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The West continues its work of sanctions and economic isolation of Russia. Will they succeed in strangling the Russian economy and with what impact on the conflict?
Two joint movements are gripping the Russian economy. With on the one hand the sanctions decided by the governments, and on the other, the cascading withdrawals of private companies. As of Wednesday, seven Russian banks are to be banned from the Swift system, including the country’s second largest, VTB; it should be noted that other banks might be concerned, and also Belarusian establishments. The G7 finance ministers met yesterday Tuesday with their Ukrainian colleague to study new avenues of reprisals, they must be announced in the coming days, promised the German minister. Janet Yellen specifies that the oligarchs are in the sights of the 7 richest countries on the planet. The 27 are also working on a new set of measures. After the airspace, access to the sea might soon close. The British want to ban their ports to Russian ships, the member countries of the EU are considering it.
The big shipowners have taken the lead, they no longer want to serve Russian ports
The Danish Maersk, the Italian-Swiss MSC and the French CMA CGM no longer take orders from or to Russia, except for the transport of essential goods such as food or medicine. A decision taken for security reasons but also because of the sanctions which complicate the payment of the freight. Visa, Mastercard and Amex in turn exclude Russian banks to comply with the sanctions. Other large American groups are giving up on the Russian market. Apple suspends the sale of all its products, Boeing its maintenance activities serving Russian companies. And finally Exxon Mobil is withdrawing from the exploitation of gas and crude from Sakhalin, a mega deposit that the American oil company has been managing for 27 years. Exxon Mobil has a 30% stake in this consortium.
Energy remains nevertheless spared from the sanctions?
Indeed there is no question for the moment of giving up oil and especially Russian gas. The 27 cannot do without it, 40% of their gas imports depend on it. Russian banks dedicated to the hydrocarbon trade have therefore not been excluded from Swift and the United States exempts Russian oil companies from the embargo on semiconductors to avoid the paralysis of their facilities. Westerners, already concerned regarding the return of inflation, want at all costs to avoid a major energy shock that would be devastating for their economies. At the same time, in fact, we see the majors abandoning Russia, which might slow down production, and we see that the Russian oil trade has started to decline. For fear of the repercussions of the sanctions, the actors of the oil markets avoid this origin; oil from the Urals offered at a discount of $15 to the price of Brent is struggling to find takers at the moment. Deliveries from contracts signed before the invasion are assured but flows might dry up in the coming weeks, for lack of buyers.
This means that the sanctions are effective?
The Westerners being very determined and perfectly coordinated, the sanctions have the power to “cause the collapse of the Russian economy” as the French minister of the economy awkwardly indicated yesterday; Bruno The mayor has also returned to his belligerent remarks. The purpose of sanctions is not to destroy a country but to make its leaders change their minds. In fact, no sanction regime has ever achieved its goals, it is hard to see Vladimir Putin giving in to this pressure, he is prepared for it. But these sanctions will be a blow to the wallet and to the morale of Russian citizens. It remains to be seen whether the people will have a nationalist outburst or, on the contrary, whether they will distance themselves from the head of the Kremlin.
