By militarily attacking Ukraine on Thursday night, Russia knows it is under severe economic sanctions from the United States and the European Union. So far, the West has not activated all of the economic retaliation, the ultimate means of discouraging the invasion of Moscow. A threat that is clearly insufficient to calm Russia’s enthusiasm. Can the Emperor’s country bend if all economic sanctions are initiated against him?
Regardless of the degree of sanctions on the giant, it is unlikely that the giant will be completely suffocated. Mark Tuati, an economist and president of the Cabinet where Aux orders de Reconomy e de la Finance, summarizes Russia’s emergency exits in a country, China. “Russia can always refer to China and trade directly or transfer its products to China and then sell it internationally, as much as the sanctions of Europe and the United States are strong,” said the economist. Pleads. Beijing shined in its silence amid world criticism and criticism of Russia’s aggression. If necessary, additional evidence of China’s neutrality in this conflict, as well as implicit support for Russia. Also, the border between the two countries is over 4,000 kilometers, which is enough for easy export and “neutralizes the effects of the blockade from the west,” MacTouati said.
Russian economy learned to do without us
After the annexation of Crimea in 2014, Russia was already suffering from severe economic sanctions. Since then, the country has sought to free the economy as much as possible from the West. “Russia’s agriculture develops, China and gas pipelines are built, Moscow exchanges much of its dollars for gold or yuan, Brazil, India and other emerging countries,” said the International Institute for Strategic Relations (Iris). He mentions Sylvie Matelly, Deputy Director, Economist and International Sanctions Expert.
A diagram showing the threat of excluding a country from the Swift network, a global interbank messaging system that interconnects banks specifically for transactions. “Sure, the impact will be terrible for Russia, but catastrophic for Europe,” Mark Tuati predicts. And Russia is already trying to avoid the problem, seeing such threats already swayed since the annexation of Crimea in 2014. The national bank of the country has developed a financial message forwarding system, a unique network connected to 23 foreigners. Bank. The country is also considering joining a banking network in China and India to make up for the loss. The same logic applies to Russia’s oligarch assets, which could be blocked. “I can imagine these millionaires putting some of their money outside the west,” laughs Mark Tuati.
Good revenge from Moscow
In addition to being wasteful, attempts to suffocate Russia will prove to have serious consequences, especially for Europe. “It is quite possible to impose strict sanctions on Russia, but it will have a dramatic impact on everyone. In 2014, Russia’s retaliation had a serious impact on our economy.” And Sylvie Matelly summarize. Natural gas from the country of Tolstoy, for example, accounts for 40% of imports from the Old World, and if sanctions are too strict, the prices of raw materials such as gas, oil and wheat will rise further. Grain is already at the highest level since July 2012 at $ 9.26, while the price of Brent’s barrel rose to $ 104.5 on Thursday, compared to less than $ 80 on January 1, 2022.
However, “Western nations are moving out of a two-year pandemic that has significantly weakened their economies and inflated debt and are in favor of Mark Tuati, as these countries need recovery and growth. Commodity prices are low. ”Excessive inflation of wheat and gas can inevitably undermine European purchasing power, further exacerbate debt and resume the economic crisis. To make matters worse, rising prices for these materials are helping Russia sell more expensively and fill its pockets. “Paradoxically, these sanctions are of little benefit to Russia at this time,” said economists.
A country with a strong back
Russia is probably even more armed than the West and is ready for an economic war. The country’s public debt does not exceed 20% of GDP, compared to 120% in France and 98.3% in the euro area. “Russia also has a $ 180 billion sovereign wealth fund and a $ 640 billion financial reserve,” he informs Marc Touati. In short, a country can use its money to incur debt for war. This is a maneuvering margin that Europe does not necessarily have.
Another factor in favor of Moscow is its population. Sylvie Matelly briefly summarizes: This probably doesn’t apply to Russia. “The last point about the robustness of the kidneys of the Russian economy, its quasi-independence:” When it comes to energy, the country has what it needs. For the manufactured products that the West normally supplies to him, he You can ask China. “
China, essential variables
Beijing is an indispensable pawn for the upcoming economic war. China makes most western sanctions meaningless if it forms an alliance with Russia. “We have to seek at least Beijing’s neutrality, or at best, work with him. Without this, sanctions would be invalid,” Sylvie Matery argues.
The whole question is whether this economic war is worth it, so experts conclude: Why not, but you should make sure it serves your purpose. Already with Vladimir Putin, we are not sure of anything … “