SANCTIONS ON RUSSIA ARE SHAKING THE WORLD, INCLUDING THE WEST, WHICH IMPOSED THEM
Written by Elijah J. Magnier - 08 March 2022
Elijah J. Magnier @ejmalrai is a Veteran War Journalist, with over 35 years in Iran, Lebanon, Syria, Iraq, Libya, and more.
“We cannot replace Russian gas overnight,” Germany announced, followed by France to confirm that “its stockpile of gas will not be enough if Russia stops supplying us.” Hungary did not hesitate to reveal that “its economy and local currency will collapse if energy-related sanctions are imposed on Russia.” Finland confirmed that it needs eight years to dispense with Russian gas, of which Europe imports 43% of its annual needs through the “Northern Stream I” and the “Yamal” lines. Indeed, the Russian gas flows at its total capacity and crosses Byelorussia, Poland, and Ukraine, still enjoying Russian gas despite the ongoing war.
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PART 2
The price of oil in March of 2020 was about $16 per barrel. It has hit the $140 wall in recent days, and in the coming days, the price is expected to increase following the US oil sanctions. Moscow will compensate the US sanctions on oil imports
by increasing the oil price worldwide. The US oil sanctions will certainly not stop the war in Ukraine, contrary to the effect of an agreement of neutrality between Kyiv and Moscow.
Iran and Venezuela will certainly not sell their surplus and reserves of oil to lower their price and help the US with its objectives when they can sell very little oil at a very high price and embarrass Biden while standing by Russia. Business and politics do not always meet, but time will tell how the US can bring back the oil price to its average level.
As for other Western sanctions,
there are several problems whose consequences the West may not be prepared for when rushing towards an economic war against Russia. The Nickel price observed its highest single-day increase of around 60% because of the market’s worries about the supply shortage from
Russia, the world’s third-largest nickel producer of a metal used in technologies and batteries. The steel price followed as concerns in Europe of the longevity of the war in Ukraine arose.
Moreover, the Russian civil aircraft sector will be hit but has some benefits up its sleeve.
Hundreds of planes leased by Russia from the West will not return to their owners anytime soon because of the sanctions and European and Russian airspace closure. Russia says that its planes will continue to operate within the Russian continent and to the countries of Asia and Africa. Russia said it has the right to pay the lease in Russian local currency (ruble), or these planes will be considered compensation for the loss that will hit the national Aeroflot Company. Before the sanctions, Aeroflot’s annual profits reached about 491 billion dollars. As of today, the 8th of March, all flights from Moscow to Europe and vice versa have been cancelled. The European companies that own the planes will not recover their assets due to sanctions and Russia’s intention to hold them in Russia.
The central bank of Russia will begin to rely on its internal financial messaging system (FMS) of the SPSF system as an alternative channel for US international electronic financial messages (SWIFT). Only a few Russian banks were subjected to sanctions and were prevented from using the SWIFT system
because the West needs this system to pay billions of euros in advance for the price of oil and gas.
PAYPAL, VISA, AMERICAN EXPRESS and MASTER CARD have suspended financial operations with Russia.
Moscow preferred the Chinese UNION PAY system as an alternative that operates in 180 countries worldwide. Credit cards using another system called
MIR will be used for local transactions.
Undoubtedly, there is mass emigration of US and European companies from Russia, which will harm both Russia and the West.
However, there is no doubt that the sanctions against Russia are also harsh on the west.
If Russia weaponises its energy, it will materialise Hiroshima-like consequences in which the prices of fuel and gas will rise to a level never before seen in past crises.
However, Moscow is prepared for the economic war. Russia has cash reserves amounting to 632 billion dollars in euro (32.3 per cent), yuan (13.1 per cent), gold (21.7 per cent) and dollar (16.4%). 450 billion dollars are in Russia and China and other amounts in France, Greece, Germany, the US and the UK.
The consequences of the Russian war on Ukraine are undoubtedly a pivotal stage that represents a significant turning point in history. Russia will turn towards its first ally, China, which has the most critical monetary and developmental reserves globally. It will also resort to Pakistan, India, China, and Iran for trade and industrial exchange and other Central Asian countries to continue economic and commercial exchanges.
Russia bypassed the sanctions and the devaluation of the currency in 1998. It was not affected by the European and American crisis in 2008, and it has born the economic earthquakes whose repercussions are heard today in the West in particular.
However, the heavy sanctions will not be without severe consequences, and the unprecedented anti-Russia media campaign has reached its highest level. It will affect the morale of the Russian population.
The West shot Russia and hit its own feet: European officials wish to see the end of the war in Ukraine soon. However, the whole world fears this war with its economic and military repercussions and hopes that it will end finally on the borders of Ukraine.
However, President Putin has determined to savage Ukraine into submission, regardless of the consequences. The Russian President is not expected to pull back unless Ukraine first signs the required agreement. Official international talks with the West must include Moscow’s fear of NATO’s expansion and clarification of its future intentions toward Russia.
