Russia Sanctions: Global Sanctions-War
https://www.rozen-bakher.com/monitoring-risks/14/03/2022
Published Date: 14 March 2022
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Monitoring Risks by Dr. Ziva Rozen-Bakher
Analysing in-Depth Security & Political Risks and Economic & Strategic Risks
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Dr. Ziva Rozen-Bakher
A Researcher in International Relations and International Business with a Focus on Security and Political Risks & Economic and Strategic Risks Related to Foreign Direct Investment (FDI), International Trade and Mergers and Acquisitions (M&As)
Russia Sanctions: Sanctions-War, 23 February 2022
U.S. and allies step up sanctions pressure on Russia over Ukraine | Reuters
Kremlin warns Americans will face financial ‘consequences’ of U.S. sanctions (msn.com)
As sanctions start, Russia's trade flow shifting towards China (msn.com)
Relevant Previous Posts: Ukraine-Russia Crisis, Russia’s Counter-Sanctions: ‘Gazprom-Weapon’, Iran Sanctions and Shanghai Cooperation Organisation (SCO), Sanctions
The escalation in the Ukraine crisis leads the West to start imposing sanctions on Russia, which raise several important questions, especially regarding the potential of Global Sanctions-War:
Are the sanctions will deter Russia from invading Ukraine?
If a full invasion of Ukraine will take place, is the West sanctions on Russia will lead Russia to pull back from Ukraine?
Is the West sanctions on Russia will lead to a ‘Global Sanctions-War’ between the West and the East in terms of allocating the export and import from the East coalition to the West coalition, or vice versa, from the West coalition to the East Coalition?
If Sanctions-war will start, is it lead to a military confrontation between the West and the East?
Global Sanctions-War between West and East may reflect in reallocating the export/import from non-allies countries to allies-countries, which may create two competitors coalitions with the expectation that each country will trade only with its allies countries, while avoiding trade with non-allies countries or even with the pressure to impose sanctions on non-allies countries. Moreover, if a country is neutral without taking a strict side between the West coalition and the East coalition, then a pressure will be put on these neutral countries to choose a side between the West coalition and the East coalition. Worse, the ‘Global Sanctions-War’ between the West and the East over time has the potential to lead to WWIII, especially if the global economy will enter into a lose-lose scenario.
However, in the first stage, the expectation that the Sanction-War will occur between Russia and the West in a way that Russia will impose counter-sanctions against those countries that impose sanctions against her by reallocating the export/import of Russia to allies countries of Russia. Therefore, The table below presents the Win/Lose of Russia and each West country that is supposed to join the sanctions against Russia. The assumption is that all NATO members and all EU members may join the sanctions against Russia at some level, so all NATO members and all EU members are included in the table below, as well as core-West countries like Japan. Besides, it’s possible that additional USA allies that don’t include in the table may join the sanctions against Russia, such as USA allies from South America.
Analysis of the table reveals that the maximum potential loss to Russia due to the West sanctions is 64B$ per year (based on 2020) if all countries in the table will impose sanctions on Russia, while Russia will impose on them counter-sanctions, still, the sum of 64B$ is equivalent to 1-2 months of the export of Russia to all countries in 2021, so likely, that Russia may fill the vacuum of 64B$ per year in the short-run, as happened when the West imposed sanctions on Russia in 2014, as showed below. Nevertheless, the sanctions on Russia are supposed to include not only sanctions against export but also additional types of sanctions, such as sanctions against Russian banks and Russian individuals, yet unclear the effectiveness of these sanctions.
Table: Win/Lose of Russia and Each NATO Members and EU members due to Sanction-War between Russia and the West (See below the source of the data in the table)
Historical Perspective of Past Sanctions on Russia by the West
In 2014, the West imposed sanctions on Russia due to the annexation of Crimea, yet it harms Russia only in the short-run, but later, it’s returned to its level, while after that, the export/import even increased significantly, especially since 2020, which may signal that Russia may already reallocate its trade to its allies-countries. That’s may explain why the sanctions threat against Russia does not deter Russia from declaring the independence of the two pro-Russia regions in East Ukraine, and even may not deter Russia from the plan to invade Ukraine, especially if China is already provided Russia a backup of reallocating Russia trade from the West to China in case of sanctions by the West.
