Sanctions, sanctions, sanctions ...

in #warinukraine2 years ago (edited)

The Russian media is obliged by law to parrot the official party line rather than doing independent reporting, and their narrative differs a lot from what we're hearing from reporters from different news outlets from different parts of the world having "boots on the ground" in Ukraine. It would clearly be a false balance fallacy to put any weight on the Russian media. Still, I think it's important to pay attention to what's going on and have the counter arguments ready ... in case you one day meet an "ordinary" Russian or some other person who for some reason or another is subscribing to the Russian point of view.

One of the narratives that was told even before the invasion and repeated ever since was that "the west" wants sanctions on Russia, and would have introduced them sooner or later regardless of the war.

The only nuggets of truths I can think of at the moment is that the US did not want North Stream 2 to be built. And, of course, the freezing of assets can to some extent be considered to be theft, which of course may be of benefit for the thief. Except for that, the claim is obviously not true.

Generally, trade and economical cooperation almost always happens because it's beneficial for both parties. Sudden disruptions like the current sanctions causes costs and suffering for both parties. Just a small example from some years ago: some new Russian nuclear power stations had to deviate from the plan of using dedicated Ukrainian turbines due to political reasons. Obviously this is a pain at both sides - the Ukrainians sitting with highly specialized turbines that there hardly is any market for, and the Russians having to create workarounds to fit in Russian turbines made for another purpose, ultimately constructing a less efficient power station. Consider airplanes leased to Russian airline companies from "western" companies - for the leasing companies it's probably a total write-off, but the situation may be grim for the airlines too as they will have problems maintaining the fleet.

Europe is pretty much dependent on energy from Russia (oil, fuel, gas, to some extent even electricity), as well as metals and materials for producing fertilizer. It's painful to wean off from those imports, even so painful that Europe is currently paying premium price for all the gas Russia is able to deliver. We will see towards the winter if the European population is willing to pay the full cost of the sanctions - I have a suspicion that there will be protests in the streets as prices for fuel, gas, electricity and food will increase even more. I'd say ... what are they whining for, unlike many Ukrainians they still have their houses and cars and even a family to feed. Unfortunately I fear that the solidarity isn't deep enough for such sacrifices. Biden has even said that it's unreasonable to let the US car drivers bear the cost of a genocide happening in some far away country. In France the president is to be elected, and many French people will vote for the Putin-friend Le Pen because their local fuel prices are more important for them than the war in Ukraine. With the sanctions being sufficiently global, or applied fast, it may hurt Russia - but as it is now, Russia will probably only find new customers. The oil will have to be shipped a bit further. New gas pipes and LNG terminals may need to be built. The latter takes quite some time, it would probably hurt Russia a lot if European gas imports was halted completely and suddenly - but the current strategy is to slowly taper down the import - giving Russia plenty of time to find new customers. The actions that really may hurt Russia hurts Europe just as much.

Then there are the Russian imports - lots of luxury brands have pulled out from Russia, and also quite some other brands targeting end-consumers - including IKEA and McDonald's. "Tourism" can also be considered an import here - Russians going abroad and spending money there. Have you ever tried to be a tourist in Russia (or, if you are old enough, the Sovjet)? It's almost like they make it deliberately hard to be a tourist, I'm pretty sure there are a lot more Russian tourists abroad than foreign tourists in Russia. From a strict economical point of view such trade is beneficial for both parties, McDonald's and Louis Vuitton gets money from the customer, and the customer gets ... something ... actually, I'm a bit uncertain what kind of benefit, but it does have a value for the customer, otherwise they wouldn't spend money there. Note that this benefit goes to the individual customer. The Russian state gets some tax from the transaction, but most of the money leaves Russia. Now that McDonald's etc is unavailable, the customer will spend their money on Теремок etc (probably a healthier choice than McDonald's, as well). With the money retained in Russia they will be spent over and over again, generating tax income over and over again rather than just once, creating a steady stream of tax income that can be utilized to wage war.

From this perspective, Russia stands to win on some of those sanctions, while "the west" loses on them. Perhaps this is part of the reason why the value of the rouble has bounced back. Another reason is that Russia now demands payment for gas in roubles. The fact that the world utilizes USD as the standard currency for quite a lot of cross-border payments gives the US enourmous power - shifting some payments away from USD and into RUB will reduce this power a bit, while giving more power to Moscow.

It's a bit ridiculous to say that someone "wins" a war, because more often than not there is pain and suffering at both sides. Now we have sort of an economic "war" going on, with suffering at both sides, but it seems to me that Russia seems to be getting better out of this "war" (or, perhaps, better to label it as a "special economic operation"?) than the west.

The biggest "winners" on the sanctions are the countries not taking part in them. They can buy oil and gas for a discounted price from Russia. To some extent they can help circumventing the whole sanction thing by reselling the goods bought from Russia to other countries, at a higher price. Air China and Turkish Airlines are probably profiting heavily on this conflict. It's not only that quite some of the people travelling to and from Russia currently are doing "weird" detours, like St.Petersburg-Istanbul-Oslo (I did use that particular route myself some times at the height of the pandemic), but consider all the flights going from the northern Europe to Asia passing Russian airspace. Airline companies based in countries that are "neutral" to the sanctions regime can still operate such lines. Companies like Scandinavian and Finair have probably had to cancel their flights, while others probably are doing big detours to go south of Russia and Ukraine. And of course, those who are selling oil or gas, or otherwise are competitors of sanctioned businesses in Russia are winning on it.

In any case, the claim that "the west wanted to throw sanctions on Russia, was just waiting for an excuse to do so, and would have done it sooner or later regardless of the war" sounds pretty absurd to me. Then again, there may be things going on that I don't know anything about.