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Russia and the World: 2022 IMEMO Forecast
Analysis and Forecasting. IMEMO Journal
DOI: 10.20542/afij-2022-1-13-39
© Dynkin A.A., Baranovsky V.G., Kobrinskaya, I.Y., Machavariani G.I., Adno Y.L., Afontsev S.A., Bogaevskaya O.V., Bogacheva A.S., Vartazarova L.S., Voda K.R., Volodin A.G., Davydov A.A., Danilin I.V., Desyatsky E.A., Dmitriev S.S., Zhukov S.V., Zhuravleva V.Y., Zagashvili V.S., Zvyagelskaya I.D., Ibragimov I.E., Kanaev E.A., Kvashnin Y.D., Kislitsyn S.V., Kopytin I.A., Kramnik I.A., Kudinova O.N., Kupriyanov A.V., Lazovsky S.O., Leontyeva E.L., Lomanov A.V., Lukashin Y.P., Lukonin S.A., Malashenko A.V., Malysheva D.B., Mamedyarov Z.A., Medzhidova D.D., Migranyan A.A., Mirkin Y.M., Nevskaya A.A., Nikitina E.N., Podkolzina I.A., Popov V.V., Pritchin S.A., Samarskaya L.M., Svistunova I.A., Solovyev E.G., Surkov N.Y., Tyukaeva T.I., Utkin S.V., Fedorovsky A.N., Frumkin B.E., Khudyakova L.S., Shvydko V.G., Shirokov S.S., 2022
Received 23.01.2022.
Revised 18.02.2022.
Accepted 05.04.2022.
 
Alexander A. DYNKIN, Academician, Dr. Sci. (Econ.), President of IMEMO (dynkin@imemo.ru), ORCID: 0000-0002-4183-914X
 
Vladimir G. BARANOVSKY, Academician, Dr. Sci. (Hist.), Head of Research, Center of Situational Analysis (baranovsky@imemo.ru), ORCID: 0000-0002-7283-0244
 
Irina Y. KOBRINSKAYA, Cand. Sci. (Hist.), Head of Center, Center of Situational Analysis (psifoundation@imemo.ru), ORCID: 0000-0002-4419-0681
 
Givi I. MACHAVARIANI, Head of Section, World Economy and Policy Forecasting Section, Center of Forecasting Studies (g.machavariani@imemo.ru), ORCID: 0000-0002-4948-2624
 
Yuri L. ADNO, Cand. Sci. (Technol.), Leading Researcher, Group of Commodity Markets and Business Services Analysis, Center of Industrial and Investment Studies, IMEMO (adno@imemo.ru)
 
Sergey A. AFONTSEV, Corresponding member, Dr. Sci. (Econ.), RAS professor, Deputy Director for Scientific Work, Head of the Department, Department of Economic Theory (afontsev@gmail.com), ORCID: 0000-0003-0887-4768
 
Oksana V. BOGAEVSKAYA, Cand. Sci. (Econ.), Senior Researcher, US Economic Research Group, Center of North American Studies (bogaevsk@imemo.ru), ORCID: 0000-0003-2127-0475
 
Anastasia S. BOGACHEVA, Junior Researcher, Regional Relations Study Group, Center of the Middle East Studies (anastasia.s.bogacheva@gmail.com), ORCID: 0000-0003-0556-6719
 
Lyudmila S. VARTAZAROVA, Dr. Sci. (Econ.), Chief Researcher, Group of Analysis of the Current Economic Problems, Center of Situational Analysis (vls38@mail.ru)
 
Kristina R. VODA, Cand. Sci. (Polit. Sci.), Senior Researcher, Group of Economics and Politics of Japan, Center of Asia Pacific Studies (vodakris@gmail.com), ORCID: 0000-0003-2775-0875
 
Andrey G. VOLODIN, Dr. Sci. (Hist.), Chief Researcher, Group of Regional Political Problems of the East and South, Center of Development and Modernization Studies (andreivolodine@gmail.com), ORCID: 0000-0002-0627-4307
 
Alexey A. DAVYDOV, Cand. Sci. (Polit. Sci.), Researcher, Section of US Foreign and Domestic Policy, Center of North American Studies (adavydov@imemo.ru), ORCID: 0000-0002-8899-8746
 
Ivan V. DANILIN, Cand. Sci. (Polit. Sci.), Head of the Department, Department of Science and Innovation, Head of Section, Section of Innovation Policy (danilin.iv@imemo.ru), ORCID: 0000-0002-4251-1998
 
Ekaterina A. DESYATSKY, Junior Researcher, Section of US Foreign and Domestic Policy, Center of North American Studies (elobastova@imemo.ru)
 
Sergei S. DMITRIEV, Cand. Sci. (Econ.), Leading Researcher, US Economic Research Group, Center of North American Studies (america@imemo.ru), ORCID: 0000-0003-2538-8219
 
Stanislav V. ZHUKOV, Dr. Sci. (Econ.), Deputy Director for Scientific Work, Chief Research Fellow, Center of Energy Research (zhukov@imemo.ru), ORCID: 0000-0003-2021-2716
 
Victoria Y. ZHURAVLEVA, Cand. Sci. (Polit. Sci.), Head of Center, Center of North American Studies (zhvika@imemo.ru), ORCID: 0000-0003-1911-625X
 
Vladislav S. ZAGASHVILI, Dr. Sci. (Econ.), Head of Section, Section of the Foreign Economic Policy, Department of Global Economic Problems and Foreign Economic Policy (zagashvili@imemo.ru), ORCID: 0000-0002-2037-5729
 
Irina D. ZVYAGELSKAYA, Dr. Sci. (Hist.), Head of Center, Center of the Middle East Studies (zvyagel@imemo.ru), ORCID: 0000-0002-5937-9997
 
Ibragim E. IBRAGIMOV, Junior Researcher, Regional Relations Study Group, Center of the Middle East Studies (ibragimov.ie@imemo.ru), ORCID: 0000-0001-9669-4243
 
Evgeny A. KANAEV, Dr. Sci. (Hist.), Lead Researcher, Group of the Asia-Pacific Region Problems, Center of Asia Pacific Studies (ekanaev@hse.ru), ORCID: 0000-0002-7988-4210
 
Yuri D. KVASHNIN, Cand. Sci. (Hist.), Head of Center, Center of European Studies (kvashnin@imemo.ru), ORCID: 0000-0003-2042-7215
 
Sergey V. KISLITSYN, Cand. Sci. (Polit. Sci.), Head of Center, Center of Strategic Planning Studies (skislitsyn@imemo.ru), ORCID: 0000-0002-8438-7964
 
Ivan A. KOPYTIN, Cand. Sci. (Econ.), Head of Center, Center of Energy Research (kopytin@imemo.ru), ORCID: 0000-0002-7824-2670
 
Ilya A. KRAMNIK, Junior Researcher, United States and Canada Ocean Policy Research Group, Center of North American Studies (ikramnik@imemo.ru), ORCID: 0000-0003-1716-6261
 
Olga N. KUDINOVA, Cand. Sci. (Econ.), Senior Researcher, Group of Commodity Markets and Business Services Analysis, Center of Industrial and Investment Studies (kudinova@imemo.ru)
 
Aleksei V. KUPRIYANOV, Cand. Sci. (Hist.), Head of Group, Group of South Asia and Indian Ocean, Center of Asia Pacific Studies (a.kupriyanov@imemo.ru), ORCID: 0000-0002-9041-6514
 
Stanislav O. LAZOVSKII, Junior Research Fellow, Group of Common Problems in the Region, Center of the Middle East Studies (stas-jesin@yandex.ru), ORCID: 0000-0003-1249-3634
 
Elena L. LEONTYEVA, Cand. Sci. (Econ.), Chief Researcher, Group of Economics and Politics of Japan, Center of Asia Pacific Studies (e_leont@voxnet.ru)
 
Alexander V. LOMANOV, Dr. Sci. (Hist.), RAS Professor, Deputy Director for Scientific Work, Head of Center, Center for Asia Pacific Studies (Lomanov@imemo.ru), ORCID: 0000-0003-2676-4271
 
Jury P. LUKASHIN, Dr. Sci. (Econ.), Lead Researcher, World Economy and Policy Forecasting Section, Center of Forecasting Studies (loukaschin@imemo.ru)
 
Sergey A. LUKONIN, Cand. Sc. (Econ.), Head of Section, Section of Economy and Politics of China, Center of Asia Pacific Studies, IMEMO (sergeylukonin@mail.ru), ORCID: 0000-0002-8120-0420
 
Alexey V. MALASHENKO, Dr. Sci. (Hist.), Chief Researcher, Group of Strategic Assessment, Center of Situational Analysis (AMalashenko@doc-research.org), ORCID: 0000-0001-8862-304X
 
Dina B. MALYSHEVA, Dr. Sci. (Polit. Sci.), Head of Section, Section of Central Asia, Center of Post-Soviet Studies (dsheva@mail.ru), ORCID: 0000-0002-8625-6132
 
Zaur A. MAMEDYAROV, Cand. Sci. (Econ.), Head of Section, Section of Science and Innovation, Department of Science and Innovation (mamedyarov@imemo.ru), ORCID: 0000-0002-4336-1020
 
Dzhanneta D. MEDZHIDOVA, Junior Researcher, World Economy and Policy Forecasting Section, Center of Forecasting Studies (medzhidova@imemo.ru), ORCID: 0000-0003-1063-3162
 
Azganush A. MIGRANYAN, Dr. Sci. (Econ.), Leading Researcher, Section of the Caucasus, Center of Post-Soviet Studies (n.mihranyan@yandex.ru), ORCID: 0000-0001-6014-5955
 
Yakov M. MIRKIN, Dr. Sci. (Econ.), Head of Department, Department of International Capital Markets (yakov.mirkin@gmail.com), ORCID: 0000-0003-2507-9811
 
Anastasia A. NEVSKAYA, Cand. Sci. (Econ.), Head of Section, Section of the EU Studies, Center of European Studies (nevskaya@imemo.ru), ORCID: 0000-0002-3939-8760
 
Elena N. NIKITINA, Cand. Sci. (Econ.), Head of Section, Section of the Global Economic Problems, Department of Global Economic Problems and Foreign Economic Policy (elenanikitina@imemo.ru), ORCID: 0000-0002-8431-7990
 
Inna A. PODKOLZINA, Cand. Sci. (Econ.), Senior Researcher, Section of the EU Studies, Center of European Studies (inna.a.podkolzina@gmail.com), ORCID: 0000-0002-9243-7992
 
Vladimir V. POPOV, Cand. Sci. (Military), Senior Researcher, Section of Corporate Governance and Investment Problems Center of Industrial and Investment Studies (vlvaspopov@rambler.ru), ORCID: 0000-0001-5299-958X
 
Stanislav A. PRITCHIN, Cand. Sci. (Hist.), Senior Researcher, Section of Central Asia, Center of Post-Soviet Studies (Pritchin.stanislav@yandex.ru), ORCID: 0000-0001-9464-9836 
 
Lyudmila M. SAMARSKAYA, Junior Researcher, Regional Relations Study Group, Center of the Middle East Studies (saluma@imemo.ru), ORCID: 0000-0003-4596-4404
 
Irina A. SVISTUNOVA, Cand. Sci. (Hist.), Senior Researcher, Regional Relations Study Group, Center of the Middle East Studies (isvistunova@imemo.ru), ORCID: 0000-0001-5191-9090
 
Eduard G. SOLOVYEV, Cand. Sci. (Polit. Sci.), Head of Center, Center of Post-Soviet Studies, Head of Section, Section of Political Theory (solovyev@imemo.ru), ORCID: 0000-0002-4433-3291
 
Nikolay Y. SURKOV, Cand. Sci. (Polit. Sci.), Senior Researcher, Group of Common Problems in the Region Center of the Middle East Studies (nsurkov@imemo.ru), ORCID: 0000-0001-7185-7990
 
Tatiana I. TYUKAEVA, Cand. Sci. (Polit. Sci.), Researcher, Group of Common Problems in the Region, Center of the Middle East Studies (tatyana-tyukaeva@yandex.ru), ORCID: 0000-0003-0758-4187
 
Sergey V. UTKIN, Cand. Sci. (Polit. Sci.), Head of Group, Group of Strategic Assessment, Leading Researcher, Center of Situational Analysis (sv.utkin@gmail.com), ORCID: 0000-0003-3275-7297
 
Aleksander N. FEDOROVSKY, Dr. Sci. (Econ.), Head of Group, Group of the Asia-Pacific Region Problems, Center of Asia Pacific Studies (a.fedorovsk@imemo.ru), ORCID: 0000-0002-3892-8432
 
Boris E. FRUMKIN, Cand. Sci. (Econ.), Head of Group, Group of Analysis of the Current Economic Problems, Leading Researcher, Center of Situational Analysis (boris.frumkin@mail.ru), ORCID: 0000-0002-1821-0140
 
Ludmila S. KHUDYAKOVA, Cand. Sci. (Econ.), Head of Department, Department of Global Economic Problems and Foreign Economic Policy (l.khudyakova@imemo.ru), ORCID: 0000-0001-6680-6734
 
Vitaly G. SHVYDKO, Cand. Sci. (Econ.), Head of Group, Group of Economics and Politics of Japan, Center of Asia Pacific Studies (v_shvydko@mail.ru), ORCID: 0000-0002-7784-1655
 
Sergey S. SHIROKOV, Researcher, World Economy and Policy Forecasting Sector, Center of Forecasting Studies, IMEMO (shirokov@imemo.ru).
 
Primakov National Research Institute of World Economy and International Relations (IMEMO), Russian Academy of Sciences (RAS).
 
Corresponding author: Irina Y. KOBRINSKAYA (psifoundation@imemo.ru), ORCID: 0000-0002-4419-0681, Primakov National Research Institute of World Economy and International Relations Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation.
 
Contribution of the authors:
Dynkin A.A., Baranovsky V.G. – scientific management, research concept.
Kobrinskaya I.Y. – scientific management, research concept, methodology development, author of the ‘Politics’ section, conclusions.
Machavariani G.I. – scientific management, research concept, author of the ‘Economy’ section, conclusions.
Adno Y.L., Afontsev S.A., Bogaevskaya O.V., Dmitriev S.S., Zagashvili V.S., Kudinova O.N., Leontyeva E.L., Lukashin J.P., Lukonin S.A., Medzhidova D.D., Migranyan A.A., Nevskaya A.A., Nikitina E.N., Podkolzina I.A., Popov V.V., Frumkin B.E., Khudyakova L.S., Shirokov S.S. – authors of the ‘Economy’ section.
Bogacheva A.S., Voda K.R., Volodin A.G., Davydov A.A., Desyatsky E.A., Zhuravleva V.Y., Zvyagelskaya I.D., Ibragimov I.E., Kanaev E.A., Kvashnin Y.D., Kislitsyn S.V., Kramnik I.A., Kupriyanov A.V., Lazovskii S.O., Lomanov A.V., Malashenko A.V., Malysheva D.B., Pritchin S.A., Samarskaya L.M., Svistunova I.A., Surkov N.Y., Tyukaeva T.I., Fedorovsky A.N. – authors of the ‘Countries and regions’ section.
Vartazarova L.S. – author of the ‘Politics’ section.
Danilin I.V., Mamedyarov Z.A. – authors of the ‘Technology’ section.
Zhukov S.V., Kopytin I.A. – authors of the ‘Energy’ section.
Mirkin Y.M. – author of the ‘Finance’ section.
Solovyev E.G., Utkin S.V. – authors of the ‘Countries and regions’ and ‘Politics’ sections.
Shvydko V.G. – author of the ‘Economy’ and ‘Countries and regions’ sections.
Abridged English-language version of the annual IMEMO forecast ‘Russia and the World: 2022’ is dedicated to the analysis and the forecast of key trends in the world economy and international relations in 2022. The primary focus is on the issues that are of fundamental importance for ensuring stable economic and political development of Russia in the near (2022) and more distant future. In the preparation of the paper, the long-term experience of predictive research carried out by IMEMO RAS was used. The paper consists of three parts: global trends, economics, and foreign policy. Among the global trends accelerated digitalization and all related social, political, and economic changes; focus on technological competition; climate/environmental and energy agendas are coming to the fore; increasing geopolitical and geo-economic tensions and the raging global pandemic of COVID-19 are highlighted. In the world economy, the authors of the paper expect an increase in inflation, acceleration of digitalization amid intensifying technology competition and the pursuit of digital sovereignty, acceleration of decarbonization, launch of demethanization process, and shifts in food systems. The paper further assesses the prospects of the leading industry drivers of world economic growth in 2022: production of semiconductors; pharmaceuticals and biomedicine; rare earth, non-ferrous, and ferrous metals. In the next section of the paper, political and social trends are analyzed in the countries of North America, Europe, Pacific and South Asia, Post-Soviet space. The final section of the paper gives the forecast of the relations of the Russian Federation with its key foreign partners. Against the backdrop of the renewal of the global economy, which includes energy transition and accelerated digitalization, it is becoming vitally important for Russia to conduct a comprehensive balanced restructuring of the national economy and social sphere.
Translation: Artamonova U.Z., Samarskaya L.M., Sokolova P.S., Urumov T.R., translation editors Mamedyarov Z.A., Moiseeva D.E.

Keywords

The paper presents an abridged version of the 20th anniversary annual IMEMO forecast ‘Russia and the World: 2022’. It has become a good tradition to publish an English-language version of the forecast in a peer-reviewed journal, giving an insight into the thinking of a part of the Russian academic and policy community and encouraging academic debate on the critical issues for the international economy, foreign policy, and security 1 2 3.

The paper is based on the long-term experience of predictive research carried out by IMEMO RAS. It analyses the main external challenges for Russia and the potential responses to them.

Special attention was given to the global trend towards the intensification of geopolitical and geo-economic tensions urgently requiring strenuous efforts aimed at neutralizing it. The developments at the end of 2021, which took place after the publication of the Russian-language version of the forecast, confirmed this conclusion. The tightening of the Russian position on international security issues, as well as the proposals put forward by Russia to streamline and stabilize the military-political sphere in the Euro-Atlantic area under the modality of demands on the United States and NATO initially caused a wave of fears and almost apocalyptic forecasts. However, in a matter of days the prospect of agreements with the West to start discussing these issues at the very beginning of 2022, most likely under the auspices of the OSCE or in another format, was outlined.

It can be assumed that such an algorithm of ‘forcing negotiations and dialogue’, initiated by Moscow in order to induce all counterparties to take its interests into account, will become one of the central topics in relations between Russia and the world in 2022.

GLOBAL TRENDS 2022

Key drivers. The events of 2021 confirmed the conclusions of the IMEMO annual forecast ‘Russia and the World: 2021’, as well as the mid-term forecast ‘Russia and the World: 2024’ regarding the global economic and political development trends and scenarios. In the context of the raging global COVID-19 pandemic, accelerated digitalization and all related social, political, and economic changes; focus on technological competition; the imperatives of the climate/environmental and energy agendas and increasing geopolitical and geo-economic tensions have brought the whole world and Russia to 2022 in a different state, which is likely to become the ‘new normal’. These words turned out to be a self-fulfilling prophecy.

The main feature of 2022 and probably on the horizon of at least 3-5 years will be an unprecedented pressure from exogenous factors, which are both direct and applied through key stakeholders (state, public, and corporate), on redesigning the hierarchy and the essence of traditional factors that determine the global economics, politics, and security. This process has already begun, which is especially noticeable in energy and technology.

The essence of world politics in 2022 will be an ongoing adaptation of national states and their associations to the new conditions. At the current stage, the process will be based on the desire not so much to resist the negative consequences of the impact of exogenous factors per se, but to minimize the costs and damage for the development caused by adaptation to them. Active participation in global decision-making is needed for doing so. The system of institutions created after World War II, primarily the UN, can no longer cope with international governance, as was once again demonstrated by the UN Climate Change Conference 2021 (COP26).

In other words, the ‘new normal’ of 2022 is a state caused by a deficit of effective governance, at both national and international levels in crisis and post-crisis periods, as well as an acute deficit of trust within states, between society and government, and between states, even between allies and partners, against the background of ongoing COVID-19 pandemic. It has become commonplace to compare the current stage with the Hobbesian world of chaos. This picture is reinforced by the struggle between the ‘Leviathans’, namely the United States and China.

Along with the features of the ‘old normal’, the ‘new normal’ is likely to lead to redesigning of power configurations, both ad hoc and conventional, and will bring about some changes in the global and regional balances.

The exogenous drivers, the influence of which on world politics, economy, social life, and security will increase in 2022, include, first of all, epidemiological situation and climate. The former, caused by COVID-19, is associated with uncertainty concerning pandemic duration, virus mutation, human immune response, and, finally, the emergence of new strains which cannot be adequately predicted. At the same time, the pandemic has already given impetus to world-system changes: in way of life, socio-psychological state of the global society, economy, trade, technology, the structure of economy and finance, international relations, and security. Most of these shifts will be further developed in 2022 and beyond, regardless of the level of the epidemiological threat, which served as a powerful trigger for them in 2020-2021.

The factor of global climate change and environmental degradation, which has been discussed for a long time, has become sharply actualized in 2021, partly due to stress against the background of the pandemic, as well as due to high instability in the energy sector. Abnormal weather conditions demonstrated the unreliability, or at least the weaknesses of renewable energy technologies (wind, solar), which is considered one of the reasons for the energy crisis of 2021. As of early 2022, the volatility of the global energy market is highly likely to affect decision-making process in relation to energy transition, primarily in terms of time.

Along with that, the so-called ‘climatization’ of agenda of world politics and economy by 2022 has finally taken shape as a powerful tool of geopolitical, trade, economic, and technological competition.

The impact of exogenous drivers directly or indirectly affected the entire complex of political and economic world-system traditional features.

Political and social trends. The pandemic has caused a sharp increase in social imbalances within nation-states: not only in the developing and poor countries, but also in the rich leading powers. The jump in unemployment and the beginning of the restructuring of the labor market as well as the degradation and depreciation of the positions of the middle class caused tension, which has fallen on the fertile ground of social contradictions and protest activity of the recent years. The actions of governments, which can hardly keep the balance between compliance with epidemiological requirements and the need to maintain economic activity to prevent the collapse of businesses, especially small and medium-sized, cause discontent and protests among the population. The situation was aggravated around the world by the emergence of not yet a movement, but a large number of COVID dissidents, whose protests have further destabilized the internal political situation in many countries.

Public distrust of the authorities, significantly aggravated by the pandemic situation, which was admittedly not its only cause, forces the elites to make urgent fiscal decisions that could have negative consequences for the national economies. However, in addition to fiscal measures, the authorities are looking for external lightning rods. The trend towards the domination of the internal agenda over the external one, which has also been noted by experts in various countries and regions for a number of years, will intensify in 2022. This will complicate foreign policy processes, affect the world agenda, and likely weaken strategic stability. The migration crisis in Belarus became an extreme manifestation of these tendencies. However, these trends can be equally easily traced in the politics of China, Israel, Tajikistan, or quite prosperous Czech Republic and Poland.

In the same paradigm of rebalancing domestic and foreign policies with the stress of the pandemic as a backdrop, nationalism will continue to grow throughout the world. Its manifestations are multifaceted and have long-term consequences. A stake on sovereignty, both in politics and economics, primarily in technology, or techno-nationalism, is becoming its basic form along with growing distrust in world politics, even between allies, and the aggravation of geo-economic and geopolitical competition. The Trump administration first set the tone for this trend. However, such trend is clearly defined not only in Russia, China, or Turkey, but also in European countries that belong to exemplary integration associations. All of this reinforces the growing influence of regional and small players, often to the detriment of regional stability. In all likelihood, the zones of smoldering or ‘semi-frozen’ conflicts in the East of Ukraine and in Nagorno-Karabakh, where tensions increased at the end of 2021, will remain major risks to regional or even global security in 2022.

Within individual states, nationalist sentiments, sometimes taking extremist forms and fueled by the stress of the pandemic, will remain present in 2022 but there is no ground for their significant increase. In Europe, where the growth of nationalism in the last 5-10 years was a natural reaction to the integration process and the desire of Brussels to level everyone and everything, and was caused by migration waves, the protest, as 2021 has shown, is channeled into the fight against social inequality. At the same time, however, an understanding of the positive effect of a consolidated EU response to the pandemic crisis is emerging, especially among young people. Generally, it relieves the widespread fears for the integrity of the European Union in the foreseeable future. It should be noted that the offensive policy of Russia, as well as the unstable situation in the Eastern European states of the CIS, primarily in Belarus and Ukraine, influences the EU in the same consolidating way.

Meanwhile, experts predict the rise of a specific Asian nationalism, which is explained by a number of reasons. First of all, it is a reaction to the rise of nationalism in China, causing the nations to strengthen their sovereignties out of fears of the PRC domination. Then, it is a manifestation of national pride in development success, especially against the backdrop of a ‘sluggish’ Europe. This is also a specific stage in Asian states’ development. While in the first half of the 20th century they copied Western practices (European, American, or Soviet), striving to enter the world community built according to Western rules (secularism, linear borders, management system), now, against the background of the obvious crisis of the Western community and the simultaneous rapid development of the countries of the South, Southeast, and East Asia, Asian states are beginning to look for a civilizational foundation that would justify their rise as natural and predetermined. A new specific form of Asian nationalism is taking shape. It is not similar to the European one, for it provides for economic expansion, on the one hand, and the creation and division of spheres of political and military influence, on the other.

In other words, in the 2020s the shapes of a civilizational rift in the world order (if not a ‘clash of civilizations’), are becoming more visible.

The reliance on technological sovereignty, the localization of industries and production chains, which have intensified under the influence of the pandemic, in 2022 and onward will contribute to the trend towards regionalization of globalization and a change in the global balance, in which the huge Asian area is gaining momentum.

The ongoing confrontation between the United States and China operates in the same direction. In 2022, it is difficult to expect any softening of Washington’s position, especially taking into account the coming midterm elections in the United States. The position of Beijing, where the preparations for the 20th Congress of the CPC in 2022 are underway, is also becoming increasingly tough. Being close to a bipolar confrontation, the global rivalry between the US and China in 2022 and in the foreseeable future will apparently remain the key world-system axis determining the dynamics of development of the global economy, politics, and security.

Despite possible retreats caused by pragmatic reasons like the agreement between Beijing and Washington on ‘uncorking’ strategic oil reserves amid the autumn energy crisis, the confrontation will not only intensify and expand progressively into the military sphere, but also institutionalize. This is evidenced by the US-initiated Trilateral Agreement on the exchange of nuclear submarine technology and strengthening the security partnership in the Indo-Pacific region (AUKUS), signed in 2021 with Australia and the United Kingdom in addition to the Quadrilateral Security Dialogue (Quad: USA, Japan, India, and Australia) and the Five Eyes Intelligence Alliance (Australia, Canada, New Zealand, United Kingdom, and the USA).

Further erosion of traditional Western military-political structures, primarily NATO, is the flip side of the military-political strengthening and the creation of an allied ‘network’ / ‘platform’ in the Indo-Pacific region aimed at containing the PRC. The multi-billion dollar deal to build a new generation of submarines for Australia by France, unceremoniously canceled due to the creation of AUKUS, caused an extremely negative reaction not only from Paris, but also from Brussels. Washington’s policy under J. Biden to restore transatlantic allied ties, largely motivated by the need to build a broad Western alliance to contain China, started to be criticized in the European Union. Discussions about the ‘strategic autonomy’ of the EU resumed, albeit at a low profile. Significant changes in transatlantic relations can hardly be expected in 2022. The trust that was undermined under D. Trump will probably continue to weaken, despite the perceived threats from China and Russia cementing the Western alliance.

Destabilization in conflict-prone regions, primarily in the Middle East, may become one of the negative consequences of the degradation of Western military-political unity and the refocusing of the United States on the Indo-Pacific region. In 2021, Afghanistan has already become the outcome of this course.

In 2022, the significance of the Afghan factor in global politics will be determined by the developments within Afghanistan itself. In one favorable scenario, which implies normalization of the situation in the country; strengthening of the power of moderate pragmatists, the importance of the Afghan factor will decrease. Another scenario, the probability of which as of early 2022 is quite high, implies continuation and possible escalation of civil war in the near future, which can lead to the excesses of terrorism and tensions along the perimeter of the Afghan borders. The less likely scenario involves the return of the extremist part of the Taliban to power, albeit this is possible only in the course of a deadly war, which may de facto lead to a collapse of the country. The actions of fanatical extremists, especially in the beginning, can create a real threat to some countries of Central Asia. Military intervention from the outside is almost impossible; given the Soviet and American experience, no one would risk it.

For Russia, the extreme tension and fears in the region that have arisen in connection with the Taliban coming to power in Afghanistan create extra opportunities both for strengthening its positions in Central Asia and for dialogue with the West in case of unfavorable scenarios at least in 2022. However, the risks remain high.

Under any scenario, the situation in Afghanistan not only has a regional character, but also brings the issue of Islam as a global trend that in many ways determines the development or the world order to the forefront of the global agenda, even though in a latent form. In addition to ideological rivalry with various branches of Christianity and other world religions, in the foreseeable future, the confrontation of Islamic branches will increasingly influence the situation in the area of the Greater Middle East and Asia and deepen the global civilizational rift.

World economy. Economic trends. Rising inflation. Since summer 2021, the world economy has been developing against the backdrop of heightened and growing inflation. Its main reasons were the monetary policy of authorities in response to the exogenous shock of the pandemic, the disorganization of global and domestic production and supply chains, and the incipient energy transition and cartelization in the global oil market. In response to the shock of COVID-19, authorities have been pumping cash liquidity into economies, supporting the unemployed, low-income households, as well as small and medium-sized businesses. Demand support is carried out against the background of falling or anemically growing supply. Restrictions on labor migration created a labor shortage in trucking, port, and warehouse facilities. It will take several years for domestic, regional, and global transport to be back on track and for the labor market to adjust.

The energy transition has become a structural factor of inflation, as the rise in electricity prices is one of the sources of its financing. The rising carbon price is putting additional upward pressure on primary energy prices. The rise in oil prices is supported by the cartelization of the global oil market, as well as significant cuts in exploration and production investments by the world’s major private oil companies in response to the risks of the green transition. Rising energy prices are also driving higher prices for food and agricultural stock.

In many developing countries, the devaluation of national currencies makes a significant contribution to inflation.

It is highly probable that even under the most favorable scenario, the global economy in 2022 and the following years will grow against the background of increased inflation. At the same time, the Fed’s ability to extinguish the inflationary wave through an increase in the interest rate is limited. In the most probable scenarios, the rate will remain at the level of about 2% for the following years. A higher rate can undermine the stock and the bond markets. New massive injections of liquidity into the US economy as part of President Biden’s infrastructure plan will push the inflationary wave further.

Accelerating digitalization amid increasing technology competition and the pursuit of digital sovereignty. The digital race has exacerbated economic and geopolitical competition. The exogenous shock of the global coronavirus pandemic has reinforced these trends. Both governments and private companies regard digitalization as the most important factor in economic growth. Governments and corporations will continue to accelerate R&D and investment in artificial intelligence, supercomputers and quantum computers, microelectronics (primarily semiconductors), the Internet of Things, and Big Data.

Since the beginning of the 2010s, the growing contradictions between the United States and China in the science, technology, and innovation (STI) have developed into the ‘technological war’. In spring 2021, China adopted the Vision 2035 program, which aims to create fully independent national supply chains for critical products and technologies that are resilient to external shocks. We should expect the US to strengthen its policy to restrict PRC's access to advanced technologies and to squeeze Chinese competitors out from the markets. In 2022, the United States will continue to sanction Chinese telecommunications and consumer electronics companies to reduce their ability to scale promising digital solutions.

The ‘technological war’ in STI has become the norm and acquired a global dimension, including a geopolitical one. It has a noticeable impact not only on US-China relations, but also on the transatlantic dialogue and the interaction between the West and Asia. The intensifying technological competition will nudge the digitalization process in the USA, China, Europe, South Korea, and India with an eye to achieving digital and technological sovereignty.

Striving to strengthen the global zones of digital influence, the US will likely promote new initiatives to expand technological interaction with the EU, Japan, Australia, India, and South Korea. Attempts to create zones free from Chinese telecommunications and, in part, software and Internet solutions will be made. In its turn, PRC will continue to promote the Digital Silk Road initiative and related measures to globalize Chinese digital standards. The EU will also act in the logic of ‘European digital sovereignty’, trying to achieve a ‘special status’ for EU markets and build a soft protectionist regime for certain sectors of the data market.

Accelerating decarbonization. Despite the half-hearted results of the COP26 in Glasgow in November 2021, the trend towards decarbonization of world economic growth has been additionally accelerated. In 2021, 21% of global greenhouse gas emissions were subject to tax or other forms of carbon payments. Carbon tax or other emission trading systems for carbon operate in 45 countries. The world’s largest national emission trading system for the electricity sector was launched in China in 2021.

The European Union, as the world leader in decarbonization, has developed two new decarbonization tools, the Carbon Border Adjustment Mechanism (CBAM) and the EU Taxonomy. Both of them are extraterritorial in nature. The CBAM mechanism will start operating in test mode in 2023; the full-mode operation is scheduled for 2026. CBAM payments will decrease proportionally to the volume of free allowances for greenhouse gas emissions within the European trading system that the European Commission plans to abandon in full only after 2030-2035. In the beginning, the CBAM mechanism will cover cement, iron and steel, aluminum, fertilizers, and electricity; then it will be gradually extended to petroleum products.

The EU Taxonomy creates conditions and incentives for the reorientation of financial flows and investments into green economy and energy. The first list of environmentally sustainable economic activities came into effect in June 2021 and includes about 90 items. The second list will be published in 2022. High price for carbon quotas was one of the key factors of the EU gas crisis in autumn 2021 / winter 2022 and it can cause an increase in production costs and decrease in competitiveness of European exports. The European Commission will likely include natural gas in the EU Taxonomy as a transitional economic activity in a form of an exception to the rule, although this is actively opposed by the sectoral lobby for new renewable energy sources. In the nuclear energy sector, the situation is uncertain as the EU countries are split over the issue. France, Finland, Czech Republic, Poland, Hungary, Slovakia, Bulgaria, Romania, and Croatia support inclusion of nuclear energy into the Taxonomy, while Germany, Austria, Denmark, and Luxembourg are against.

The country-specific features of decarbonization will intensify, while the whole process will evolve at different speeds. Decarbonization in the United States, unlike in Europe, will be mostly based on market mechanisms. As the world’s largest natural gas producer, the United States is not interested in squeezing it out of the energy balance. Due to internal problems in the electricity sector and under the influence of the energy crisis in the EU countries, China lifted restrictions on the development of coal-fired generation until 2025. India came across serious problems in sustaining strong economic growth, and therefore the importance of coal-fired power in the country is going to decline more slowly.

The process of demethanization of the world economy was launched following decarbonization. In October 2020, the European Union approved a strategy of methane emissions reduction. The Global Methane Pledge initiated by the EU and US was adopted and supported by more than 100 countries at the COP26. China did not join but intends to prepare its own demethanization program. In 2021, the European Commission in partnership with United Nations Environment Program (UNEP), Climate and Clean Air Coalition, and International Energy Agency, established the International Methane Emissions Observatory (IMEO) that started to compile an open database of global methane emissions. IMEO will propose universal standards of methane emissions control. As soon as 2022-2023, the methane capacity of the production chain will become a factor that affects the global competitiveness of oil, gas, and coal companies. In the future, payments for methane emissions similar to payments for carbon will be introduced at the company level. Oil, gas, and coal firms will be affected first; agriculture companies will be affected by these mechanisms later.

Shifts in food systems. The COVID-19 pandemic has revealed the dangerous vulnerability of national provision systems, exacerbating the negative climate change impact on them. The spread of coronavirus in rural regions, combined with the transformation of extreme weather events into the ‘new normal’ for many countries and the escalation in some conflict and predominantly agricultural regions (from East Africa to Afghanistan) in 2021, has negatively affected world production and distribution of food. There is a real threat that the UN goal of achieving ‘zero hunger’ by 2030 is not being met. In September 2021, world leaders at the UN General Assembly conducted a special summit that outlined the transmission to sustainable provision systems that seek to solve global provision and environmental problems by supporting social development of rural regions including assistance and cooperation of agro-industrial systems of less developed countries. A global “green” transition is essentially impossible without the transformation of provision systems, which account for 33% of the world’s anthropogenic greenhouse gas emissions and about 30% of the total economic damage from extreme weather events.

However, it is difficult to expect radical changes in the global provision industry in 2022 and in the following decade, in the light of the growing global demand for food, particularly for the products of ‘eco-climate-unfriendly’ livestock sector in developing countries. The main changes will include the mitigation and adaptation of traditional production and processing of agricultural stock and fish, as well as their consumption and waste disposal to climate change. It is necessary to take into account the interests of 600 million family farms that produce about 80% of world provision. Even in developed countries, such farms are mostly not ready to ‘breakthrough’ changes in technologies and organization of agricultural production.

Mitigating or neutralizing the ‘green’ transformation effect of the agro-industrial system for the socio-economic development of rural regions will require more time and investment. It includes the gradual replacement of the current industrial technology and organizational schemes by so-called FoodTech that involves an integrated implementation of digital technologies and biotechnology in all chains of provision systems. Such processes are already underway in rich countries. However, their pace, scale, and displacement degree of traditional products and technologies are still insufficiently determined. The European Union postponed the start of its new Agrarian Strategy for 2030, which includes a number of FoodTech areas, from 2022 to 2023. At a rough guess, the implementation of the planned eco-climate goals can reduce agricultural production in the EU by 10% and meat production by 15%. The prospects for developing countries are even more uncertain. More than 80% of peasant farms in these countries are small (up to 2 hectares) and they lack the necessary financial and human resources. They have been seriously affected by the pandemic and chronic internal conflicts. The implementation of the UN summit decisions will require serious assistance from rich countries and private sector but they are not ready for such assistance at the moment.

Drivers of growth. Under the influence of digitalization and decarbonization, the leading industry drivers of world economic growth in 2022 will be the production of semiconductors; pharmaceuticals and biomedicine; rare earth, non-ferrous, and ferrous metals.

Semiconductors play a central role in the process of digitalization and decarbonization of the world economy. The semiconductor shortage that arose in 2021 had a negative impact on the production of cars, computers, and industrial and consumer electronics. In the most optimistic scenario, the deficit will not resolve until mid-2022. At the same time, an increase in semiconductor prices is expected. The rise in demand and prices for semiconductors will in turn stimulate the rise of prices of metals, especially silicon.

The leading countries have formed large-scale programs of state support of the industry. In China, semiconductor-manufacturing companies will get government support of $1.4 trillion under the ‘Made in China 2025’ strategy. The government of South Korea announced the support of national semiconductor manufacturers, in order of $450 billion over 10 years, to create a domestic full-cycle production of chips. Under the Innovation and Competition Act, in the United States it is planned to support the national semiconductor industry with $52 billion over 5 years. The EU has announced a plan to create ‘ecosystems for domestic chip production’, and the European Chips Act initiative is currently under development.

The ‘technological war’ between the United States and China will wield a major influence on the development of the semiconductor industry. Under the auspices of the EU–US Trade and Technology Council, established in June 2021, the creation of a common transatlantic semiconductor zone will be intensified. US companies have already built semiconductor factories in Europe. They have announced investments in new European semiconductor projects in the coming years amounted to tens of billions of dollars. US companies widen their expansion into the semiconductor sector in Japan via mergers and acquisitions. The US administration will increase pressure on South Korean and European companies, making them abandon joint projects with China in semiconductors.

Pharmaceuticals and biomedicine demonstrated dynamic growth in 2020 and 2021, while the production in most industries declined. Pharmaceutical companies have boosted resources channeled into R&D. At the same time, large state orders for medicines, medical supplies, and vaccines, driven by COVID-19, have supported the companies’ financial performance. The growing number of vaccinated by the inclusion of children, transition to mandatory vaccination for the entire population and need for revaccinations, and the formation of strategic stocks for protection against new strains of coronavirus will support the increased demand for vaccines in developed countries at least in 2022-2023. The demand will support the expansion of mass vaccinations to low per capita countries.

Despite the acceptance of programs for the production of vaccines at national and regional levels by many countries, the effect of these programs will not be seen earlier than in 2023–2024. In the nearest two years the USA, China, the largest EU countries, Japan, and India will remain the leading global producers of vaccines. Among the regional producers will be Russia, Iran, Turkey, and Brazil. The countries of Southeast Asia are actively expanding their vaccine production capacities.

By early 2023, the total pharmaceutical market can reach a record of $1.5 trillion, a fifth of which will be channeled into innovative research and development. The amount of money transferred to this sector is bigger compared to any other sector of the world economy.

By the end of 2022, the world’s leading companies will activate the commercialization of pharmacological and biomedical innovations developed during the coronavirus pandemic, including the implementation of biotechnology in the production of non-medical substances, cyber-physical systems, strengthening the biological protection of enterprises, and implementation of ‘smart’ information systems based on biometrics.

Energy transition and digitalization will noticeably increase demand for rare earth and non-ferrous metals, first of all, nickel, lithium, cobalt, copper and aluminum. Large-scale construction works in China and substantial financial inflows into infrastructure modernization in the US push demand for ferrous metals up.

Growth rates. In 2021, the main challenge for the world economy was to develop adaptive mechanisms to ensure positive economic growth in light of the continuing spread of coronavirus. Strong recovery of global economic indicators in the first half of the year gave us hope that the damage caused by the coronavirus crisis in 2020 would be recuperated faster than previously expected. By October 2021, the IMF raised its forecast for global GDP growth for 2021 to 5.9% (in comparison to 5.5% expected in January), and the WTO reconsidered its forecast for global trade growth to 10.8% (in comparison to 8.0% according to March forecast). However, by the end of the year, the worsening epidemic situation and concerns about the possible consequences of the spread of the omicron coronavirus strain had a negative impact on the global commodity and stock markets. That fact significantly increased the uncertainty concerning the development prospects in 2022.

In 2020, the depth of the economic crisis showed significant regional and country variations. Similarly, in 2021, varied rates of economic recovery were observed. Like in the previous year, developing countries of Asia appeared to be in the most favorable condition: in 2020, they showed the lowest economy cutback rates (–0.8% compared to –3.1% in the global economy; and –2.1% compared to the group of developing countries). In 2021, the growth rates of developing countries of Asia, according to the IMF estimates, may amount to 6.4%. The countries of Latin America and the Caribbean also showed significant GDP growth (6.3%), however, unlike in the developing countries of Asia, this didn’t seem to be enough to compensate for the GDP cutback in 2020, which amounted to –7.0%. As for developed countries, the growth rates are estimated at 5.2%, while the indicators for the Eurozone (5.0%) and especially Japan (2.4%) are noticeably behind those for the United States and Great Britain (6.0% and 6.8%, respectively).

The differences in the rates of post-crisis economic recovery were based on three main groups of factors: the scale and intensity of quarantine and quasi-quarantine restrictions imposed in the context of tackling the coronavirus pandemic (and the rapidity of lifting the said restrictions); the effectiveness of the anti-crisis policy; as well as foreign trade specializations of countries and recovery rates of markets for relevant goods and services. The first of these groups of factors had a decisive effect on the differences in the economic cutback rates throughout 2020 and kept playing a deterrent role in many countries in 2021, especially in the EU countries, where the policy of lockdowns and hard restrictions for the unvaccinated population was particularly intense). As for those countries that managed to avoid a sharp economic decline in 2020 by holding from imposing restrictions (or by quickly lifting them), in the absence of other favorable growth factors their growth dynamics was little. In this context, the most indicative example is the example of sub-Saharan Africa: in 2020, its losses from the crisis were relatively moderate (–1.7% of GDP), while in 2021 the economic growth rates were also low (3.7%).

As in the previous year, anti-crisis policy measures play the greatest role in developed countries. It is due to the scope of support for the economy and due to effective implementation of the decisions made, provided by the quality of political and administrative institutions. This refers mostly to the United States, where a new package of anti-crisis support for the economy for $1.9 trillion was approved in March, while the Federal Reserve System kept pursuing the aggressive policy of quantitative easing.

The main source of differences in GDP growth rates was the influence of the dynamics of world markets on the economic situation in specific countries. World commodity markets were actively recovering during the year. The maximum indicators of world trade growth were predictably fixed in the Q2 of 2021, when compared to the crisis indicators of the previous year, the volume of world trade in goods increased by 22%, while the volume of trade in manufacturing products increased by 40%. Indicators for a number of manufacturing industries were even more impressive: for example, clothing production increased by 54%, iron and steel production increased by 71%, and automotive production increased by 101%. Although the recovery of international trade slowed down in the second half of 2021, it brought considerable dividends to countries that specialize in product output and demonstrate the highest rates of post-crisis ‘rebound’.

Since the end of October, the uncertainty in the global economy has begun to increase again. First of all, it affected the global commodity and financial markets, most of which have not only fully recovered after the crisis, but also showed even better results. The stock quotations of dated Brent crude oil rose to $86.74 per barrel in October 2021, having overcome the maximum pre-crisis level observed in January 2020 ($71.75 per barrel) and reached the five-year maximum level recorded in October 2018 ($86.70 per barrel). The SP500 stock index has in turn consistently updated historical highs, reaching the level of 4,743.74 points in November, which is 1.4 times more than in January 2020. In the light of continuing pandemic, such a ‘boost’ of stock quotations could cause serious correction risks that occurred in November-December 2021 and remain relevant for 2022.

The key factors that make these risks real are concerns about the new strains of coronavirus that may be resistant to existing vaccines, and the reduction of the US Federal Reserve's asset buyback program, which began in November ($15 billion monthly). In addition, it is expected that in 2022 the Federal Reserve System starts raising interest rates on federal funds due to a sharp increase in inflationary trends in the US economy. Although the interest rate increase to tackle inflation will have a lower impact on markets than the decrease in fund buybacks, the cumulative effect of these measures on stock and commodity prices can be sharply downward.

In 2022, the world economy will continue its recovery growth, which will amount to 5.1%. The economies of most countries in the world will exceed the level of 2019, although the economies of China, India, and the United States have already reached pre-crisis levels in 2021. The highest growth rates will be demonstrated by emerging market and developing economies (5.4%), while the growth rates of advanced economies will increase by 4.7% (Table 1).

Table 1. GDP growth rates, %

Source: IMF WEO Database, forecast and estimation by IMEMO.

World trade. The current dynamics of world commodity trade allows expecting its 10% growth in 2021, and a 6% growth in 2022. In subsequent years, the dynamics will increase on average by 3%. Online service trade will continue to grow in the medium term, but overall growth in service trade does not seem to be as dynamic as it was in the pre-pandemic period.

In 2021, world trade grew almost 2 times faster than GDP. However, in 2022, the difference between these two indicators’ growth rates will be minimal, and this ratio will likely be relevant in the medium term. In some years (like, for example, in 2017 and 2021), a situation may arise, that was typical for the period of accelerated development of world trade when its growth rate was 1.5-2 times higher than the GDP growth rates.

In 2022, the dynamics of world trade will be reductive. In subsequent years, the development of world trade will be increasingly determined by the factors associated with the deployment of a new stage of the research and technological revolution, including the growth of e-commerce and bringing production closer to consumers.

An important condition for the growth momentum of world trade after the end of the pandemic is adherence to the principles of liberal trade policy. Nowadays such adherence is confirmed by the world’s leading countries, members of the G-20 group. After the return of the world economy and trade to sustainable growth, the attempts to overcome the WTO crisis can be expected.

Nevertheless, the rise of protectionism remains a serious problem for all participants in international trade. In addition, trade and technological rivalry between the United States and China will continue. It will be one of the main causes of instability and strengthening of protectionism in the foreign trade policies of leading countries.

The implementation of plans to change the energy balance of the leading countries in favor of increasing the role of renewable energy sources will have a growing influence on the dynamics and structure of world trade. As the experience of 2021 has shown, the energy transition carries serious risks for the state of the economy and trade. World trade remains vulnerable to shocks in the financial sector, the stability of which can be compromised by the exacerbation of the world debt problem.

The use of trade policy tools that aim to build a green economy will expand. These instruments will be similar to the EU carbon levy. During the negotiations of trade agreements, developed countries will actively insist on the inclusion of conditions that ensure compliance with environmental and labor standards in partner countries.

The process of maintaining high growth rates of international trade will depend not only on the foreign trade policies of the WTO members, but also on government economic support measures, that played a serious role in reducing the negative consequences of the pandemic. The economies of the leading countries and the whole world trade will depend on the way these measures are being scaled down.

COUNTRIES AND REGIONS

United States. In 2022, the United States will continue to reform the system of allied relations in accordance with the current challenges and threats, primarily from the PRC. As a matter of priority, it means the search for the new principles of interaction with allies in the areas of trade, technology export and information security. The European-American Trade and Economic Council (EU-US Trade and Technology Council Inaugural Joint Statement, TTC) will continue its work. The first meeting of the Council took place in September 2021 in Pittsburgh, USA.

Washington and Brussels will discuss the abolition or limitation of trade tariffs introduced during the Donald Trump presidency. Certain progress has been already outlined regarding this matter. This is both an important achievement for the EU and an agreed trade-off for the United States, who seeks to involve the partner in the confrontation with China. An agreement on the lifting of US tariffs on the portion of imports of steel and aluminum from the EU has been reached. Talks on aircraft subsidies for Boeing and Airbus will proceed.

The United States is intensifying its engagement in the modes of military cooperation between the EU member-states, in particular, the PESCO Project on Military Mobility. This will allow to maintain control over the activity of partners while lobbying the interests of American producers in terms of supplies for Western Europe’s armed forces.

NATO will continue to shift its center of gravity to the countries of Eastern Europe, whose role and importance are growing. There is a possibility of significant military supply contracts being signed with the regional states, primarily with Poland and Romania. Against the backdrop of the US-Norway deal, which allows the former to use air force and naval stations of the latter, an increase in the military presence of the United States and its allies in the Arctic, subarctic waters and the airspace of the North Atlantic can be expected.

It is anticipated that in 2022 NATO will conduct a number of war games and military maneuvers, which increases the risk of incidents between the forces of the alliance and the Russian Federation. Norway is going to host the biggest NATO military exercise inside Arctic Circle since the Cold War (about 40 thousand soldiers) named Cold Response 2022. Within the framework of Dynamic Mongoose 2022, which is NATO-led maritime Anti-submarine Warfare (ASW) training in the North Atlantic and Arctic, nuclear submarines of the Russian Navy are considered as the main hypothetical enemy. Advanced anti-surface, anti-submarine warfare exercise, Dynamic Manta 2022, will take place in the Mediterranean Sea with the participation of the US.

In the Asia-Pacific and Indo-Pacific regions, AUKUS will become the key allied structure for the United States in the coming years. Cooperation with Australia and the United Kingdom provides the United States with a unique opportunity to form and support an anti-China coalition via the time-tested format of the three traditional allies. Unlike many others, London and Canberra are able to pay for the aid they receive from the United States.

The priority for the further development of the alliance system in the region will be the strengthening of ties between the United States and Japan as well as the development of cooperation between the latter and AUKUS in terms of joint trainings, conferences and military-technical cooperation.

Aside from building new and reinforcing traditional alliances, the United States will pursue a strategy of ‘optimal engagement, given China threat’.

The development of the American-Indian dialogue is an important track for the United States but further progression of cooperation will be of a framework nature. The deepening of cooperation on regional security issues with New Delhi within the QUAD is quite possible. At the same time, the significant difference in the strategies of the United States and India regarding Iran, Russia, protectionist economic policy of India, violation of human rights, and climate agenda will remain. Nevertheless, Washington will be able to make concessions to New Delhi if it can contribute to the promotion of American strategy in Southeast Asia in line with the anti-China approach.

In South Asia, Washington will continue to implement the US-Uzbekistan-Afghanistan-Pakistan quadrilateral cooperation format aimed at the development of a whole package of infrastructural projects. The policy of the United States and its European allies around Afghanistan will be based, first of all, on the issue of recognizing the country’s new government, as well as on the issue of providing it with humanitarian and economic assistance.

In Central Asia, the United States will continue to use the negative consequences of the Afghan crisis as a reason for strengthening its position as an alternative provider of security services and resources for economic development.

The Middle East will retreat further to the periphery of Washington’s global strategy. Unlike his three predecessors, J. Biden did not propose a concept or format that would somehow involve all countries of the region. The United States will continue to pursue not a proactive but a reactive policy in the Middle East, focusing on a limited range of issues.

The US policy towards Iran will remain an important track, but a breakthrough is unlikely to happen: the course of the negotiation process demonstrates deep distrust between the parties, which will remain in 2022. The United States will uphold its demands for Iran to return to the terms of the JCPOA regarding the agreed limit of uranium enrichment, while Iran will expect the complete lifting of the sanctions. The difficulty of negotiations arises from the complexity of interrelated problems. In addition to the Iranian nuclear program and the impact of the renewed JCPOA regime on global energy markets, one should also consider Iran’s development of intermediate and shorter-range missiles, Teheran’s support for the Houthis in Yemen and Shiite minorities in Arab countries as well as for the government of Syria and Hezbollah in Lebanon. In addition, concerns about the possibility of eventual agreements reached with the Biden administration being canceled after a change of leadership in the White House at the beginning of 2025 are not without merit. This increases the likelihood of the new conservative Iranian government turning to a more reactionary policy in 2022 already.

The containment of Russia in terms of geopolitics, economy and technology remains one of the priorities of American foreign policy. The sanctions will last to the full extent. Moreover, it is possible that the democratic administration will monitor more closely the internal political processes in Russia and threaten to introduce new sanctions under the slogan of respect for human rights as a part of the election campaign. Any significant normalization of diplomatic interaction between the two countries is unlikely.

Europe. In 2022, the EU is going to approve the so-called ‘strategic compass’. This document has been presented nearly as Europe’s defense strategy. It is being developed at the same time as NATO’s next Strategic Concept, which should replace the previous one adopted in 2010. Both documents are likely to reflect a strictly critical Western view on Russia’s foreign policy. New incidents and disagreements, primarily in the area of ‘common neighborhood’, will continue to affect the EU’s relations with Russia and Belarus.

The new German governing coalition has to pass a strength test in 2022. It seems unlikely that this coalition will uphold after the next elections in 2025, but the Chancellor who has proven himself a good choice could continue to play this role in a different scenario as well. Co-leader of Germany’s Greens, the party known for its principled stance on human rights and democracy, took over the foreign ministry. However, the Chancellor has traditionally played a significant role in international arena. It is possible that he will be the one to assume the mission of interacting with the most problematic in Germany’s opinion countries including Russia.

The new German government confidently declares its intention to take into account the interests of Central and Eastern European countries and to strengthen the unity of the EU. However, in order to achieve these results, a reciprocal readiness of countries whose political optics do not coincide with Germany’s would be required. One of the most sensitive questions regarding the political future of Germany is about how the new government will conduct personal and political relations with close and distant neighbors.

In April 2022, France holds presidential elections, which is likely to require two rounds, followed by National Assembly elections. These elections will attract a lot of attention around the world because of the fundamental differences between the candidates and the significance of the result for the future of the EU. Many experts will observe it from the perspective of ‘domino theory’. Will European political mainstream survive in France or will the results trigger the new powerful wave of national-populism that threatens the entire structure of the EU? There are major questions.

President E. Macron starts the election year having a rather good position. Polls predict him to win in the second round, probably against his traditional opponent M. Le Pen. The pandemic has a mixed effect on the events. On the one hand, President and government are consistently at the forefront of the fight against this threat. On the other, voters are looking for alternatives because they are tired from the restrictions, especially those who suffered damage through their association with small businesses and tourism.

The popularity of Le Pen in the second half of 2021 has declined markedly. She has to compete not only with Macron, but also with the new populist candidate E. Zemur, a former journalist who does not skimp on harsh political assessments and, apparently, is able to draw off a significant part of Le Pen’s electorate. At the same time, it is not clear whether his candidacy and popularity will survive until the elections because massive criticism from various sides tries to convince voters that he is not suitable for the role of President.

For E. Macron, the dilution of an unsympathetic electorate between different opponents could be beneficial and risky at the same time. If a populist candidate manages to bypass M.  Le Pen, he could demonstrate a lower anti-rating because not everyone who is not ready to vote for Le Pen under any circumstances would reject his candidacy. Erosion threatens the centrist electorate as well because of the rise of the Gaullist party The Republicans led by V. Pécresse and supported by the former chief EU negotiator on Brexit M. Barnier. EU partners do not consider these politicians unacceptable, but it is easier for them than for E. Macron to exploit the topic of the migration threat, traditionally considered a priority among populists and right-wing radicals, promising a tougher approach.

Left-wing politicians are more likely to lag behind in the presidential race but collectively they have a chance to receive a noticeable part of voters’ support, depriving the favorites of the opportunity to secure a decisive advantage in the first round.

The outcome seems even more intriguing when coming parliamentary elections are considered. In 2017, in the wake of E. Macron’s popularity, his political movement, despite being barely one year old by that time, managed to secure decisive support in Parliament for him. Such synchronization of the election results is unlikely to be preserved, both in the event of E. Macron’s victory and in the event of his defeat. In this case, the relationship between the President and Parliament could bring new complications into the processes of policies formulation and implementation.

The negative consequences of Brexit in terms of trade relations with the mainland and logistical problems have become more tangible than, in fact, at the time of the announcement of the country’s withdrawal from the EU. A noticeable part of criticism and negative emotions of voters is focused on the Prime Minister B. Johnson. One cannot rule out that in the foreseeable future the conservatives, while maintaining their overall political course and not questioning Brexit, will bet on another candidature in their camp, presenting this change as overcoming the political mistakes made by the Prime Minister.

Great Britain, which has declared that Brexit will allow it to acquire an independent ‘global’ role, is trying to be proactive in foreign policy. This includes strengthening its role as the closest US ally, recently highlighted by the creation of the AUKUS bloc with the US and Australia, toughness directed at Russia and participation in trade agreements in the Asia-Pacific region. The UK is looking for (not without success) countries among EU member-states that are ready to strengthen bilateral cooperation on selected issues within the bounds set by the EU norms. In particular, such course could be pursued by states with traditional pro-Atlantic attitude including Poland, Baltic states and Nordic countries.

The European Union continues to proclaim its desire to become an independent global center of power in the international competitive environment. However, the prevailing political dynamics in the West erodes increasingly the significance of the EU structures per se. Strategic and defense issues are covered at the level of transatlantic coordination. National governments continue to play the main role regarding the fight against the pandemic, solution of economic problems and the majority of foreign policy issues. The voters are more and more concerned about what is happening directly around them locally, not globally. The withdrawal of Great Britain remains a significant factor in European politics and some of the related consequences have not fully manifested yet. The Green Agenda promises significant results in the future but is unable to make a difference in the EU. 2022 will reveal what is more attractive for the EU member-states: the new German government or French populists.

Middle East and North Africa. Tensions that have been accumulated in the region will remain but the trend towards gradual de-escalation is expected to come into sharp focus. It includes both the normalization of relations between Israel and the Arab states (UAE, Bahrain, Morocco, and Sudan) and attempts to reduce tensions between other regional players.

The warming of relations between Qatar and Saudi Arabia is likely to continue, contributing to the further re-establishment of working ties between the members of the Cooperation Council for the Arab States of the Gulf.

As part of the de-escalation process, Ankara is expected to try to reach an agreement on expanding cooperation with Egypt, United Arab Emirates, and Saudi Arabia (mainly in the economic sphere). The resumption of active political contacts between Turkey and Israel cannot be excluded.

Attempts to establish a dialogue between Saudi Arabia and Iran can be treated as a trend towards de-escalation only conditionally. The parties are not ready for serious concessions, and the situation does not inspire optimism partially because of the high risk of ‘black swans’ emergence. Moreover, Saudi-Iranian contacts are taking place against the backdrop of increasing pressure on Tehran from Israel and the United States.

It is highly likely that the process of restoring relations between Syria and the states of the region will continue and the country will return to inter-Arab structures, primarily to the League of Arab States. Nevertheless, it is too early to talk about Damascus breaking its international isolation.

The escalation of tensions in Lebanon is expected. This is due to pressure on Beirut from Saudi Arabia and a number of its partners, mainly because of the Arab monarchies’ desire to weaken the Hezbollah movement and reduce Iranian influence in Lebanon.

The situation in the Eastern Mediterranean will remain tense. The struggle for access to sea and marine resources will continue there. Against this background, Greece and Cyprus will strengthen military cooperation with Egypt, Saudi Arabia, United Arab Emirates, and Israel. Therefore, Ankara is hardly to abandon its claims to a significant part of the shelf and active policy aimed at asserting Turkey’s dominant role in the Eastern Mediterranean.

It is hard to predict de-escalation in the Maghreb because of the aggravation of contradictions between Algeria and Morocco. In August 2021, Algeria announced the severance of diplomatic relations with Rabat. However, the parties are likely to confine themselves to political and diplomatic demarches as well as demonstrations of force, while avoiding a direct military clash.

Given the upcoming elections in December, the situation in Libya in 2022 is fraught with a new escalation. If conducted, the elections results may not satisfy a number of influential internal and external players.

Post-Soviet space. In 2022, for most of the post-Soviet space (PSS) countries internal processes will be complicated by the socio-economic consequences of the pandemic. General increase of international turbulence will affect the region as well along with the growing competition of the leading powers for influence in the PSS.

As in the rest of the world, the CIS countries face the challenge of balancing growing post-crisis social spending and stimulus measures. At the same time, social disparities in the CIS countries, exacerbated by the crisis, are higher than in developed countries. The demand for change will remain high, although the degree of dissatisfaction with economic policy in the CIS countries varies and depends on the level of economic development, or more specifically, resource endowment and export potential and the stability of political regimes. Resource-rich countries are considering the possibility of new formats of the social contract like direct financial assistance from the state, stimulation of social responsibility of business, state investment incentives. Countries with a low level of resource provision (Armenia, Moldova, Ukraine, Tajikistan, and Kyrgyzstan) in the social sphere count on funding from external donors, among other things.

Considering high priority of this region for Russia’s foreign policy, the development of events in the PSS generates a number of challenges for Russia. In almost all CIS countries, the Russian Federation has turned into a kind of political lightning rod, to which all the internal and foreign policy problems of the PSS countries are attributed. Nevertheless, in 2022, Moscow may have a number of opportunities to strengthen its positions (Central Asia, Transcaucasia, and Belarus). This is due inter alia to the special role as mediator or peacemaker that Russia plays in resolving decades-old conflicts in the PSS.

Russia will remain the guarantor of security for the PSS countries through cooperation within the CSTO as well as on a bilateral basis. At the same time, in 2022, a kind of ‘arc of instability’ (chain of current and frozen conflicts that could rapidly transit to the ‘hot’ phase) will emerge along the perimeter of Russia’s borders in the Western, Transcaucasian, and Central Asian directions facilitated by extra-regional powers. These include situation in Belarus, aggravation of Transnistria case, still not frozen conflict in Donbas, tensions around Karabakh and in bilateral relations between Armenia and Azerbaijan, border disputes in Central Asia, and consequences of the chaotic withdrawal of US and Western troops from Afghanistan.

Russia will remain the key mediator in Nagorno-Karabakh conflict, continuing to advance implementation of the trilateral ceasefire statement of November 9, 2020 and the agreements of January 11, 2021.

The growing competition of powers in world politics will have a destabilizing effect on the situation in a number of conflict zones in the PSS. Moreover, in 2022, not only US, EU, and PRC will preserve traditionally high level of activity in the region, but also growing centers of power like Turkey, Iran along with Poland and Romania.

The situation around Donbas is one of the most volatile in 2022. To compensate for a drop in ratings, President V. Zelensky will speak from maximalist positions on Crimea and Donbas issues (within the framework of the narrative established in Ukraine on the fight against ‘Russian aggression’), demand the accelerated admission of Ukraine to NATO (to mitigate ‘the Russian threat’), an urgent meeting with V. Putin (to end the Russian ‘hybrid war in Donbas’), compensation from Germany and other European countries in connection with the loss of Ukraine’s budget revenues (estimated at up to $2 billion) due to the completion of the construction of Nord Stream 2, revision of the Minsk agreements ‘imposed by force’ on Ukraine, restoration of the country’s territorial integrity. These approaches can receive support not only from the United States but also from the overwhelming majority of European political elites. The desire to demonstrate intransigence towards Moscow to the US and EU and at the same time to act a ‘victim’ of Russian aggression that is ‘friendly to the West’ may lead to new armed incursions not only on the line of contact in Donbas but also provocative actions around Crimea (on the Black Sea or Azov Sea).

In this context, Ukraine will develop military-technical cooperation with the United States, Britain and Turkey (supplies of modern lethal weapons including missile systems, warships, strike UAVs). That may strengthen the dangerous illusions of the part of the Ukrainian elite about the possibility of ‘Croatian’ or ‘Azerbaijani’ scenario in relation to Donbas already in 2022. This is the main destabilizing effect of the political course taken by the Ukrainian leadership that prevailed in 2021 and will be probably extended until the end of Zelensky’s presidential term.

In Belarus, the domestic political situation will remain the key element of the agenda. In 2021, the authorities managed to take control over the situation in the country and push the leaders of the mostly pro-Western political opposition abroad or move them to places of detention. President A. Lukashenko has low level of popular support, especially in large cities. For the successful implementation of the constitutional reform, the ruling regime needs financial and economic support and international legitimacy. Throughout 2021, A. Lukashenko carried out maneuvers both for receiving economic assistance in the context of developing integration with the Russian Federation and for improving relations with Western countries.

Fluctuations in Belarusian political course will persist, and in 2022 Moscow will actively contribute to the implementation of 28 union programs with Minsk. This is supposed to create a solid institutional basis for a functioning common economic space. However, there is no reason to expect that Lukashenko will actively start implementing the programs in 2022 (except for those that directly affect his interests, such as the formation of a single energy market). Attempts to resume political bargaining with Western countries and even to ‘force’ them into dialogue in a specific way are also predictable, which was clearly demonstrated by the migration crisis on the Belarusian borders with the EU countries in 2021. The ruling regime will try to persuade the Western countries to fully resume relations, which will allegedly give it freedom of maneuver on the ‘eastern flank’ and will allow evading Russian integration initiatives more effectively. However, it is unlikely that the Western countries will refrain from the sanctions pressure on President A. Lukashenko, especially in view of his unsystematic behavior and direct pressure.

The greatest political risks in the Central Asia region are traditionally generated in Kyrgyzstan. This time, they are associated with the concentration of powers in the hands of President S. Japarov, which is fraught with the consolidation of political and regional forces removed from power and new political destabilization. Observers are concerned about the prolonged transit of power in Kazakhstan, which, however, will remain under control in 2022.

In foreign policy, the Central Asian countries will continue a multi-vector course with a balanced development of relations with the leading centers of power including Russia, China, United States, EU, and Turkey. Tajikistan will be the only exception, as Russia and China are remaining its main strategic partners. Besides, China is gradually beginning to act not only as the Republic’s key creditor but also as its security ally.

RUSSIA IN THE WORLD 2022

The renewal of the global economic interface including key features like energy transition and accelerated digitalization, poses a number of challenges for Russia.

Given Russia’s remaining high dependence on energy exports, the first challenge is a need for a comprehensive balanced restructuring of the national economy and social sphere. Having been voiced for a long time, this goal under the new conditions becomes existential and vitally important for the state. In order to solve this problem in a strategic manner, climatic change should be taken into account, e.g. eventual shifts in the Russian ‘North’, changes of the country’s water balance, already happening transformations of the agricultural landscape.

The second challenge is to ensure the adaptation to the transition happening with minimum costs and maximum consideration of long-term benchmarks. According to the strategy presented by the Russian delegation at the COP26 summit, Moscow’s position includes several points of fundamental importance. The first is to achieve the recognition of nuclear and hydropower as ‘green’ sources of energy, and natural gas as a low-carbon fuel. The second is to establish the notion of the Russian forest fund (about 20% of the world) as a factor offsetting Russian CO2 emission. The third is Moscow’s willingness to take part in the development of norms for international carbon trading. Finally, the fourth point is the intention to become one of the leading (up to 20% of the world market) producers of hydrogen energy, especially considering the declared by the country’s leadership possibility of exporting it through existing pipelines, primarily Nord Stream-2. Russia also intends to encourage companies to invest in Russian projects that contribute to the fight against climate change, so that money stays in the country and is not being used in order to pay taxes and duties abroad.

Generally, in 2022 Russia is as if the rest of the world will remain dependent on the impact of an exogenous epidemiological factor and measures aimed at overcoming the pandemic, which were introduced in the country and throughout the world.

Following the global trend of re-sovereignization, Russia will continue to pursue its traditional foreign policy strategy. In 2022, there are still no visible factors or signs of improvement of Moscow’s relationship with the West where Russia is highly mistrusted.

As for the Russian-American relations, IMEMO experts consider that the most probable scenario is selective cooperation against the background of a generally conflictual relationship. The factor of Chinese threat cultivated by the American government also prevents Washington from going beyond the established framework of confrontation with Russia. Therefore, containment of Russia will remain a priority of American foreign policy both in general context and on the bilateral track. The sanctions regime will remain fully operational. However, consultations on strategic stability issues will continue. Washington is interested in reaching a mutual understanding with Moscow, taking into account the growth of the PRC’s capabilities.

In the matter of Russian-European relations in 2022, much will depend on the dynamics in ‘the common neighborhood’ and the political course of the new German government. As for trade and economic cooperation, one can expect from Berlin the continuation of the course initially set by A. Merkel. Concerning politics, it is likely that somehow toughened attitude will emerge.

In the Middle East in 2022 Moscow may have some selected opportunities to strengthen its positions, since states concerned about the weakening of the US commitment may show a great interest in partnership with Russia on the issues related to security, political and diplomatic settlement in the region. The United States may try to reach a certain understanding with Russia on the situation in northeastern Syria and on the issue of humanitarian access. Possible attempts to resume the negotiation process on the Palestinian problem cannot be completely ruled out either. Here Russia will be able to act within the framework of the Quartet (UN, EU, USA, RF), which could be possibly expanded by including a number of regional players.

The situation in the post-Soviet space will become even more complicated. Amid the instability in Afghanistan, Central Asian states consider Russia as the only reliable guarantor of security in the region. That, however, does not prevent them from further implementation of a multi-faceted foreign policy with considerable attention towards China and Turkey. In general, in 2022 the situation in Afghanistan is highly likely to remain the main threat to security in the region for Russia and its neighbors in Central Asia.

It is difficult to expect the existing format of relations between Moscow and Minsk to change significantly, despite the weakness and increased dependence of the latter on the former. As for Russian-Ukrainian relations, one cannot completely rule out neither the scenario of ‘unfreezing’ the conflict in Donbass nor the scenario of aggravation of general confrontation. The ‘war of nerves’ is becoming above all the factor of powerful political pressure but it also poses a risk of transition to uncontrolled escalation, which could be further aggravated by the military-political support from Western countries to Kiev. Under such conditions, an increasing level of conflict in 2022 seems quite likely, whereas a mere preventing the situation from collapsing and causing an uncontrollable ripple effect can be considered a positive scenario. However, another possible option seems to be the preservation of the prevailing circumstances, inter alia, with the support of the West, primarily the United States.

From the point of view of IMEMO experts, 2022 will not bring any special changes to the picture of Russia’s relations with the countries of the Pacific and South Asia region. PRC will remain the main geopolitical partner of Russia with whom it shares a similar view of global processes and has a significant convergence of geopolitical goals and priorities. An expected visit of Russian President to the Olympic Games in Beijing is a symbol of the deepening partnership between two countries in the political sphere against the background of the West’s campaign for a diplomatic boycott. No changes are expected in the partnership between Russia and India, disregarding the ‘multi-faceted’ nature of India’s foreign policy and sporadic conflicts in bilateral relations.

The Republic of Korea also treats Russia as one of the vectors of its foreign policy, in particular as the object of its Northern Economic Partnership strategy and the Nine Bridges program. Some hopes are pinned on a possible constructive role of Russia in normalizing inter-Korean relations and resolving the situation around the DPRK’s nuclear and missile programs.

ASEAN’s relations with Russia are based on the Comprehensive Plan of Action to Implement the ASEAN and the Russian Federation Strategic Partnership in 2021-2025. Non-military high-tech exchanges are intensifying, including those related to countering the COVID-19 pandemic.

The development of Russian-Japanese relations will be constrained both by objective differences in the positions of the two states in the system of global alliances and confrontations and by the long-standing territorial dispute. The resumption of bilateral contacts to the same extent after the pause associated with the pandemic will be hindered by the declining interest of the Japanese leadership in developing relations with Russia. At the same time, Moscow and Tokyo will maintain the achieved level of humanitarian ties, including educational and cultural exchanges.

The new normal of energy transition, digitalization and fierce technological competition in 2022 will have an increasing impact on the global economy, politics and security. Russia’s ability to launch the process of accelerated adaptation to changes will determine the country’s place in the changing world order and in the hierarchy of global powers for the ongoing decade.

References

  1. Afontsev S., Kobrinskaya I., Machavariany G., et al. Russia and the World: 2020 IMEMO forecast. New Perspectives. 2020, 28(4), pp. 435-461. DOI: 10.1177/2336825X20954758
  2. Kobrinskaya I., Machavariany G., Dynkin A., et al. Russia and the World: 2019 IMEMO Forecast. New Perspectives. 2019, 27(2), pp. 87-114. DOI: 10.1177/2336825X1902700205
  3. Dynkin A., Baranovsky V., Kobrinskaya I., et al. Russia and the World: 2018 IMEMO Forecast. New Perspectives. 2018, 26(3), pp.143-166. DOI: 10.1177/2336825X1802600308

For citation:

Dynkin A., Baranovsky V., Kobrinskaya I., et al. Russia and the World: 2022 IMEMO Forecast. Analysis & Forecasting. Journal of IMEMO, 2022, no 1, pp. 13-39. https://doi.org/10.20542/afij-2022-1-13-39

© IMEMO 2022