![\"TOPSHOT-RUSSIA-HISTORY-WWII-POLITICS-ARMY-HEALTH-VIRUS\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/1759073233_259_960x0.jpg\")
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TOPSHOT – Russian Sukhoi Su-35S fighter aircrafts, Su-34 military fighter jets and Su-30SM jet fighters fly over downtown Moscow during a military parade, which marks the 75th anniversary of the Soviet victory over Nazi Germany in World War Two, in Moscow on June 24, 2020. – The parade, usually held on May 9, was postponed this year because of the coronavirus pandemic. (Photo by Kirill KUDRYAVTSEV \/ AFP) (Photo by KIRILL KUDRYAVTSEV\/AFP via Getty Images)<\/p>\n
AFP via Getty Images<\/p>\n
Quite some years ago, at an evening gathering in Moscow, I had the pleasure of interviewing Natalya Kaspersky (in 1997 she founded the cyber security firm Kaspersky Lab with her then husband Eugene – he and many Kaspersky Lab colleagues had previously worked in the KGB).<\/p>\n
I put a question to her regarding the growing number of Russian entrepreneurs, who seemed to thrive in a range of countries \u2013 the U.S., Canada, Germany and so on \u2013 but I was surprised by her answer \u2013 that the talent of the new entrepreneurial class was entirely due to the Russian state, its educational system and various socio-political institutions.<\/p>\n
Today, not unlike both America and China, the Russian state and the notion of entrepreneurship are at odds. Many wealthier, young Russians lurk in Dubai, Cyprus, Georgia or parts of Asia, and the domestic labor market in Russia has been badly damaged by the war in Ukraine. Tellingly in the context of Natalya Kaspersky\u2019s comments, much research talent has been directed into military focused technologies, and more broadly Russia\u2019s \u2018War Economy\u2019 has become the only game in town.<\/p>\n
This has created opportunities and dependencies for Russia. On one hand, together with China, and Iran, Russia is now a key part of an energy empire \u2013 that trades commodities, and builds commodity supply chains for at least one half of the world (India is shifting into this sphere). Both Russia and China have their claws into Africa, in a sinister repeat of what Tom Pakenham called the \u2018Scramble for Africa\u2019.<\/p>\n
In contrast, Russia\u2019s isolation and mono-sectoral economy leave it heavily dependent on China \u2013 some 90% of high-tech imports into Russia come from China, and it is yet unclear what financial support it gets from Beijing. In a week when Argentina\u2019s economy and financial markets spluttered to a halt and triggered a rescue by Washington, Russia risks becoming China\u2019s \u2018Argentina\u2019 if that makes sense.<\/p>\n
There are however a few lessons for Western policymakers from Russia\u2019s war economy, the first of which relates to debt. An under-remarked point is that Russia\u2019s debt to GDP is only (officially) 20% which at least means it is not constrained by a huge debt burden, unlike the U.S., Britain, France, China, Italy and Japan. As the historian Niall Ferguson has remarked, no empire that has paid more to service its debt than its military has survived. In the future, indebtedness and military strength will be inter-related.<\/p>\n
In 2008, after its partial invasion of Georgia, a post-mortem took place on the relatively poor state of the army (its training, equipment, and tactics) and hence began a modernization process in earnest. Many critics would say that elements of this \u2013 such as the structure and training of the army have failed completely, but other elements, notably military technology are a lot better. Germany, Spain, and Italy all need, or are about to embark on modernizations of their armies, while other countries like Ireland will need to remake their armies almost from scratch. In this respect, in a more contested world, there is a premium on getting military modernization right.<\/p>\n