Letter From the Editors
A-listers from around the world jetted into Davos, Switzerland for this week’s headline event – the latest annual meeting of the World Economic Forum. Attendees included 116 billionaires, one representative from China and exactly zero Russian delegates (the forum does not invite countries or individuals under sanctions). Joe Biden, Xi Jinping, Rishi Sunak and Emmanuel Macron were all noticeably absent, leading many to question the forum’s overall relevance.
Be that as it may, this year’s theme was “Cooperation in a Fragmented World,” an apt choice considering the yawning gap between rich and poor, the economic consequences of the COVID‑19 pandemic and the ongoing conflict in Ukraine. According to the forum’s Global Risks Report, the most pressing threats are the cost-of-living crisis, extreme weather events and political confrontation, with the forum’s managing director Saadia Zahidi writing that the “new normal” requires a return to the basics of food, security and energy.
Indeed, security and energy are top concerns in Ukraine, which a senior US delegation visited in lieu of Davos. As Aleksei Zabrodin points out, the level of the officials in the delegation, which included US Under Secretary of State Wendy Sherman, indicated that there would be “comprehensive and substantive” talks with Ukrainian officials. The most urgent question for the delegation was whether Germany would allow other countries with Leopard tanks to send those tanks to Ukraine, which has been desperately pleading for them. The US delegation’s stopovers in Germany and Poland en route to Ukraine, as well as statements made by the Polish and Lithuanian presidents in Davos, seemed to indicate that Germany intends to greenlight the deliveries.
Meanwhile, Azerbaijan, a country friendly to Russia, is helping Ukraine out on the energy front by supplying it with generators in the face of plummeting temperatures and Moscow’s unrelenting attacks on Ukraine’s energy structure. According to Kiev Mayor Vitaly Klichko, “the situation is critical. We are fighting to survive.”
And just because Russia wasn’t invited to Davos doesn’t mean that it’s immune to these pressing threats. Even though the country is flush with energy reserves, it has fewer places to send its supplies now that Europe is rejecting them. As NG reports, it is currently seeking to form a gas alliance with Kazakhstan and Uzbekistan. Such an alliance would help Russia reroute its gas to Asia and allow the two Central Asian countries to cover their domestic gas shortages.
Another major issue for Russia is what the Global Risks Report refers to as a “dwindling” middle class. According to a poll conducted by the Federal Research Sociological Center, only 18% of Russians 35 and under can be classified as middle-class. The problem with this is that Russia – or any country for that matter – needs a “a large group within the country with high purchasing power that can generate enough demand for goods and services to boost all industries.” This is particularly important for Russia as it shifts to import substitution, because it will need someone to sell all those domestically produced goods to.
Russia’s middle class is also being diminished by the loss of citizens who have relocated abroad. This process may become harder, however, as some countries, like Kazakhstan, have started stiffening residence rules for Russian relocatees. According to new rules issued by the Kazakh authorities, Russians are now only allowed to stay in Kazakhstan for a total of 90 days out a 180-day period. If they want to stay longer, they will have to consider putting down deeper roots in the country by applying for permanent residence.
This crisis of the middle class may be the latest sign that Russian society is starting to splinter. Which brings us back to the forum’s theme. Perhaps those who want to save the world from fragmentation would do well to leave their private jets in their private hangars and get out and experience real life with the rest of us.