The world has witnessed such strict measures against Russia the past couple of weeks, including sanctions on country’s exports, finances, its oligarchs, as well as numerous businesses leaving the country as a sign of support to Ukraine in the Russia-Ukraine conflict.
One of the initial sanctions imposed by the European Union was exclusion of Russia from the SWIFT system (Society for Worldwide Interbank Financial Telecommunications), however this was only done partially. Although US, Canada and their allies in Western Europe have called for removal of Russia from the SWIFT system, it is important to note that the headquarters of this system is based in Belgium and as many credit unions and smaller banks throughout US do not connect to SWIFT, this move was set to impact its Western European allies the most. This is the reason why it was met with resistance from countries like Germany.
Sanctions and withdrawal of many businesses from Russia will have an impact on Russian economy, however chances are that these measures imposed by the West will not impact Russia as much as we have been led to believe. Upon annexation of Crimea in 2014, Russia created an alternative to the SWIFT system called SPFS. In addition, China’s CIPS (Cross-Border Interbank Payment System, also an alternate to SWIFT used for financial transactions with China) may actually provide an alternate route for financial transactions with Russia.
Russia signed an agreement with Turkey in 2019 to trade in local currencies, which now allows the two to bypass the restrictions completely. Russia has also secured an agreement with Pakistan prior to the war outbreak to build a new gas pipeline. Russia also secured numerous bilateral agreements in the past couple of years with other large regional players in the east such as India, United Arab Emirates, China, etc. Many European nations are still highly dependent on Russian gas and are unable to participate in United States’ schemes of banning imports of Russian oil and gas. Judging by all of these factors combined, Russia may not be in a bad position after all. President Biden’s desperate visit to Venezuela, a country sanctioned for so long by the US, seems to indicate that West is hurting more than the East is.
Jeffrey D. Sachs has pointed this out numerous times and this man would be an appropriate commentator as he has held senior positions across different organizations and lead several countries back to economic recovery, including Russia in the 1990s. American foreign policy uses sanctions as one of its main tools against other states, however we have seen time and time again that they do not work. They have tried it with Venezuela, Iran, North Korea, just to name a few, believing that they will remove existing leaders from power, and what has happened? President Biden was knocking on Vezeuela’s door just a few days ago in hope to negotiate import of some of Venezuela’s oil as replacement to that of Russia. None of the sanctions imposed on these states achieved what the West was hoping to achieve and the outlook for Russia is very similar. In addition to standing strong even with many businesses leaving, Russian President (whether we like it or not) enjoys high ratings among his voters, which is very different from presidents (current and former) in the US, democrat and republican alike.
That’s all fine and dandy, but where’s my Big Mac you ask? Although McDonalds in Russia represented a beginning of a new era when they opened up their first location behind the Iron Curtain, and they had thousands of people wait in line for hours to get their hands on a Big Mac, general public will get over it with the national Teremok. It’s McDonalds that will suffer losses of estimated $50 million a month with temporary closure of some 900 locations throughout the country.
More importantly, will we get over it? Our influence is shrinking, our debt is just piling up, billions of dollars are being sent overseas in aid to be used towards who knows what (and if you believe that paying higher prices for gas for a few months will help the little Ukrainian girl in the picture being shared on social media, you are very naive), rising prices of gas are resulting in decreased ability of families to afford the living costs and resulting in poverty rate increase – so ask yourself, where does it stop?
All Russia has requested was for neutrality and demilitarization of Ukraine – very simple. Instead of using tax dollars collected from your and my paycheque to send more weapons and fuel this war even further, they should be out there doing some hardcore diplomacy! I say hardcore diplomacy, because after this fiasco, it will not be easy. It is time for the West to take accountability for this one, as EU, US, NATO and anyone who follows politics to some degree, all knew that Ukraine was not, nor would it have been for years to come, in a position to join NATO but these leaders kept toying with that idea at every meeting. Now, it is time to bury pride and illusions rather than burying more people over ideals the majority of those citizens did not support in the first place.