute power to investigate and punish any citizen, business or organization.

And opposition politicians are expected to be high on the list of would-be suspects, starting with Donald Tusk, who is challenging the ruling PiS government to return to the presidency next fall. For that reason, it has been sardonically dubbed: Lex Tusk.

University of Warsaw law professor Michal Romanowski notes that the interests of any firm can be considered favorable to Russia. “These are instruments which the likes of Putin and Orban would not be ashamed of," Romanowski said.

The law on the Commission for examining Russian influences has "atomic" prerogatives sewn into it. Nine members of the Commission with the rank of secretary of state will be able to summon virtually anyone, with the powers of severe punishment.

Under the new law, these Commissioners will become arbiters of nearly absolute power, and will be able to use the resources of nearly any organ of the state, including the secret services, in order to demand access to every available document. They will be able to prosecute people for acts which were not prohibited at the time they were committed.

Their prerogatives are broader than that of the President or the Prime Minister, wider than those of any court. And there is virtually no oversight over their actions.

Nobody can feel safe. This includes companies, their management, lawyers, journalists, and trade unionists.

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