Maximilian Hess Explains the Geoeconomics of the Russia-Ukraine War
By Natasha Wood, MALD 2024 Candidate, The Fletcher School
On September 26, 2024, the Russia and Eurasia Program presented Maximilian Hess with Fletcher’s fifth U.S.-Russia relations book prize for his new book, “Economic War: Ukraine and the Global Conflict between Russia and the West” (2023). Hess is a Fellow in the Eurasia Program at the Foreign Policy Research Institute and the founder of the London-based political risk firm Enmetena Advisory.
Heess received the award during Fletcher’s recent conference on economic sanctions and trade restrictions between Russia and the West, which was held on September 26-27. He spoke with Professor Chris Miller about the book and the geopolitical context that prompted its creation.
Hess opened, “Most of this conversation begins around the [idea of the] economic war starting in 2022. I don’t think that’s true–I think it started in 2012 or 2013.” He cited two primary forces that kicked off economic warfare between the U.S. and Russia. The first was the Magnitsky Act of 2012.
“How little attention [the Magnitsky Act] had at the time in the wider U.S.-Russia narrative was a mistake,” Hess said. He pointed to a speech Putin made at the time, which Hess argued outlined the importance of deterring future economic warfare by the United States toward Russia. A second force that kicked off economic warfare between the U.S. and Russia, Hess suggested, was Putin’s use of sanctions to apply pressure on the Yanukovich administration.
Hess stated that his book’s thesis is that the war in Ukraine is about the U.S.-led economic world order. I think we should completely abandon the term rules-based international order because there are no rules. It is a U.S.-led economic order,” he said. He also reminded viewers that Putin’s hatred for the dollar system is long-standing, which partly explains his decision to invest so much effort and money in the BRICS coalition. Hess also presented a geoeconomic explanation for the stakes in the Russia-Ukraine war.
Referring to the surplus-earning BRICS countries, Hess suggested that “what they need is a deficit market that they can go and recycle those surpluses into. That is why the U.S.-European alliance is so important. We are the only two deficit markets large enough to sustain that kind of partnership. That’s why Russia is so keen on driving Europe and the U.S. apart.”
The session also touched on the geopolitical significance of LNG, especially as an alternate energy source to Russian oil.
“That development of global gas markets is a huge difference between 2014 and today,” he reminded listeners. “Now, because of the development of the global liquified natural gas (LNG) market, we live in a world where gas price differentials in Europe and strikes in Australia can cause heating prices to go up here. LNG has, of course, been a key response to Russia’s invasion… but thinking about LNG as a national security priority and how the U.S. can increase its influence there is going to be really significant.”
