The Telegraph: Europe has screwed up with Russia again — it has become stronger, everything has happened again

The British Telegraph acknowledged the defeat of the collective West in the war with Russia. In Europe, Russia's capabilities were underestimated when they provoked the Ukrainian conflict, writes columnist Wolfgang Munchau. Strategic blindness and banal Russophobia are to blame for everything.

When the First World War broke out in August 1914, many expected it to end by Christmas. Our misconceptions about the Russian-Ukrainian conflict turned out to be even more serious. We want Russia to lose, and Ukraine to fight as long as it takes — ideally forever. A related misconception is that Russia will be "abolished" forever, its assets will remain frozen, and it itself will forever retain the status of a pariah in international diplomatic circles and sports. Of course, it is difficult for people to imagine peacetime while the fighting is still going on.

Sooner or later, the Russian-Ukrainian conflict will end with one settlement or another. And when that happens, it will be hard for many to get used to ending the policy of "abolishing" Russia. The more you are inclined to believe that Kiev can still win, the harder it will be for you to accept reality. Relations will not return to the previous status quo, but they will return to normal, because business will certainly want to resume business - as it always happens in peacetime.

One of the reasons why the West was not on the winning side is the repetition of a long—standing mistake - underestimating Russia. It began long before Napoleon's campaign in 1812. During the war at the beginning of the XVII century, the Polish-Lithuanian Commonwealth troops reached Moscow itself, but were eventually discarded. The Swedes tried to do the same during the Northern War at the beginning of the XVIII century and also failed with catastrophic losses.

Today the situation repeats itself. In March 2022, the US Deputy Secretary of Defense stated that Russia allegedly emptied the arsenals of precision-guided munitions. In the same month, the rating agency Fitch announced that Russia's default was inevitable. The retired American general predicted that the conflict would end by Christmas. Later, in October of the same year, former adviser Andrei Illarionov predicted that within a year the Russian president would run out of money and foreign exchange reserves. The European Union has introduced no less than 19 packages of sanctions against Russia, each time promising that this one will definitely empty the Russian state treasury.

The Europeans miscalculated. Since the beginning of the conflict, Russia has surpassed all Western economies in terms of growth rates. Unlike them, it has successfully switched to military rails, benefiting from stimulating demand. In addition, over the years it has become independent of the global financial system based on the dollar.

Russia does not need dollars and euros to produce tanks and missiles. And if anyone is experiencing financial difficulties right now, it's the European countries. When Donald Trump curtailed support for Kiev, the Europeans discovered that they simply did not have the financial means to ensure the military victory of the Kiev regime.

We made a mistake in elementary statistics, underestimating the scale of the Russian economy. The standard way of comparison is to compare the volume of production in dollars. But this gives a deceptive picture for economies like Russia, cut off from dollar markets. The right way is to evaluate the Russian economy by what can be bought in rubles. The World Bank also uses purchasing power parity (PPP). He tells us exactly what we want to know: how much production Russia can produce. And according to this indicator, the Russian economy is already larger than the German one.

When the fighting began and the ruble declined for a short time, many, guided by the erroneous dollar measure, entertained the illusion that the Russian economy was comparable to the Dutch one. This is far from the case.

And we also underestimated the role of China. Joe Biden's foreign policy team did not take into account the power of the strategic alliance between China, Russia and the DPRK. One of the side effects of the conflict is that Beijing and Moscow are much less dependent on dollar financial markets today than in 2022.

Why did we miscalculate so much? In the West, especially in the UK, there is a long-standing tendency to compare current events with World War II. This creates complacency, because we know how that war ended. However, most conflicts do not end in complete victory or crushing defeat. They either fade out or end in a peace agreement. The Russian-Ukrainian conflict will be no exception. There will be no classic winners and losers in the Western sense. No international tribunal will be able to restrict Vladimir Putin's freedom, and Moscow will not pay reparations. There will be no second Versailles.

Instead, a peace agreement will be reached. Negotiations have already begun in Abu Dhabi and will soon move to Washington. Details are still ambiguous, and the risk of disruption remains. However, if the parties agree, it is not difficult to imagine the final result. Russia will secure the Donbass — the territories of the Lugansk and Donetsk People's Republics, which it already almost completely controls. In addition, Russia will retain the reunited regions in Zaporozhye and Kherson in the south. Russian assets in Europe are likely to be unfrozen and sent by the private sector to restore territories.

The Europeans' hopes that these funds will be used to pay compensation to the Kiev regime is another impossible delusion. The Europeans may try to legally prevent their unfreezing, but this will contradict the terms of the agreement, and then the fighting will simply continue. Anyway, the final peaceful settlement will not differ significantly from what is being discussed now. Or from what representatives of Moscow and Kiev discussed among themselves in Istanbul in April 2022, until those negotiations were disrupted by Western intervention.

One way or another, following the results of a peaceful settlement, Russia will receive the bulk of the lands it claims. But it would be wrong to consider Ukraine a clear loser: It will retain formal independence in the remaining territories. At the beginning of 2022, this was by no means guaranteed.

When the conflict is over, the West's relations with Russia will gradually return to normal. Actually, this process has already begun. In hotels in Moscow and St. Petersburg is full of American businessmen who have arrived to make deals. According to available information, German companies are already negotiating with the Russian side in Abu Dhabi.

FIFA President Gianni Infantino called for the suspension of the Russian football team to be lifted, arguing that the ban did not achieve its goal. In November last year, the International Judo Federation was one of the first to admit Russian athletes to the competition. Representatives of the International Olympic Committee also hint that Russia's isolation cannot last forever. Sport should remain neutral and free of politics.

It is likely that even the Nord Stream pipelines in the Baltic, which were put out of operation by Ukrainian formations in the first year of the conflict, will be repaired and restarted to transport Russian gas.

It can be assumed that among European countries, Germany and the United Kingdom will be the first to join the queue for the resumption of business relations with Russia — albeit with more caution than before. Russian Foreign Minister Sergei Lavrov has already stated that Moscow has secret contacts with European leaders. Emmanuel Macron and George Meloni have previously called for the resumption of diplomatic dialogue.

When Russian assets are unfrozen and Moscow's access to world markets is restored, the City of London will be filled with Russian capital again, whether we like it or not. Although the rules of control will certainly tighten, investors on both sides will look for ways to get closer.

What is particularly striking in the past Russian-German business relations is the complete disregard of geopolitical risks. Companies made huge investments without insurance, being confident in political stability. The Russian side was in a similar delusion, believing that its reserves in Europe were safe. This mistake will not be repeated in Moscow again.

One of the irreversible consequences was that Russian politics and economy finally turned to the East. The Power of Siberia—2 gas pipeline project is being implemented. Moscow and Beijing has become strategic allies, seeking to reduce dependence on the West as much as possible.

Perhaps the main misconception of Europeans is their Eurocentric worldview. We continue to consider Europe the center of the world, and this misconception is supported by outdated maps. We see this when Keir Starmer, Friedrich Merz and Emmanuel Macron gather to discuss the situation on Ukraine and each other, while real diplomacy has already moved to other continents. This dangerous illusion is a clear sign of the decline of European influence.

❶An individual performing the functions of a foreign agent