The Russian-Ukrainian war broke out, and the United States aggressively imposed sanctions on Russia’s finance and energy. More than 100 days have passed since the Russian-Ukrainian war. The U.S. claims that sanctions against Russia can stop the war, and U.S. President Joe Biden has claimed that sanctions will “turn the ruble into rubble.” And the fact is that at present only the people of the European countries who use energy are turned into “rubble”. Recently, “Bloomberg” has an article summarizing the US sanctions against Russia, saying that the sanctions backfired and Russia’s coffers were full of ammunition.
First, energy. The United States originally hoped that through sanctions, countries around the world would completely stop buying Russian energy, making its income zero and no money to fight. But Bloomberg estimates Russia’s oil and gas revenue to be about $285 billion this year, up 20 percent from last year, with other commodity revenues rising due to soaring commodity prices. Although Russia’s foreign exchange reserves of 300 billion U.S. dollars have been frozen by the West, due to the increase in revenue from exporting oil and commodities, the frozen foreign exchange can be greatly compensated.
The EU this week agreed to a sixth round of sanctions against Rosneft, but only those shipped by sea, not via land pipelines, are exempt, lest the entire sanction be vetoed by Hungary, which insists on buying Russian oil. , Hungary imported Russian oil through pipelines. The EU has made all kinds of compromises, which have shown that the sanctions themselves are extremely limiting. “You’re trying to maximise the suffering of your target and at the same time minimise the suffering of your domestic voters, but unfortunately, it’s easier said than done,” said Scott, a senior fellow at the Peterson Institute in Washington.
America is now in a dilemma. The U.S. also posted a super-inflation rate of 8.3 percent in May due to rising oil and food prices, but sanctions had little effect on Russia’s energy exports. U.S. officials are now discussing ways to increase financial pressure on Russia, such as imposing so-called “secondary sanctions,” not just on Russian oil exports, but also on countries or companies that buy Russian energy.
However, the resistance to imposing secondary sanctions is enormous, as doing so would directly undermine U.S. relations with other countries, such as India. India blatantly buys Russian oil, and even resells the refined and processed Russian oil it bought back to European countries for profit. And the United States can only open its eyes and close its eyes. How can the United States initiate secondary sanctions? Therefore, the U.S. energy sanctions against Russia have limited effect. Russia may have reduced its energy exports, but it has made more money because prices have soared.
Second, funding. The United States launched financial sanctions against Russia on the same day, prohibiting some Russian banks from using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system, in order to defeat the ruble. However, Russia has stabilized the ruble exchange rate by asking unfriendly countries to pay for Russian gas in rubles. In addition, due to the sharp increase in Russia’s energy and commodity export income, Russia’s foreign exchange income has increased significantly. According to the International Energy Agency, Russia is only exporting oil, with revenue rising by 50% at the beginning of this year compared with the same period last year. Contract profits at Russia’s top oil producers hit their highest level in nearly a decade in the first quarter, according to estimates from Moscow-based SberCIB Investment Research. And Russia’s wheat and commodity exporters have seen their incomes rise sharply because of higher prices.
Exporters make money, and Russia’s trade surplus soars. Russia’s current account surplus more than tripled year-on-year in the first four months of the year to $96 billion, the highest level since 1994. Although Russia faces international sanctions, its export revenue still rises. On the other hand, due to sanctions, it reduces its imports of foreign goods. One plus one reduction has greatly increased its trade surplus. The ruble has risen sharply against the U.S. dollar and is the world’s best-performing currency this year. What happened in Russia turned Biden’s rhetoric about turning the ruble into rubble into a joke.
After reading Bloomberg’s report, the conclusion is that the sanctions against Russia by Western countries led by the United States cannot defeat the ruble or reduce Russia’s income, but it has caused the price of energy and commodities to rise sharply, which has instead increased Russia’s income. The stone of U.S. and European sanctions fell on the feet of the people.
“It is unrealistic if the goal of sanctions is to stop the Russian military, Russia can still finance the war and still have the ability to compensate for the harm that sanctions have caused to its population,” said Goga, a senior researcher at the German Institute for International and Security Affairs.
But the West is full of populist politics, and it can only continue to impose those “politically correct” sanctions, and as a result, people all over the world will pay the bill.
Lu Yongxiong
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