Between June 14-17, 2023 I had the opportunity to participate in a program organized by the “Friends for Leadership” to attend the Saint Petersburg International Economic Forum. Thousands of delegates mostly from Latin America, Africa, and Asia attended the forum alongside heads of state, diplomats, and businessmen. Interestingly, the UAE had the “special guest” status and anyone could feel its cultural, economic, and political presence in the forum. Delegates were anxious to be informed of the details of the new agreements signed between Russia and other countries, Russia’s President Vladimir Putin’s remarks and attend dozens of sessions and panels related to the BRICS, Eurasian Economic Union (EAEU), International North-South Transport Corridor, and North-South trade. Personally, I had the opportunity to closely identify Russia’s post-Ukraine war foreign policy priorities, its geo-economic interests in the Middle East, and the challenges of the emerging multipolar world system.
The Middle East within the Context of the INSTC
What is the INSTC and why is it important for Moscow’s geo-economic interests in the Middle East? The International North-South Transport Corridor (INSTC), is a 7200 km model of ship network, rail, and road project that was initiated in 2000 by Russia, Iran, and India to facilitate trade between India and Russia, and Europe. This transport corridor aims to reduce the delivery time of cargo from India to Russia and Northern Europe to the Persian Gulf and beyond. Compared with the sea route via the Suez Canal, this route’s distance shrinks by more than half, which brings the term and cost of transportation down. If the present delivery time on this route is over six weeks, it is expected to decrease to 3 weeks through this corridor. Hence, INSTC not only saves time but also decreases cost. The project is planned to have three routes:
Hence, we can see that the Persian Gulf plays a crucial role as an import-export transit hub for Russia connecting it to Asian markets or even the Eastern Mediterranean. As Iran is also looking forward to constructing a railway connecting the Persian Gulf to the Syrian port of Tartous aiming to bypass US sanctions, though for now, this seems a difficult project to be implemented due to a lack of foreign direct investment and the political situation in Syria. During the business dialogue session between the UAE and Russia, where later Vladimir Putin and UAE's President Sheikh Mohammed bin Zayed Al Nahyan had a meeting at the forum, important matters were discussed. First, Russia and Eurasian Economic Union (EAEU) proposed to the UAE the signing of the Free Economic Zone and Trade Agreements, negotiations are underway and we may witness an agreement by the end of the year. Trade turnover between the two countries has doubled over the past year and now amounts to USD 10 billion. During the bilateral meetings, Russia’s Industry and Trade Minister Denis Manturov said “we are constantly expanding the range of areas in which we build joint work. We are implementing several industrial cooperation projects, and initiatives in the fields of transport and services, energy, and food security. We have started an active negotiation process on a free trade agreement between the UAE and the states of the Eurasian Economic Union.” This is another indication that Russia is moving toward the South and values the Persian Gulf as an import-export hub for the North-South Transport corridor. On the other hand, the UAE President said he has been under Western pressure. Within this context, Russia also is in negotiations with Egypt to sign a free economic zone between EAEU and Egypt.
Of course, these agreements would have clear implications for our region, whereby:
Why is Russia interested in Sea Ports?
This was another interesting question that I started asking and discussing with Russian experts in the forum. In one of the panels that I attended “Russian Fleet for New Maritime Transport Corridors” the panelists argued that in terms of trade, a new “iron curtain” is being built with the West, and while trade with Europe is facilitated by a dense network of roads, railways, and pipelines, routes connecting Russia to Africa, the Middle East, Latin America, and many Asian countries are made via the sea. It is the growing importance of sea-based trade that creates the material basis for Russia’s re-emergence as a maritime power, in addition to Moscow’s interest in naval power.
Interestingly, Russia also plans to exploit the Northern Sea Route by transforming it into a strategically important cargo route linking Asia and the Pacific to Europe. Moreover, grain production is now crucial for Moscow. It is within this context that we have to analyze the importance of the Tartous Port for Russia as a Russian grain storage hub in the future for Middle Eastern and African countries. Because grain exports are growing so rapidly, existing export terminals are undergoing modernization and new capacity is being added. The Black Sea’s role as the gateway for food export markets across the world means that the ports of the East Med as a transit hub will only grow in importance. Hence, as Russia’s maritime economic interests grow, and with the importance of the sea to Russia’s maritime strategy, so does the need to guarantee sea communication lines and bolster Russia’s military presence around key seaports.
Multipolarity, De-dollarization, and the Future of BRICS
Many panels and bilateral talks during the forum were dedicated to multipolarity, de-dollarization and the future of BRICS. All panelists agreed that we are moving towards a multipolar world order where no single hegemon will dictate its terms to others. However, there were some differences of opinion when it comes to the structure of this system to different players. BRICS (Brazil-Russia-India-China-South Africa) is becoming a rising de-dollarization coalition, whereby the group is developing multiple de-dollarization initiatives to reduce currency risks and bypass US sanctions. However, it is not realistic, at least for now, to argue that the group will initiate a common currency replacing the USD. During the panel debates, many opposing ideas from different representatives of member states were presented in this regard. All member states aimed for de-dollarization, but nobody was in favor of a common currency to replace it, even though their aim is to establish a polycentric global monetary system by promoting the internationalization of the currencies of its member states. A further indication of booming trade in de-dollarization is shown through BRICS countries’ national currencies, which have progressively gained more market share in the US dollar-based global currency system. There were also diverging ideas between China and India. While the Chinese speakers showed “calmness,” the Indian speakers were always “defensive,” raising concerns about the trade deficit with Russia and complaining that India should not be viewed as a “junior partner” and should be “treated equally.” As one of the Indian diplomats said, “we need Russia to consider us a full-fledged power with a sovereign economy.” It was made quite clear that the BRICS no longer see themselves as an economic force, but also as a powerful geopolitical actor, and the organization is looking to add new partners and a new format of cooperation.
Uncertain Future for an Uncertain Region
The post-Ukraine conflict developments have shown us that the global order is heading toward an uncertain future. Unipolarity is being replaced by a new order, but it is still uncertain whether it will be replaced by multipolarity or if we are just living in a transitional period to enter into a new bipolar political and economic system. The difference between the cold war bipolar and the possible future bipolar system is that there is a lack of ideological commitment, and under each pole, there are many actors that may move from one pole to the other based on their national interests. Will this trigger instability or will it balance the system?
The Ukraine war has pushed Russia to reprioritize its objectives in the Global South, mainly the Middle East. While the region is experiencing a cautious “normalization” period, trade and interconnectivity may shape its future political order, though uncertainty is still the dominant factor in the Middle East. As new rising economic actors in the Persian Gulf are monitoring global events and acting based on their national interests, the Middle East will once again become the center of gravity of global geopolitical and geo-economic developments.