Russia(Washington Insider Magazine) -After Russia invaded Ukraine in February, approximately 40 nations imposed coordinated sanctions. They wanted to damage the Russian economy by restricting banks’ access to dollars and the US financial system, cutting high-tech exports to decrease Russia’s military capacity, and targeting Kremlin supporters and enterprises. This unparalleled economic pressure hasn’t destroyed the Kremlin’s military determination or economic might. Sanctions haven’t lowered Russia’s level of life. However, if you look carefully, they are harming the nation and are vital to finish the conflict. Let’s find out if are sanctions hurting Russia and how much.
Are sanctions hurting Russian economy?
Nearly four months ago, in reaction to Russia’s invasion of Ukraine, the United States and many of its allies imposed unprecedented sanctions on Russia. For weeks later, the value of the Russian currency plummeted, foreign multinational corporations fled the country, and the outlook for the economy became bleak.
However, Russia reacted violently. In turn, the ruble’s value was bolstered, and oil shipments to China and India rose. Recently, the ruble has been the best-performing currency in the world. Russia now has large foreign currency reserves and is much more self-sufficient due to years of planning. In addition, several businesses that closed under foreign administration are now operating again.
Do we see any results from the sanctions? Russian political scientist Ilya Matveev observed, “It depends on the criterion.” “Sanctions are not having the desired effect since the Russian economy is still running, which is why they were enacted. However, sanctions are very effective if their intended outcome is the gradual economic weakening of Russia.” We look at Russia’s preparation for this moment and what the sanctions may entail for its battle in Ukraine.
Are sanctions hurting Russian citizens?
Despite Putin’s statements and the Kremlin’s economic data suggesting otherwise, Russia’s economy is being severely harmed due to businesses withdrawing their support and sanctions being implemented as a reaction to President Vladimir Putin’s unlawful war in Ukraine.
More than 30 nations have taken the step of imposing sanctions against Russia, which have resulted in a reduction in the country’s energy imports, a blockade of financial activities, and a stop to the shipping of essential imports such as semiconductors and other electronic goods. Consequently, more than one thousand international businesses have evacuated their activities in Russia.
During this same period, imports into Russia have dropped by more than fifty per cent this year. Spending by individual consumers has significantly decreased, contributing to an increase in Vladimir Putin’s budget deficit. There is little doubt that Vladimir Putin’s reckless assault on Ukraine will significantly impact the Russian economy. On the other hand, the propaganda machine that the Kremlin maintains is putting in extra hours to create an illusion of economic security.
How did Russia prepare for this moment?
There are now nearly 11,000 separate sanctions in place on Russia. Following its invasion of Ukraine in February, dozens of nations took swift action, quickly elevating Russia to the position of a country with the most sanctions in the world. Removing several major Russian banks from the SWIFT payment clearing network was among the most significant sanctions. Other significant sanctions included freezing Russian assets in foreign countries, restriction of imports of Russian oil, and cessation of key exports to Russia, such as high-tech components and microchips.
Even though the sanctions inflicted some immediate harm, the Russian government has spent years getting ready for anything like this to happen. Following the annexation of Crimea and the commencement of a “hybrid war” in eastern Ukraine in 2014, Russia was subjected to economic sanctions, which prompted the country to initiate measures to protect its economy against future restrictions.
According to Chris Weafer, the chief executive of the Moscow-based consultancy Macro Advisory, today, Russia is self-sufficient in basic food supplies. It has even become a significant exporter of items like grains and wheat. In 2013, for example, Russia imported approximately half of the food it consumed; however, the country is now completely independent.
In the beginning, prices were very expensive. The quality of many different items, such as bread, cheese, and cereal, was inconsistent.”We went through a few of years of eating what I could best characterise as flavoured tissue paper while they were trying to get it right,” said Weafer of various meals that were available in Russia during that period. He said that Russian businesses could satisfy a significant portion of the nation’s need for food and other necessities such as detergents. Additionally, Russia decreased its dependence on foreign debt and accumulated massive reserves denominated in foreign currency.
Read More: Can The US Defeat Russia? (A New Perspective)
Conclusion
The rise in the price of oil and gas has helped Russia pay for its military involvement in the conflict. According to David Fyfe, chief economist at Argus Media, the company’s revenues from crude oil increased by 41% year-over-year.
He claims that 40% of Russia’s exports come from the sale of oil, which helps immensely in funding the war. While this may be true, Mr Fyfe argues that Russia is being weakened in other ways due to the sanctions.