This week, our guest is Anastasia Likhacheva, Dean of the Faculty of World Economy and International Affairs at the Higher School of Economics in Moscow.
This week, our guest is Anastasia Likhacheva, Dean of the Faculty of World Economy and International Affairs at the Higher School of Economics in Moscow.
*The Trialogue Podcast is hosted by the Stimson Center and produced by University FM.
(Transcripts may contain a few typographical errors due to audio quality during the podcast recording.)
[00:00:00] Peter Slezkine: I'm Peter Slezkine, Director of the U.S.-Russia-China Trialogue Project at the Stimson Center. Since the middle of the 20th century, relations among the United States, Russia, and China have had an enormous impact on each country separately and on the world as a whole. The purpose of the trialogue is to better understand this extraordinarily complex and consequential relationship by directly engaging with experts from all three countries.
My guest today is Anastasia Likhacheva, Dean of the Faculty of World Economy and International Affairs at the Higher School of Economics.
[00:00:41] Anastasia Likhacheva: Absolutely true.
[00:00:42] Peter Slezkine: I'm glad I got the title right.
[00:00:44] Anastasia Likhacheva: It's an extremely long title. So, we tried to shut it up, like, a world faculty or something like this, because it's too hard to mix all this economics and affairs in one sentence.
[00:00:54] Peter Slezkine: Well, the world is also pretty big. Rubio said that there are extremely interesting possibilities for economic cooperation.
[00:01:03] Anastasia Likhacheva: Well, it's very interesting. Even if we forget about all that happened in our bilateral relations for the last 10 years, even before the economic aspects of Russian-American relations, it was very weak. There were some energy projects, there wasere some representation of American service companies, finance, IT, consulting, whatever, but it was so far from U.S. economic presence in Asia. I don't speak about Europe or Latin America. But so, we'll see. Maybe, they have some ideas on how to relaunch everything.
[00:01:36] Peter Slezkine: But you're saying that there's not much to relaunch. That, even in the good days, there was not much American economic presence in Russia.
[00:01:41] Anastasia Likhacheva: No. We reinvent the formats of Russian-American cooperation.
[00:01:45] Peter Slezkine: So, let's talk about sanctions.
[00:01:48] Anastasia Likhacheva: I recently found our materials of 2016 when we started our sanctioned research program at the faculty.
[00:01:56] Peter Slezkine: And that’s as a result of the sanctions imposed after 2014.
[00:01:59] Anastasia Likhacheva: Yeah. It wasn't popular. And most of the people wereas like, “Why, what for do you study that? It's going to be rearranged soon somehow. And all ideas that we have to study Iranian experience, that we have to study Chinese experience in ‘90s.” They were like, “We shouldn't truly dig into that.” And in this forecast, there was some analysis, like, when most of Russian banks could be cut off from SWIFT, for example. And well, our forecast was it can happen only on the very severe shock in bilateral relations, mostly related to military clash involving Russia.
[00:02:33] Peter Slezkine: So, this is in a report that you were writing in 2016.
[00:02:35] Anastasia Likhacheva: Yes. And I was very sad to re-find it in 2022. So, if we take a look on American sanction policy everywhere, it was pretty logical that after the events that happened in February 2022 and in March, it can be just one package and that's it. So, the whole logic of American sanction campaigns of the last 35 years is that, if the U.S. starts sanctioning, they continue. And they try and involve as manyuch countries as partners as possible. They try to build coalitions. If it's possible to do via United Nations, good. If no, ad hoc coalitions with you, like what happened with the Russian campaign with Europeans, Japan, Korea, and Singapore and Micronesia.
[00:03:19] Peter Slezkine: But so, you saw the first round of sanctions and we're ready for many more, because that is the general rhythm of application of sanctions in American history.
[00:03:27] Anastasia Likhacheva: For me, a really shocking moment was the explosion of Nord Stream. So, when sanctions were mixed with hardware. Also, when Europeans became very active in, not just following American sanctions, but in introduction of some sanctions that really ruins some of stereotypes, that Europe deserves to cooperate with Russia, and just the very dominant nature of U.S. foreign policy doesn't allow Europeans to marry with Russian economy and prosper. And then we realized that it doesn't look so clear. So, that was the most intriguing moment here.
[00:04:05] Peter Slezkine: So, in the post-2014 work that you had done on sanctions and anticipation, or at least preparation, for possible future American sanctions on Russia, you expected the United States to be the most aggressive actor, for Europe to have incentive not to fully follow along. And so, you were surprised by how enthusiastically the Europeans embraced the sanctions policy. And you mentioned Nord Stream. What do you mean by hardware?
[00:04:32] Anastasia Likhacheva: Usually, we try to divide the sanctions as a tool of foreign policy that countries apply, trying to avoid other military tools. But de facto, in most cases, if sanctions really matter as something in bilateral relations and they're considered by a sanctioned side, it is usually mixed with some, either, direct military pressure or relative military pressure. So, if Germany would just sanction import of Russian gas, it would be one story. When, also, three or four pipelines were destroyed, it was another environment for sanction application.
[00:05:11] Peter Slezkine: Sanctions by other means. So, this is, in some ways, analogous to the history of sanctions with respect to Iran. That Iran is the target of sanctions, but there is also a certain amount of sabotage that accompanies the sanctions-
[00:05:24] Anastasia Likhacheva: Definitely.
[00:05:25] Peter Slezkine: … of their nuclear facilities and…
[00:05:26] Anastasia Likhacheva: Yeah. Well, with Iran, it was de facto what happened with Iran. So, Americans pushed a lot of Europeans to follow the sanctions and all those. And whenever it was possible, Europeans tried to swing from these sanction campaigns. And from 2014 to 2022, it was more or less a similar story with Russia. And then it was a very profound change.
[00:05:49] Peter Slezkine: So, from 2014 to 2022, there were American sanctions on Russia, but the Europeans were attempting to maintain economic relations as much as possible.
[00:05:59] Anastasia Likhacheva: Yeah, yeah. And try to mitigate, somehow, American sanction compliance. Of course, some European companies limited their presence in Russia after 2014, obviously, but it's incomparable to the scale of 2022.
[00:06:12] Peter Slezkine: Yeah. And after 2022 is the reverse. The Europeans have been much more aggressive than the Americans – , European companies left Russia much more completely than American companies.
[00:06:22] Anastasia Likhacheva: No, American companies also did, and especially some European companies with heavy American presence in their stakeholder structure. That was the key European sanctioners, de facto sanctioners. For example, private, family-owned European companies, they tried to stay in Russia as much as possible. And it was some part of international transnational conglomerate with American presence in any forms. So, these companies were pretty active in leaving Russia, in cancelling.
[00:06:53] Peter Slezkine: Do you know what prompted them to leave so abruptly? Was it fear of legal or economic repercussions, or of reputational damage?
[00:07:03] Anastasia Likhacheva: I think it's a mix. For some companies, for some Swedish companies, it wasere both reputational aspects regarding their domestic markets and their domestic political situation and the share of American markets in their revenues.
So, we analyzed the logic of these withdrawing companies. Most of them had some economic concerns or economic rationale here. So, very few of them really were like, “Oh, we just don't want to deal with Russia anymore.” There were thoseat kinds of companies, but not so much. And some of them started to come back very silently, but, like, in some, in half a year, in a year, but many of them still work abroad.
[00:07:46] Peter Slezkine: And the ones that started coming back a half a year or a year after the full-scale invasion, as we call it in the U.S., did they come back because they realized that Russian policies wouldn't be so punitive or that American sanctions wouldn't be so total? If they left for economic reasons, what economic reasons brought them back in?
[00:08:08] Anastasia Likhacheva: First, they realized that some competitors stayed and continued to work. If we speak especially about retail, FMCG [fast-moving consumer goods] sector, these segments weren't sanctioned directly. They weren't sectors that were on the sanction list. So, it was more about concerns and concerns on how to redirect revenues, how to set up financial flows between Russia and major headwater, that kind of things.
When they found some ways or found partners that represent their interests here under the same brand, well, they started to profit again from the market. Because also, if we take a look aton forecasts in March 2022, so, Russian economy should be ruined in weeks or months. Then, it didn't happen. Russian economy started to grow.
[00:08:52] Peter Slezkine: But why didn't it happen? And what did you expect to happen when, suddenly, there's this massive war, which even Russians didn't expect because it was presumably supposed to be over quickly? Nobody expected it to take as long as [crosstalk 00:09:04].
[00:09:03] Anastasia Likhacheva: Nobody expected it. And we try to, like this example as a case when any expertise doesn't work properly. There were no proper forecasts of the dynamics of Russian GDP for coming years. No, both from American, from European institutions, from IMF, from Russian research bodies where lots of smart people work. Basically, the smartest, especially in economic forecasts. But all the models they use, they are not adjusted to profound shocks. The same with pandemics. Actually, in the spring 2020, nobody really managed to foresee what's going to happen with global trade and global GDPs, GDP of major countries, during the pandemic year.
[00:09:46] Peter Slezkine: Were these totally different disruptions? Or did the experience of the pandemic prepare Russia for the sanctions that came after the start of the war?
[00:09:56] Anastasia Likhacheva: Well, the one thing that probably is similar with pandemic experience is unusual, like, nonstandard practices of very intense dialogue between government, between official bodies and business. That was what worked during the pandemics when everything is disrupting. So, we need some other tools and speed of problem resolutions.
And that helped, but I think nobody expected it's going to work in this way, both business and government. So, Russian business managed to redirect lots of flows and trade activities and investment activities very fastly, much faster than what was expected by sanctioning countries. Nobody expected that Russia would redirect its trade towards Asia so fastly and in such huge scale. Now, about 73% of Russian foreign trade is trade with Asia. No matter, like, for example, if part of theise goods still comes from Germany or other countries, but still all services, logistics, goes through Asia.
[00:10:58] Peter Slezkine: But some of that is only on paper, presumably.
[00:11:02] Anastasia Likhacheva: Oh, well, God bless paper.
[00:11:05] Peter Slezkine: Yeah, paper has done a lot for human civilization. But so, how was Russian business capable of such flexible reorientations? Because this is a country not known for quick movements, adaptable bureaucracies, right? I mean, the idea is that it's, sort of, a big, clunky system that moves slowly, that has a lot more friction than flexibility. So, is this adaptability always inherent, always visible? Or was this a response to totally catastrophic circumstances?
[00:11:38] Anastasia Likhacheva: That's the key. I think, if we speak about the speed of adaptation, a Russian business that’s grown up for the last 35 years, it's education curve was based on catastrophic changes and on catastrophic shifts. So, when one country disappears and completely another country appears when, like, we just started to rearrange something and then in, like, seven years of new Russia, we have a default and financial crisis…
[00:12:01] Peter Slezkine: Well, give us specific examples, because country appears, disappears is a little confusing.
[00:12:06] Anastasia Likhacheva: First, you start thinking about some business activities living in USSR. Then, you wake up, and next day there is no USSR anymore. There are 16 countries. And you live in the biggest one, but still, it's a different country, different bureaucracy, different ideology, different everything. Then, you'll enjoy hyperinflation. Then, when you…
[00:12:26] Peter Slezkine: Enjoy is an interesting term.
[00:12:27] Anastasia Likhacheva: Oh, well, irony is part of our culture code. And then, you just started to re-configurate something, rediscover the world or whatever, business practices. And then, 1998, hello, Asian financial crisis that in Russia is never considered as Asian financial crisis. It's our financial crisis and default when many people who just started their businesses, they faced really very difficult period, when dollars jumped from five rubles to 20 and 25 rubles in a couple of weeks. That's just preparatory school for Russian business. And then, the next 20 years, they started to learn how to do business in the global world. And some of them learned. So, when they first faced the shock of 2020, they remembered some of their practices and instincts from the very beginning.
[00:13:18] Peter Slezkine: But a lot of time had gone by since the 1985, the 96th decade. From the outside, it looked like there's just all the pipelines have been built, the gas was flowing, the money was going to London, along with the children of those who own the pipelines. And everybody was happy with a pretty stable system.
[00:13:40] Anastasia Likhacheva: Yeah, but then we realized that we have more than two pipelines that go to Europe. Obviously, more than two. Three in Nord Stream were exploded. And we have the whole world around. And we don't really know how to work with it. And it's really lots of people that already can pay for services.
We started to work on Pivot to the East before itwe became fashionable. And it was very hard in, like, in 2010 to explain why we have to consider more work with China as a prosperous market. And from an economic point of view, it was so obvious. You're showing figures and you say, “Hey, guys.” They’ve gonerown up, like, by two digits, pass every year. And we have the longest land border with them. And we have so many things they need, not just oil and gas and resources. We have water. We can produce water in canned goods and sell food for them, sell paper or whatever. And not speaking about technologies, they also could be interested in.
And the most of the logic was, it's right, but what for? We have Zurich, we have London, we have pipelines, and we have oil, $120 per barrel. But some projects were launched before. So, if we didn't start any attempts to balance our relations with Europe, mostly economically with Europe, till 2022, the consequences would be much harder. And all the efforts at the presidential level, like, relations with sea, relations with Moody, it also played its role. Relations with the Middle East, of course, with Middle Eastern monarchies, it played its role.
[00:15:11] Peter Slezkine: But, so, after the first major package of sanctions in March, or whenever it was implemented, how precarious did the situation feel here? And how quickly did you find your footing? How quickly did the expert community, the business community, and the various bits of the government bureaucracy all get together to start working on this problem? Or did everybody start doing it separately?
[00:15:33] Anastasia Likhacheva: I think they started to work immediately, particularly, at the very important role, stabilizing role, that was played byt the Central Bank. Because, basically, they increased interest rates immediately. So, basically, the idea was that, for a short period of time, the economy must become frozen to avoid any clashes, any collapses. And when they realized, okay, now, we can start breathing, they started to change the monetary policy. Current interest rates are… they're pretty high for Russia, more than 20%, but at that time, it worked very well. It was a very important stabilizing impetus. And at the same time, lots of people started to find any options, because there was no choice, whether a business can take a pause and wait or it has to redirect its activities or find another partners abroad. There was no choice. There was just a goal to find other ways how to get money. And when I think it's part of the cultural code as well, then when there is no choice and you just must do something, they went and did.
[00:16:39] Peter Slezkine: And how easily were these intermediaries and partners found? And how actively did they search out Russian business? To what extent did the outside partners do some of the work to meet you in the middle?
[00:16:57] Anastasia Likhacheva: I would answer from a bit of a different angle. If we compare Russian sanctions, like, anti-Russian sanctions with anti-Iranian sanctions or any sanction campaign, the key variable here is the role of third countries, to which extent they follow the sanctions or they just don't deal with the sanction state and whatever.
And I think that of U.S. and Europe, that their very intense sanctions and media and political campaign against Russia would push other countries either to follow their sanctions or to avoid dealing with Russia, it failed.
At the same time, we can say that there were some generous offers to these countries. It was just a bet on, nNot just coercion, but the symbolic role of political messages and that kind of things, because there was no UN Security Council resolution, forby obvious reasons. There was no official positions of China or India or Middle Eastern countries that they share the views of Europe and the United States that Russia must be sanctioned at all. Without these conditions, sanctions don't work to the same extent they used to work 15 years ago, just because the economic role, economic potential, economic capacity of the global majority really increased.
So, if the same amount of sanctions that was imposed under the same logic, no generous offer to other countries and no UN Security Council resolution, if the same amount of sanctions would be imposed on Russian 2022, the consequence would be much harder.
[00:18:32] Peter Slezkine: Because of the external environment.
[00:18:34] Anastasia Likhacheva: Yes, because the international system changed completely. It's much easier to survive within the system under sanctions. But it's more expensive to cooperate.
[00:18:45] Peter Slezkine: To what extent do you think American policymakers understood this fact? Do you think they meant to destroy the Russian economy? Or they understood that there's only so far that they would actually be willing to push a partner like India? So, that there are always going to be some doors left pretty wide open and that sanctions weren't ultimately meant to be total?
[00:19:08] Anastasia Likhacheva: Frankly speaking, I don't know, because first, state official positions were that the Russian economy will be destroyed very soon. Our sanctions would work. Sanctions from hell and so forth on.
So, I think that the initial message was to destroy the Russian economy as it used to exist by the time, very fast with low costs states who sanctioned Russia, firstly for the U.S. and Europe as well. I don't believe that Europeans, in 2022, really planned that these sanctions are for ages. Otherwise, I think there will be more concerns placed in some countries.
The idea was, okay, we start, we expect fast results –, then they realize that there is no fast result. But to achieve these fast results, really, to ruin the economy, you have to incorporate China, India, and Middle East in the equation. And you can't incorporate them just by coercion. So, you need to offer something. And the offer was too expensive. That's why they decided not to move too deep into that by that time. The example of Thailand is pretty famous, when there was an attempt to push Thai authorities to block tourist visits from Russia, and the Thai said, “Okay, we raise a pretty good fortune from Russian tourists. Just provide us the same amount of money and we will block the next day.” And the idea was no, and the talk didn't work.
Peter Slezkine: And the same, more or less, with the Indians in oil. That they say, “We need energy, this is cheap, we're going to buy it, unless you give us better terms.”
[00:20:45] Anastasia Likhacheva: Oh, well, I think, with India, it was more complicated because India…
[00:20:49] Peter Slezkine: It’s their famous non-alignment.
[00:20:50] Anastasia Likhacheva: It's not an alignment. It's just the biggest population of the world by now, if I'm not mistaken. It's a booming economy. It's the whole logic of new pole of growth worldwide. And those who want to deal with pole of growth haves to treat India properly. So, I think it's more sophisticated than just the oil bargaining. But part of oil bargaining also takes place, that's true.
[00:21:11] Peter Slezkine: And self-confidence doesn't have to be sophisticated. But they certainly felt like they had a position in the world where they could afford to do what they wanted and what was in their own interest.
[00:21:22] Anastasia Likhacheva: Yep.
[00:21:23] Peter Slezkine: So, you said that the world had changed, that what might have been possible earlier is impossible now with this sanctioning instrument, that it turned out that sanctions are not a nuclear bomb after all. So, what do you think the future of sanctions will be?
[00:21:43] Anastasia Likhacheva: I need a crystal globe to answer properly, but as we don't have it in our podcast, I think that sanctions will be on the table of negotiations, for sure. It's already presented by both Russian and Americans, but if we imagine the situation that U.S. withdraws lots of sanctions, most of sanctions, some sanctions, no matter, if we imagine that this happens, it means that the whole previous logic of American sanction policy is changed dramatically, because if we compare American sanctions in 1990s, like, La Lista Clinton against drug dealers and drug barons and some small countries, and then 9/11 happens, and the war against terrorism is combined with a war against finance, financing of terrorism. And here starts the new story of American sanctions with the financial intelligence helping to monitor inappropriate transactions.
And what is more important, because OFAC realized very quickly that there's too many operations that happens in the financial world and any institution with the smartest AI can't monitor all that. You have to outsource. You have to make your concern not to allow bad people pay to other bad people. You have to outsource it to financial institutions. And it was a very profound shift.
And there was no example of that, for the last 25 years. , tThen when you start this crusade against some absolute evil, like, terrorism or how it was positioned in American media and politics against Iran that wants to come into the nuclear club, you can't stop because you can't bargain with absolute evil. And the whole logic of the sanction campaign against Russia for the last, especially three years, it was the same. There was a sanctioned crusade against absolute evil.
And if we now imagine that no, sanctions are just a regular tool of foreign policy, it's just when countries have some conflicts, they use one kind of instruments, when they overcome these conflicts, they can use other tools, it's just a very profound shift. And if it happens, and from a logical point of view, it should happen because there are just too many countries that can be part of these trade and investment equations. But it will be a new story of American sanctions.
[00:24:04] Peter Slezkine: But do you think that the current model of sanctions is suited to this more flexible future? Is it a screw that can turn both ways? Because you say that the enforcement of sanctions was outsourced to the companies themselves that had to hire lawyers and create special departments so that they could manage their own transactions in order to avoid punishment if some audit were to take place. But that they're the ones who do it themselves. And from what I understand, many of them are wary of making changes to this because Congress passes one law today, another tomorrow. You don't want to have to rehire this whole group of lawyers, so maybe better for now just keep in place the same policies. So, there's not much adaptability built into this system. So, let's say that Rubio proposes to resume economic activities with Russia. How much can the government actually do to roll back sanctions in certain sectors?
[00:25:04] Anastasia Likhacheva: First of all, they can deal with SDN list because SDN list, especially the most recent changes in SDN list, because its…
[00:25:12] Peter Slezkine: Explain what an SDN list is.
[00:25:13] Anastasia Likhacheva: Specially designated nations are really, truly bad people and companies, that any person who wants to deal with America shouldn't deal with members of this SDN list. It can be companies. It can be some particular people. But there are also sectoral sanctions, and there are some laws that were signed, both during the first Trump presidency, CAATSA [Countering America's Adversaries Through Sanctions Act], Countering American Adversaries… I don't remember how it's ends up, but CAATSA. And it means that a president can withdraw some sanctions only if Congress approves it, if Congress allows it. And now, we see that President Trump really has lots of capacities to work productively with Congress, but the limits of this dialogue are unclear, at least for us here. And without this, any key sanctions can't be withdrawn. So, sanctions against Russian energy sector, against the financial sector, they are put in laws. And some particular bank, yes, okay, you can now switch the light and connect 15 Russian banks to SWIFT, but after tomorrow you can switch them back. It's better than nothing. And I think that, if that happens, Russia could profit from that kind of changes, but it's not a sustainable solution at all.
[00:26:36] Peter Slezkine: So, allowing Russian banks access to SWIFT is something that can be done immediately without Congress, but the sanctions against the large sectors of the Russian economy remain in place because those were imposed by Congress and need to be repealed by Congress.
[00:26:51] Anastasia Likhacheva: There is also a tool that is called waiver or exemption. So, executive authorities in the U.S. can start issuing these waivers and export licenses within some existing sanction programs. It happens. It worked with Iran. For example, by 2010, if I'm not mistaken, like, Halliburton worked in Iran by humanitarian waiver or something. General Electricity is good for humanity, that's true. So, it's also possible and doable, but it takes a lot of work and very intense dialogue by of authorities and business. In this case, it can be institutionalized.
[00:27:29] Peter Slezkine: Let's say now everything continues to progress as quickly as it has, up to this point, in terms of Russian-U.S. relations, and there is some motivation to begin to roll back sanctions, if you were to tell the American side how and where to start, what would you put on that list?
[00:27:54] Anastasia Likhacheva: It's a difficult question, actually, because there are some immediate things that can be changed very fast – , like, the next day, the same day – by this exemption or waiver or moves within the SDN list. But if we limit our conversation only by these moves, it's almost unimaginable to overcome other sanctions, other sanction limitations. And they would limit most of the activities, except some very particular projects. If we raise a question on assets that are frozen and the part of the American answer is, “Well, we have only 20 billions and all the rest is mostly in Brussels. Deal with Brussels.” I don't believe that Russia would accept this answer completely. If we speak about sectoral sanctions against aircraft and aviation industry, one particular waiver for one particular aircraft, it’s not… it can't solve anything systemically.
We saw yesterday that the first phase was to set up better diplomatic dialogue, so to set up diplomatic teams that work in both capitals more productively. That's a good sign, because for me, it illustrates some openness to really discuss not some situative issues, like, let's allow Gazprom to set three transactions via SWIFT and then we cut it off. It's unsustainable at all, but it takes lots of work within the U.S., more work domestically than with Russia here.
[00:29:30] Peter Slezkine: But you didn’t quite answer the question. If you are writing such a paper for your own relevance and then they will present that and study right here… so, you said there's a lot of stuff that is complicated and it requires long and persistent work. Are there any big ticket items or small, easily achievable compromises?
[00:29:48] Anastasia Likhacheva: Well, small, easily, achievable. It's not a compromise. Well, this is a very important point right here. For Russia, any withdrawal of sanction is not considered as part of compromise. It's considered that the United States corrects their own mistakes.
[00:30:02] Peter Slezkine: But if you talk to Trump that way, you're not going to get very far. So, you have to present it as mutually beneficial and that the United States economic sector will also gain considerably from removing certain limitations.
[00:30:17] Anastasia Likhacheva: Obviously. Well, for President Trump, the rhetorics must be different, that's clear. He likes big projects. He likes big figures. So, of course, if we take a look at theon Russian economy, it's about energy, it's about finance, it's about services. That's it. Some talk can be about aluminum and titanium, but it's very… I think it's a secondary issues.
[00:30:36] Peter Slezkine: What about uranium?
[00:30:38] Anastasia Likhacheva: Well, uranium also can be a part. But uranium without answering to energy and finance, it shouldn't be discussed first. It won't be just… like, it would be a nice deal.
[00:30:51] Peter Slezkine: Okay. Well, it seems like these negotiations will probably take a while. There is a lot to discuss.
[00:30:57] Anastasia Likhacheva: Well, I think the first key point here is to fix the principles, how the whole sanction issue is discussed. Because if we start going sanction by sanctions, now, I don't remember exactly. All in all, we have more than 20,000 sanctions from all the countries. And the U.S. usually takes, like, more than half. So, if you go one by one, surname by surname, company by company, and afterwards we turn to sectoral sanctions, many people can build their careers within these negotiations, but it will be too long a journey.
But the major principles, what we do with assets, what we do with sectoral sanctions, and how the president can push the sectoral sanctions back within Congress, and some very practical and fast low-hanging fruits with SDN or waivers or exemptions.
I think that the first step will be more about exemptions and waivers. But it's not the route towards some – , how did they they called it yesterday –, new era of bilateral relations. It's not an era. It's just… can be a better moment. But we had lots of bad moments in the past three years, so it's not very hard to draw something nice.
[00:32:10] Peter Slezkine: Yeah, the Chinese have declared a new era. I guess the Russians and the Americans can have a moment. In 2022, circumstances changed quickly. Russian business and its foreign partners had to adapt. The system of interaction and exchange became more complex. And many more links were added to the chain. But the people who were operating as intermediaries clearly have benefited. Are there important sectors of society who would not be very happy if sanctions were to be lifted substantially?
[00:32:51] Anastasia Likhacheva: Well, there will be some people who wouldn't be happy about that. Any counter-sanction policy means that there is a group of people that know how to profit from sanctions. I think that some concerns now are more in FMCG sector and retail when many American and European companies left. And now, if they want to come back and the others already invested some money here or just launched or increased their production here, for them, it's a pretty heavy challenge. And there is a chance that McDonald's comes back and we have the Russian analog of McDonald's on the same street and McDonald's here. And they compete for Russian guests because, well, the Russian analog works pretty efficiently.
[00:33:32] Peter Slezkine: And the Russian analog just took over the restaurants that McDonald’s [crosstalk 00:33:36].
[00:33:36] Anastasia Likhacheva: But they renovated most of them. They made a renovation.
[00:33:40] Peter Slezkine: So, McDonald's has its work cut out for it. If it comes back, it has to find new real estate and...
[00:33:45] Anastasia Likhacheva: I don't know exactly how the deal was structured because most of these deals, they were structured very specifically for every particular buyer and seller. There was management buyouts. And how it's going to work now, it's very big question. But of course, some Russian companies retail, if you go around Moscow, you see lots of restaurants, lots of shopping malls that have some brands that we never met before 2022, or they were very small, but now they became pretty big for the Russian market.
[00:34:16] Peter Slezkine: Chinese brands or other brands?
[00:34:17] Anastasia Likhacheva: Chinese, Turkish, Russian brands.
[00:34:19] Peter Slezkine: Chinese, Turkish, and Russian?
[00:34:20] Anastasia Likhacheva: Yeah, and some Italians, still.
[00:34:23] Peter Slezkine: Some Italians, still?
[00:34:24] Anastasia Likhacheva: Yeah.
[00:34:24] Peter Slezkine: I know Russian tourists have been able to go to Italy. That's one of the best places to get a visa in Europe, right?
[00:34:29] Anastasia Likhacheva: Those who wanted, they could go. They weren't in the sanction list. They could go to European countries — so, to Italy, to France, to Spain. But it wasn't really welcoming. But those who came, as I know, they enjoyed shopping in every place they wanted.
[00:34:47] Peter Slezkine: That's the only reason to go West, is to buy a purse?
[00:34:50] Anastasia Likhacheva: Well, it was funny that Chanel, that has a very famous perfume, Russian skin, but in French it sounds nicer. And it's very, very famous that Madame Chanel invented because of her beautiful love towards Russia. And in 2022, they took the title from the bottle. So, it was just unnamed boxes. But those who wanted to come to Chanel in Paris and spend $10,000 or 20,000 euros for bags, they could do that.
[00:35:21] Peter Slezkine: Because a lot of money that used to flow out of the country was stuck in the country. So, when you have a chance to buy a bottle of perfume in France, you take advantage of it. So, when was the last time you were in the West, anywhere?
[00:35:36] Anastasia Likhacheva: I think a year ago.
[00:35:39] Peter Slezkine: A year ago. Where'd you go and for what reason, if you can share? You don't have to.
[00:35:45] Anastasia Likhacheva: What for? They’re personal reasons.
[00:35:46] Peter Slezkine: Personal reasons, very good. Okay, now, for just the last short segment, I'd like to ask you about this school that you run as dean and the ways in which it, perhaps, has changed in recent years. So, first, a tactless question – . How old are you?
[00:36:03] Anastasia Likhacheva: I'm 36.
[00:36:06] Peter Slezkine: 36. So, we're pretty much the same, but you're already dean. It seems like there are quite a few young people in important posts in Russia. You might be the record holder.
[00:36:17] Anastasia Likhacheva: Last week, I met with the governor of Yamalo-Nenets Autonomous Region, the key gas producing province in Russia that produces more gas than Qatar. And he's our age. He's 36. And he's governed for the last seven years. And that's when I realized that, well, my career sucks completely. No, there are young people.
[00:36:38] Peter Slezkine: How do you explain this? Because obviously, from the outside, we see the top leadership, which Putin, Lavrov, and everybody else is of a certain generation, I mean, all the same generation. But underneath, has there been a renewal of, sort of, new cadres? And when did this start? And what was the impetus?
[00:36:51] Anastasia Likhacheva: I feel that, for the older generation, I mean, like, ‘70s boomers, for them, it's easier to deal and to transfer power towards people, not, like, 10, 15 years younger than they are, but to two generations down, like what we see in many areas. Of course, there are some people, like our prime minister, Mr. Houston, he's, like, in between Putin and ‘40s. But if we take a look aton young rectors of Russian universities, they are about their 40s. So, it's not like 55, 60-plus. And not forgetting that those who are 55, 60-plus, many of their careers and career tracks were ruined by ‘90s. People were trained to become engineers or someone who would be very ion demand in the Soviet economy, in the Soviet country, and then everything crashed. So, it was, like, everything changed. Like, those who graduated with a history diploma or literature or philosophy, they just couldn't find money to survive. So, they left their careers. So, they had to raise money, some commerce, and none of them really became successful. And those who started their careers in the 2000s or in the late 2000s, it was much easier. It was a prospering country. So, if you started from one position, you could imagine some very clear other further steps. So, there's quite a large gulf. So, there's the current top elite, which had already begun its career by the ‘80s. And then there's the younger elite coming up that only began in the early 2000s.
[00:38:23] Anastasia Likhacheva: So, generationally, yeah, it's, like, kind of, children of boomers. So, I think it explains some shifts in our government. For example, when we see one of Vice Prime Minister's Patrushev, he's the son of Nikolai Patrushev. I think it's a more acceptable logic for transfer. Oreshkin, he is young. He's one of the first deputies in the presidential administration. If we take a look aton the ministers in the government, most of their deputies are very young. So, they are about in their 40s. But as a dean, I'm one of the youngest in the country, I guess.
[00:39:02] Peter Slezkine: Well, and that is something that is not visible at all from the outside, because you see this continuity in leadership and those are the faces that…
[00:39:09] Anastasia Likhacheva: I think that's the message.
[00:39:10] Peter Slezkine: Internationally recognized, yes. This is a-
[00:39:11] Anastasia Likhacheva: That's the logic.
[00:39:13] Peter Slezkine: … frozen and then stable situation.
[00:39:15] Anastasia Likhacheva: Yeah, yeah, yeah, yeah, nothing changes.
[00:39:17] Peter Slezkine: But in fact, you're saying that, in many of the key positions, there are quite young and newly arrived people with different understandings of the world.
[00:39:25] Anastasia Likhacheva: Yeah. The most recent example, our company, state corporation that runs Roscosmos, like Russian space, it was governed by men, like, about 60s, 70s, closer to 70s. And now, it's chaired by a guy who is about 40.
[00:39:40] Peter Slezkine: Who doesn't remember anything about the Soviet Union and Gagarin?
[00:39:43] Anastasia Likhacheva: Well, everybody remembers everything about Gagarin. But the key problem is that we have to move beyond the Gagarin past. We have to invent something new. And well, there is a belief that the young one can move forward in this direction.
[00:39:58] Peter Slezkine: Well, so, let's finish by talking about the very youngest, your students. Three and a half years ago, what did they come to this school to study? And what sort of jobs did they think they were going to get? And what has changed since 2022?
[00:40:15] Anastasia Likhacheva: I would say that, first of all, they are much more adaptable than the adults. And they switch to a new reality that they have to apply for a job, not to an American company, but to a Russian company or to a Chinese company. Or they have to go for a student mobility exchange, not to Germany, but to Korea or to China or to Hong Kong or to Japan. By the way, this year, we have students who take Arabic as their major language. And they started their mobility with the United Arab Emirates. They're very satisfied. For many of them, actually, the dream career now looks like a career in Dubai. Then, if we speak about finance and investment in Dubai, then in New York previously.
[00:40:56] Peter Slezkine: And that's not just a result of the war, but also that the world is changing and Dubai is sparkling and the skyscrapers are taller than they are.
[00:41:03] Anastasia Likhacheva: Dubai attracts millionaires from countries who are not sanctioned. And what I can also say about…
[00:41:08] Peter Slezkine: But so the trend was already changing even before the Russia…
[00:41:12] Anastasia Likhacheva: Well, my faculty is pretty specific because, as I said, we started pivoting to these before. So, by 2022, we had the School of Oriental Studies that attracts lots of students annually, more than 180 annually of newcomers, just for oriental studies. We had oriental languages, Chinese, Arabic, Japanese, for our world economists, for those who take international relations as their major. We also had a program of a dual diploma program with Korean University Kyung Hee. So, many students who are eager to go to Asia before, not because they couldn't go to France, for example, but because the choice was made and they want to work with Asia.
[00:41:51] Peter Slezkine: And what have the results been? So, those early specialists in eastern countries, have they already put that to use? Are there, now, is there a network of Russians who are ready to tie Russia to the global majority, as you call it?
[00:42:07] Anastasia Likhacheva: They are ion demand. And the Russian labor market now is overheated. We have a strong deficit of well-qualified specialists in most of the positions. That's why, like, my third year students, we have four year for undergrad, who takes world economy, for example, on the third year, the students who don't work, that's only students who don't want to work because the market is ready to take them for short internships, for various options. So, they're very ion demand. But I still believe that we don't have enough experts to work with world majority. And with alumni of Soviet universities from Africa, from Asia for about 20 to 30 years, it was mostly forgotten asset. That's why we have a lot of work to do.
[00:42:52] Peter Slezkine: But so, you are rediscovering these Soviet connections. Finding Africans who once studied in Moscow and redinkling these associations.
[00:43:00] Anastasia Likhacheva: Well, for our faculty, it's a bit different. I believe that for Russian companies who want to work abroad, who want to work in Africa, in global majority markets, they have to invest in raising Russian specialists. But it takes a lot of time. It's like five, six years. If we take a student who comes, who doesn't speak any foreign, any oriental language, and he also has to learn, I don't know, economics, logistics, business. Cross-cultural communication and whatever and get some practical experience. Or you invite a master's student from a targeted country. He studies there for two years, gets some Russian experience and connections. And then he comes back and works for a Russian company. It's much faster than what we can do in years, not in generations. So, we try to mix these activities, but it goes very hard.
[00:43:50] Peter Slezkine: Oh, I was about to say that you had presented a very tough negotiating position, that the West isn't even interesting after all. That's Dubai and Shanghai are much more enticing than London and New York.
[00:44:02] Anastasia Likhacheva: Of course, some students are interested inof going to London or to New York. But I mean, for them, it wasn't so heartbreaking and ruining their, picture of the future. Those who won, they still can go. That's the point. And, some of them go. But many of them are eager to find any low hanging opportunities. They understand that fast careers are built to, either when an empire is growing or when an empire is, destroying. They want to build their empires on the new markets.
[00:44:32] Peter Slezkine: Let's end on empires growing and collapsing.
[00:44:35] Anastasia Likhacheva: Unfortunately, or perhaps fortunately.
[00:44:38] Peter Slezkine: Seems to be a rule of history. But we will see which empires gGo in which direction? All right. Well, thank you very much.
[00:44:47] Anastasia Likhacheva: Thank you very much.
[00:44:52] Peter Slezkine: Thanks for listening to the Trialogue Podcast. Make sure to subscribe to the show, so you don’t miss out on any episodes.
The Trialogue Podcast is hosted by the Stimson Center and produced by University FM.