What effects are European sanctions having on the Russian economy?
By Akhil Gunasekaran
Over the weekend of February 25-28th, a multitude of European
sanctions hit Russia and its oligarchs, among which include the exclusion of several Russian banks from the SWIFT Banking system. This Monday morning, the effects of these sanctions have been evident, as the Ruble hit its lowest point in decades, even matching the value of one US cent.
With videos arising on the internet of packed Russian ATMs and banks, along with the central Russian bank hiking interest rates to 20%, the entire situation is reminiscent of Germany during the post-WWI era.
The causes of these levels of inflation are more multimodal than mere sanctions. Several seemingly neutral nations, such as Switzerland and Sweden, have frozen Russian assets (amounting to 11 billion USD) and sent military aid to Ukraine respectively.
Moreover, Russia’s war itself has been going seemingly slower than expected. Ukrainians, armed with NLAW and Javelin anti-tank launchers and US rifles, have been stringently defending their country from invaders. In addition, videos have risen across the internet of many young Russian soldiers being captured or killed by Ukrainians. This situation has essentially prolonged the war and given European countries more time to impose sanctions. In addition, the lengthy war has caused mass protests across major Russian cities, overall leading to a loss of faith in government.
Although Russia has agreed to hold peace talks with Ukraine, it seems that as of March 1, 2022, the war will continue. Theoretically, with Russia continuing its crusade against Ukraine, sanctions will only continue to be imposed, further demolishing the Russian economy.
In a country with over 100 million citizens, the effects of such sanctions would be unprecedented. In fact, we could likely see another breakdown of Russia’s government (with the last one being the collapse of the Soviet Union). This time, however, sanctions could lead to a potential famine in Russia, since the country wouldn’t be able to trade with many other countries due to their SWIFT ban.
It has been known for long that Putin and Russia’s rich have formed a house of cards; Putin enacts favorable laws to business owners, and in return, business owners give Putin a share of their produce. But, with many oligarchs having their assets frozen, we could see Russia’s 1% wage a “war” against Putin.
Despite the negative effects of sanctions, it is one of the only realistic routes the world can take to prevent another world war. Actions, such as admitting Ukraine into NATO, would immediately begin WWIII, as other European countries would have to defend Ukraine. In the end, the economic effects of sanctions will primarily affect the Russian people, as they must now face a new age of resource scarcity, poverty, and oppression from Putin’s brutal regime.
[FEATURED IMAGE: YouTuber “Bald and Bankrupt” escapes Kyiv along with thousands of Ukrainians on a refugee train to Hungary]