Since Putin began massing his forces, which exceeded 100,000 soldiers, on the borders of Ukraine weeks ago, until the US and European threats began to apply “unprecedented” sanctions against Russia, but to no avail, as the president went ahead with his plan, despite his public denial of the intention to intervene. Military.
The boldness of the Russian president raised many question marks, especially with regard to the economic aspect, as it seemed that he had “prepared” himself and his country for such sanctions, and had made the “necessary fortifications.”
Economist and Overhoot host Matthew Klein said that since the start of the Russia-Ukraine crisis in 2014, Putin has shown a “courageous understanding” of the fact that the West “will not match power with force, but with sanctions”, which has prompted Moscow over the past eight years to work on Reduce the impact of sanctions.
He explained that “the Russian people accepted the decline in living standards and reduced their consumption of imports by more than a quarter, while Russian companies paid amounts due to creditors abroad, reducing their foreign debt by a third, and the Russian state tightened its measures, which allowed it to build reserves of gold and foreign currencies.”
By adopting these “sacrifices”, Russia has fortified itself against the West’s economic weapons. The Russian Central Bank holds a $630 billion fund for “turbulent days”.
Even if the sanctions prevented 100 percent of Russian exports for a whole year, the country would continue to import at its current pace, and would still have foreign exchange reserves.
US President Joe Biden’s initial response to Putin’s incursions was to prevent American investors from buying Russian bonds, but Russia does not need to borrow from Americans, according to the Washington Post.
Meanwhile, the newspaper asked, how did the West prepare for today’s crisis? Pointing out that instead of reducing their need for Russian energy supplies, the Europeans increased their dependence on it.
In 2013, the European Union imported about 135 billion cubic meters of Russian natural gas; By 2019, the year before the Corona pandemic affected the numbers, it imported 166 billion cubic meters, an increase of nearly a quarter. Russian coal exports to Europe also rose.
Despite Europe’s investments in wind and solar energy, Russia’s share in the European energy market jumped from 16.5 percent to 18.5 percent in the years following the 2014 crisis.
This puts recent European actions into perspective, as Germany suspended the operation of the Russian-German Nord Stream 2 pipeline, which was aimed at doubling shipments of natural gas from Russia.
Given current import needs, Russia can live well without the Nord Stream 2 project, according to the American newspaper.
The United States and its allies have also imposed other sanctions on Russia, targeting Russian parliamentarians and Putin’s friends, but they are likely not to have the effects the West would like on the Russian president.
Sanctions have also crippled most Russian banks, but Russian companies that want to do business in the West will find alternative financial partners.
The export of some technical products to Russia was also banned, and these sanctions in particular may affect Moscow, but the effects will slowly materialize.
The Washington Post noted that the punishment that will have the greatest impact is the blocking of Russia’s “SWIFT” system for global interbank payments, the system through which banks exchange messages about payments.
This would greatly complicate trade between the West and Russia, and create enough chaos to create real problems for Putin, because although the Russian Central Bank is “filled” with reserves, those funds will be of little use if they are not used to buy imports.
For these reasons, Ukraine and the three Baltic states have called on the West to keep Russia away from the “Swift” system, but its expulsion from the banking system may cause an energy crisis in Europe, so Germany and its neighbors, for the time being at least, oppose this step, considering it an “unnecessary sacrifice.” acceptable for the time being.
The American newspaper concluded its report by asking whether “the fragility of the West and the Europeans’ refusal to accept sacrifice explains why Putin felt emboldened to intervene militarily in Ukraine in the first place? And whether the West should now adjust their calculations.”