Posts Tagged ‘Sanctions Against Russia’

U.S. is losing high-stakes sanctions war w/Russia

November 19, 2022

When Russia invaded Ukraine, President Biden threatened “sanctions from hell.”  His goal was to destroy Russia’s ability to carry on a war effort by wrecking its economy.

This didn’t seem far-fetched.  Russia ranked only 11th among industrial nations in terms of output.  It alternated with Ukraine in ranking as the poorest and most corrupt nation in Europe.  Its government and its companies were considered bureaucratic and inefficient.

If the United States had been able to rally the world behind its effort, it might have succeeded.  But it failed.  The sanctions effort was limited to the USA and its core allies.

The sanctions damaged the Russian economy, maybe permanently, but for now Russia still has both the means and the will to continue the war.

Far from wrecking Russia, the sanctions war is wrecking the economies of Europe.  U.S. demands are pushing allies and bystander nations into the arms of China and Russia.  Sanctions are hurting the American people as well as the Russian people.

Two sayings come to mind:

  • If you strike at a king, you must kill him.
  • That which does not kill me makes me stronger.

Al Jazeera reported that the sanctions included freezing nearly half of Russia’s financial reserves, expelling several of the country’s largest banks from the SWIFT payments system, prohibiting Russian ships and planes from entering their ports and airspace, introducing export restrictions for certain advanced technologies, and placing an embargo on Russian oil and coal.

The BBC reported that the US barred Russia from making debt payments using foreign currency held in US banks.  The UK has excluded key Russian banks from the UK financial system, frozen the assets of all Russian banks, barred Russian firms from borrowing money and placed limits on deposits Russians can make at UK banks.

The BBC reported that Western nations have announced these sanctions:

From December, the EU and the Group of Seven (US, Canada, UK, France, Germany, Italy, Japan) also want to cap the price countries pay for Russian oil.  They are telling importers of Russian crude oil that western insurers will not cover oil shipments if they pay more than the cap.

The BBC also reported that the US, EU, UK and other countries have sanctioned more than 1,000 Russian individuals and businesses – including so-called oligarchs.  These are wealthy business leaders who are thought to be close to the Kremlin, such as former Chelsea FC owner Roman Abramovich.

Simultaneously, more than 1,200 foreign companies have either suspended or curtailed their operations in Russia since the start of the conflict in Ukraine, according to a database from Yale University’s Chief Executive Leadership Institute.  Among the big names on that list are brands such as Apple, McDonald’s, IKEA, Visa, and MasterCard.

The new supply restrictions have not only caused inflation to climb into the double digits, but also undercut Russian manufacturers by depriving them of imported components that are critical to assembling their final products.  Russia’s car production, for instance, plummeted by a stunning 61.8 percent during the first six months of this year, according to Al Jazeera.

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The unreported economic crisis in Europe

November 10, 2022

Reality is that which, when you stop believing in it, doesn’t go away.  

==Philip K. Dick

Europe appears to be on the verge of economic collapse because of blowback from the sanctions war against Russia.

The European economic boom, it turns out, was based on availability of cheap oil and gas from Russia.

The UK and the European Union has deliberately cut themselves off, thinking it will punish Russia.  But the Russians are doing okay while Europeans face a winter with shortages of electricity and fuel.  Many are stocking up on firewood and coal.

Whole industries have shut down or relocated to Asia or North America.

Alex Christoforou and Alexander Mercouris, in the video above, say the latest word from oil company executives is that the Europeans might just possibly have enough oil and gas in storage to get by this winter, depending on just how cold the winter is and depending on who you believe.

This is because the European countries bought all the cheap Russian oil and gas they could before the supply shut down.  But next spring, the cupboard (or rather the oil tank) will be bare.  So an even worse crisis will occur in the winter of 2023-2014.

Saudi Arabia, Iran and the United Arab Emirates decline to increase their own output to help the Europeans out.  They and the Russians benefit greatly from the sanctions induced increase in oil prices.

The Europeans are willing to buy second-hand Russian oil and gas from China, India, Turkey and other countries, at prices they refuse to pay Russia directly.  The problem with this is that the importers of Russian oil and gas will only sell that which is surplus to their own needs, and at a very high price.

The U.S. plan is supply Europe with liquified natural gas from North America.  But the infrastructure needed to carry out this plan doesn’t exist, and won’t for at least several years.  Liquifying natural gas, and storing and shipping it, is not easy and not cheap.

In a new video this morning, Christoforou and Mercouris talk about how the economic situation in the UK is so bad that Rishi Sunak, the new British prime minister, has no choice but to raise taxes, cut public services and cut aid to Ukraine.

The goal of sanctions policy is to weaken Russia so as to help Ukraine.  But sanctions policy is weakening Europe, not Russia.  How does this make sense?

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Ukraine is part of a broader three-way Cold War

April 15, 2022

The war in Ukraine is not just between Ukraine and Russia.  It is part of a larger three-way struggle between three rival imperialisms—the established imperialism of the USA and the rising imperialisms of China and Russia..

The struggle is not exclusively or even mainly a military struggle.  It is also a diplomatic and propaganda struggle.  But it is mainly an economic struggle.

The United States is the world’s most extensive military power and the world’s leading financial power.  Its aim is to keep on being the world’s only superpower—militarily, politically and financially.  Its means is threats of military intervention and financial sanctions.

Source: The Diplomat. Click to enlarge.

The People’s Republic of China is the world’s leading manufacturer and exporter.  Its aim is to dominate its immediate region politically and militarily and to become the world’s leading power economically.  The means is investing in physical infrastructure and human capital, and winning friends by offering economic benefits.  Its master plan is the Belts and Roads initiative, a system of infrastructure construction projects intended to weave together the economies of interior Eurasia.

Russia is less powerful than the USA or China, but it is an important producer of food, fuel and vital raw materials. Its aim is to be recognized as a great power and to dominate its immediate region politically and militarily

The United States has a worldwide network of military bases and alliances, which gives it the power to engage in military and covert actions on every continent.  It dominates the World Bank, the International Monetary Fund and other international institutions and its banks have a chokehold on the world financial economy.

The basis of that power is the supremacy of the U.S. dollar as the world’s medium for doing business, and the replacement of gold by U.S. Treasury bonds as a store of value.

This enables the U.S. to finance its endless wars, to shrug off trade deficits and to impose crippling sanctions on nations that defy it.  But American leaders have foolishly allowed the source of its financial power, its strength as a manufacturing and exporting country, to fade away.

Russia’s invasion of Ukraine was an attack on the U.S.-dominated NATO alliance. Its aim is to keep Ukraine out of NATO, to bar nuclear missile systems from Poland and Rumania and to roll back western NATO troops to their 1997 positions.

The U.S. aim is to get Russia bogged down in a long quagmire war, while meanwhile trying to wreck the Russian economy through economic sanctions—that is, seizing Russian financial assets held in the U.S. allied countries, cutting Russia off from the dollar-based world financial system and blocking Russian imports and exports as much as possible.

With the aid of China, Russia is finding ways to engage in world trade using the ruble and other non-dollar currencies, thus helping to undermine U.S. financial power.  

Then again, with sanctions, the U.S. is already undermining itself.  It is teaching nations they need to figure out how to survive economically without ties to the United States or the dollar-based system.

This economic war is a real war.  People will suffer as a result of it.  Some die.  Some European nations depend on Russian gas.  Many nations depend on Russia for food and fertilizer exports.  Food and fuel prices are already rising as a result of the war and are expected to rise further.  

The most likely result of the conflict is a worldwide economic depression.  The worst possible result is nuclear war.  I don’t see any possible outcome that is of net benefit to the people of any of the three countries.

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Why does hawkish Trump object to sanctions?

February 8, 2018

President Donald Trump is resisting congressional mandates to punish Russian individuals through economic sanctions.

At the same time he is going along with sending advanced weapons to the Ukrainian government to use against Russia, and with keeping American troops in Syria where they may come in conflict with Russian troops.

And he acts as if he was getting ready for war with North Korea and Iran.

So why is he digging in his heels over this one thing?

I don’t see any fundamental conflicts of interest between Russia and the United states, except maybe in the Arctic, and none that are worth the risk of nuclear war.

Vladimir Putin is authoritarian and ruthless, but no more so than many other world leaders, including Boris Yeltsin, with whom the U.S. government got along and gets along with just fine.

The problem with economic sanctions directed against whole countries is that they harm the common people of a country without touching the leaders.  If American leaders want to use U.S. economic power to reward and punish, economic sanctions aimed at individuals are probably the least harmful and most effective of doing it.

But overuse of economic sanctions of all kinds will be harmful to the United States in the long run because foreign countries will protect themselves by disconnecting from U.S. banks and the U.S. dollar.

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Congress reins in Trump’s peace-making powers

August 3, 2017

You might think Congress would try to rein in President Trump’s war-making powers, considering his lack of judgment and self-control.

You might think Congress would have second-thoughts about giving Trump authority to engage in acts of war, order assassinations and engage in economic warfare, strictly on his own say-so.

You might thank that, and so might I.

But what Congress has done is to let all of Donald Trump’s war-making powers stand, while limiting his power to make peace.

The new sanctions legislation writes existing sanctions against Russia into law, enacts new sanctions and forbids the President to lift sanctions without consent of Congress.

  • This is a bad idea because it puts the USA in a permanent state of cold war with the world’s second largest nuclear weapons power.
  • This is a bad idea because it sets the United States against its European allies, who see their oil and gas prices go up.
  • This is a bad idea because President Putin is likely to retaliate by ending U.S.-Russian co-operation in the space program.

All this is to punish the Russian government for interfering in the 2017 U.S. election, even though such interference has never been proved.

The charge that Russians hacked the Democratic National Committee and Clinton campaign computers is treated by Congress and most of the Washington press as a proved fact, but the FBI has never been allowed access to those computers, and has never demanded access to those computers.

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Did Senate Dems trade ACA for Russia sanctions?

June 15, 2017

Senate Democrats reportedly made a deal to allow Republicans to gut Obamacare in return for their support of tougher sanctions against Russia.

The Republicans have a 52 to 48 majority, so they have the power to force through their plan.   We the public don’t know what it is going to be, but, in order to be reconcilable with the House bill, it will include denying government health care benefits to millions of people in order to enable tax cuts for the very rich.

There are procedural tactics that the Democrats could use to delay action until public opposition has time to build, but they reportedly have agreed not to do this.

So the public loses a program that, despite its many flaws, has saved lives in return for the increased possibility of war with Russia.

Reports of a deal may be false or exaggerated and, if there is a deal, not all Democrats may be on board with it.

But it is an indisputable fact that the Democratic leadership in Congress is putting much more energy into investigation, so far fruitless, of Trump’s ties with Russia than into opposing the Republican political agenda.

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What did Michael Flynn do that was so bad?

February 15, 2017

National Security Adviser Michael Flynn resigned after the FBI or NSA revealed that he talked to the Russian ambassador about economic sanctions prior to President Trump being sworn in.

Michael T. Flynn

Michael T. Flynn

He reportedly asked the Russian ambassador to ask his government hold back on retaliating against President Obama’s economic sanctions because the Trump administration would have a new policy.

President Obama’s actions, taken during his lame-duck period, could have put Russia and the USA on a path of tit-for-tat retaliation that would have made it harder from the Trump administration to improve U.S.-Russian relations later on.

De-escalating was a good thing, not a bad thing.

∞∞∞

I agree that General Flynn was not a good choice for the post of national security adviser.  He was evidently a brave and honorable commander in the field, but he did not function well at headquarters, for which reason he was fired by President Barack Obama as head of the Defense Intelligence Agency.

He thinks the West is in a war with the whole Islamic world, not just the Islamic State (ISIS), Al Qaeda and their sympathizers.   He is a war hawk regarding Iran.  He would have been likely to get the United States into pointless wars—just not a pointless war with Russia.

I would consider his departure, in and of itself, a good thing, but for the fact that he will almost certainly be replaced by someone else just as bad or maybe worse.

The problem is that he was forced out for (1) trying to stop the slide toward military confrontation with Russia, and that the forcing out was done (2) by intelligence agencies with policy agendas different from the White House.

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Russia is losing an economic war

September 26, 2016

The Russian Federation is in economic crisis.

The economy is shrinking.  Although unemployment is low, poverty is increasing,  Inflation is at double-digit rates.   The exchange rate for the ruble is falling.  Russia’s trade deficit is widening.  The Russian government is cutting spending on public services.

While Russia has serious internal economic problems, the immediate cause of the crisis is the economic war being waged by its foes.

  • The United States and European Union boycott many Russian individuals and institutions, including cutting off credit to Russian banks and cutting off sales of equipment to Russian oil companies.
  • Saudi Arabia has stepped up production of oil, driving down oil prices worldwide and hurting Russia’s oil exports.
  • The United States has begun a new arms race with Russia, forcing the Russian government to either divert resources from the civilian economy or admit inferiority.

03-bust-boom-bustIn waging economic war against Russia, the United States and its allies hurt themselves as a price of hurting Russia more.

  • Europe and Russia are natural trading partners, with Europeans buying Russian gas and oil and Russia buying Europe’s, especially Germany’s industrial products.   Cutting off this trade hurts both.
  • Saudi Arabia is using up a large but limited resource at a fast rate without getting the best price for it.
  • The United States, too, is diverting resources from our civilian economy and domestic needs.

In many ways, this is a replay of the economic war waged against the Soviet Union in the 1980s.

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Even the USA imports energy from Russia

March 4, 2015

OilPrice reports that, despite sanctions, energy exports from Russia continue to flow not only to Europe but to the USA.

As President Obama and Secretary of State John Kerry last year lambasted Russia for supporting pro-separatist rebels in Crimea and eastern Ukraine, and accused the Kremlin of involvement in the shooting down of a Malaysian airliner, a huge coal carrier was crossing the ocean to deliver 40,000 tons of thermal coal to the Schiller Station coal-fired power plant in New Hampshire. 

Forbes broke down the reasons for the apparent contradiction nicely, stating that for the East Coast, Russian coal is “easy to get and cheaper to ship.”  An added advantage: coal from Russia emits less sulfur than US coal, making it easier to comply with environmental regulations.

Many US citizens would also be horrified to learn that a considerable amount of nuclear power produced in the United States comes from Russian uranium, none of which is yet subject to Western sanctions.  According to the US government’s National Nuclear Security Administration, about half of the fuel used in American nuclear reactors comes from dismantled Soviet warheads … …

Waging economic warfare against Russia by disrupting long-standing economic relationships is a prime example of cutting off your nose to spite your face.

LINK

Impotent Western Sanctions Fail To Disrupt Russian Energy Exports by Andrew Topf for OilPrice (hat tip to naked capitalism)

The Russian response to Western sanctions

February 17, 2015

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The Vineyard of the Saker is a pro-Russian, pro-Putin web log written and edited by a descendent of a Russian emigre family living in the United States.  This is the Saker’s perception of Russian public opinion, based on watching Russian broadcasts and reading Russian publications on the Internet.

  • First, nobody in Russia believes that the sanctions will be lifted.  Nobody.  Of course, all the Russian politicians say that sanctions are wrong and not conducive to progress, but these are statements for external consumption.  In interviews for the Russian media or on talk shows, there is a consensus that sanctions will never be lifted no matter what Russia does.
  • Second, nobody in Russia believes that sanctions are a reaction to Crimea or to the Russian involvement in the Donbass.  Nobody.  There is a consensus that the Russian policy towards Crimea and the Donbass are not a cause, but a pretext for the sanctions.  The real cause of the sanctions is unanimously identified as what the Russians called the “process of sovereignization”, i.e. the fact that Russia is back, powerful and rich, and that she dares openly defy and disobey the “Axis of Kindness”.
  • Third, there is a consensus in Russia that the correct response to the sanctions is double: (a) an external realignment of the Russian economy away from the West and (b) internal reforms which will make Russia less dependent on oil exports and on the imports of various goods and technologies.
  • Fourth, nobody blames Putin for the sanctions or for the resulting hardships. Everybody fully understands that Putin is hated by the West not for doing something wrong, but for doing something right.  In fact, Putin’s popularity is still at an all-time high.
  • Fifth, there is a wide agreement that the current Russian vulnerability is the result of past structural mistakes which now must be corrected, but nobody suggests that the return of Crimea to Russia or the Russian support for Novorussia were wrong or wrongly executed.
  • Finally, I would note that while Russia is ready for war, there is no bellicose mood at all.  Most Russians believe that the US/NATO/EU don’t have what it takes to directly attack Russia, they believe that the junta in Kiev is doomed and they believe that sending the Russian tanks to Kiev (or even Novorussia) would have been a mistake.

The Saker’s conclusion:

Western sanctions have exactly zero chance of achieving any change at all in Russian foreign policy and exactly zero chance of weakening the current regime.  In fact, if anything, these sanctions strengthen the Eurasian Sovereignists by allowing them to blame all the pain of economic reforms on the sanctions and they weaken the Atlantic Integrationists by making any overt support for, or association with, the West a huge political liability.

via The Vineyard of the Saker.

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