In the face of sanctions, Moscow “strengthened the resilience of its economy and its financial system.”

This interview was conducted on Wednesday, February 23, the day before Russia invaded Ukraine.

Before Russia’s attack on Ukraine began on Thursday, February 24, the United States, Great Britain, the European Union, Japan and Canada announced a series of sanctions against Moscow. Westerners want to put pressure on Russia, which recognized the independence of pro-Russian separatists in Lugansk and Donets’k in eastern Ukraine on Monday.

But how much weight do these sanctions have on Russian giants? To find out, Franceinfo interviewed David Teurtrie, a geography doctor and deputy researcher at the European-Eurasian Research Center (Cree) at the National Institute of Oriental Languages ​​and Cultures (Inalco).He is the author of Russia – Revival of powerPublished in 2021.

Franceinfo: What are the sanctions against Russia?

David Territory: It is mainly a political act that has an economic impact. Sanctions make it possible to show Western countries’ disapproval of the Russian method, especially the independence of the Separatist Republic of Donbus by Moscow.

They also allow them to stop there and not intervene at the military level. Europeans and Americans have revealed that they will not send soldiers. Weapons are sold and delivered, but there is no Western intervention.

Facing the west is still the second largest nuclear power plant in the world, so the implementation of other more compulsory measures will be complicated.

Are these penalties unprecedented?

No, Westerners regularly impose sanctions on Russia. The first sanctions were announced at the beginning of the 2014 Ukrainian crisis. It became very weak after the annexation of the Crimean Peninsula, but remained measured and became even heavier in the conflict at Donbus. The European Union has banned the export of weapons and certain technologies to Russia, banned Russian officials from entering the territory and frozen their assets.

On the American side, sanctions have been tightened fairly regularly with stricter and broader measures than Europeans. In 2017, the United States enacted legislation sanctioning countries that import Russian arms, but Russia is the second largest arms exporter in the world.

Are they effective? Do they really do “very terrible”, as guaranteed by Josep Borrell, head of EU diplomacy?

This represents a form of Russia’s financial and economic isolation. But these sanctions are still tolerable to the Russian economy. Especially since the crisis, the Russian government has strengthened the resilience of the economy and financial system through important concrete measures.

For example, in the banking sector, at the beginning of the Ukrainian crisis, the United States sanctioned Sberbank by disabling the MasterCard and Visa cards it distributes. This measure may have been generalized. Overnight Russians would not be able to use their credit cards. Since then, Russia has responded by creating a system that allows these cards to function on Russian territory despite sanctions.

Similarly, Russia has created its own bank card, MIR. Almost 90% of Russians have this. Especially because the country pays social benefits and salaries for civil servants. Therefore, the country is no longer dependent on Western technology and media.

In the final example of the financial sector, the threat of separating Russia from Swift’s financial messaging system emerged. The latter is used by all banks for international interbank transactions, but also at the national level. The West has already sanctioned Iran twice in this way. Since the import and export business is linked to this system, using it against Russia will be a big blow. However, Russia has created its own independent mail system.

Did Russia anticipate these sanctions differently?

Yes, by accumulating and distributing reserves. The Central Bank of Russia holds more than $ 600 billion … In anticipation of possible US sanctions, a significant portion of the reserve has been converted to gold, euros and yuan.

Can sanctions really have a deterrent effect in this context?

We certainly have to ask ourselves about the effectiveness of this sanctions policy. They do not seem to have a significant impact on Russia’s foreign policy. Moreover, in Cuba and Iran, we can see that it only strengthens the political system in which sanctions policies are implemented. We have to ask ourselves: was the problem taken from the origin? Why did Ukraine promise to join NATO when it was a casus belli for the Russian elite? Did Europeans make an effort to provide an integration scheme that includes Russia? Can we think that these sanctions could destroy a country like Russia? Have non-wealthy countries lived under sanctions for decades?

With 500 French companies and 160,000 employees, France is Russia’s leading foreign employer. Can sanctions announced by Western countries harm the French economy?

Sanctions could obviously hurt France’s interests. Many investors and companies are in Russia, especially distribution (Auchan, Decathlon …), automobile industry (Renault owns Russian manufacturer Lada), hydrocarbons (Total invests heavily in liquefied natural gas). I’m in). Therefore, anything that interferes with financial transactions with Russia is not in the favor of France.

However, it should be emphasized that sanctions do not directly target these sectors. This is the difficulty. Many of Europe’s interests are related to Russia. How can we sanction Russia without damaging France and the EU too much?

What other sanctions may be taken?

It’s hard to say. Interest diverges sharply. Russia is a minor economic partner in the United States. The sanctions they are trying to impose will probably have an indirect effect on raw material and hydrocarbon prices, and thus on inflation, but without a strong direct effect.

The opposite is true in Europe. With the exception of Switzerland, Russia continues to be the third economic partner after China and the United States. Therefore, sanctions inevitably cost the European economy and far outweigh the impact on the US economy.