Omkar Dattatray
Laying and heaping the economic sanctions against the arrogant super power Russia is a step in the right direction. These sanctions against Russia will definitely have the positive effect in so far as the abetment of Russian invasion on Ukraine is concerned. Thus, super power of the world America has laid economic sanctions against Russia to pressurize and force the invading country so that it may not continue war against Ukraine and end the same. America has heaped substantial sanctions against Russia in order to force it to submit to the civilized norms and ultimately shun devastating war against Ukraine. It is not the America only that has imposed economic sanctions against Russia but many countries of the world have also heaped economic and other sanctions against Russia. Great Britain, European Union, NATO countries and group seven countries have imposed economic sanctions against Russia so that it face economic losses and isolation, thereby forced to halt the war in the interest of the humanity. Even those countries which are inconsequential have also laid sanctions against Russia. Pakistan laid economic sanctions against Russia. This is a matter of some satisfaction that America, Britain, NATO and other European countries have not directly involved into the war but have indirectly laid economic sanctions so as to force Russia into submission. Therefore different countries of the globe have laid economic blockade and sanctions against Russia in order to penalize it for making it bear the economic brunt of these sanctions. Different countries which matter in the international arena have laid economic sanctions against Russia so that it will face economic hardships and bear the economic consequences of these sanctions and it is forced to think of not continuing war. It will be seen as to how will economic sanctions have a positive effect upon Russia so that it will in the ultimate analysis desist from war. At the moment one can say that the economic sanctions is a step in the right direction and it is a positive way of persuading as well as forcing Russia to obey the world opinion and submit to it. Thus have the countries across the world laid economic sanctions against Russia to pressurize her to desist from continuing the war in the best interests of the humanity. Through the imposition of the economic sanctions against Russia countries have determined to bleed her economically so that it will submit to world opinion. There is no controversy about this fact that the sanctions against Russia are a step in the right direction and will have a positive effect on Russia. United States, the European Union and several other countries and entities have expanded their economic sanctions against Russia as punishment for its invasion of Ukraine. The first actions in the most recent crisis were taken after President Vladimir V Putin of Russia signed decrees on recently about recognizing Donetsk and Luhansk, two pro-Russian breakaway regions in eastern Ukraine, and then later ordered troops to enter those areas. The multipronged invasion began in earnest on Thursday, prompting the West to widen its efforts to crack down on Russia by targeting Putin’s top allies, the country’s banking system and its access to crucial technology, although some analysts have said the measures do not go far enough. The United States and Europe have avoided direct military conflict with Russia amid its invasion of Ukraine. But they are using a powerful tool to try to push back against Russia and create consequences for its aggressions: an unexpectedly fast and powerful set of financial sanctions meant to shock the country’s economy and hamstring its access to financial resources. While Russia may have anticipated the measures, what the country perhaps did not anticipate was for so much action to be taken so swiftly. US and European allies have limited its ability to transact in foreign currencies such as dollars and euros, frozen the assets of multiple Russian banks, and cut off Russia’s banks from the SWIFT messaging system banks use to transmit information globally. Japan said it would join in freezing the assets of Russian leaders and some banks and freezing Russia’s foreign reserves in yen. Even Switzerland, a historically neutral country in conflict, has agreed to join sanctions efforts. In turn, Russia has taken action to try to shore up its economy and finances. Its central bank has doubled its interest rate in an attempt to stabilize the ruble after the currency sank against the dollar. The country, which has been facing sanctions since its invasion of Crimea in 2014, has over $600 billion in foreign reserves, meaning money in other countries’ currencies and gold. It built up those reserves specifically to help fend off sanctions. New York Times noted, a lot of that money isn’t actually in Russia but is essentially on paper in banks around the world. So now, the country could have a hard time accessing that money. Sanctions are likely to hurt the Russian government; they are also hurting the Russian people, who were already in a tough spot before now. These developments have major implications not only for Russia’s economy but potentially for the world’s; it’s unlikely their impact will be contained to one country’s borders. What will be the potential effects of these sanctions over the days, weeks and months to come. It will give rise to double-digit economic contraction. Russian government has pursued extreme measures in terms of capital controls and blocking transfers of foreign currency to non-residents. Exporters have to convert 80 percent of their proceeds to the domestic market, and Russia’s central bank has more than doubled interest rates. Russia is also undertaking banking sector support, releasing some capital for the banks. All these measures are just basic crisis management efforts. But this crisis will grow larger for the Russian economy and common Russian people than whatever it can be forecast or expected at the moment. In trade, there is likely an effect on commodity prices, and we are already seeing that. Russia is an important exporter of oil and gas, various metals and mining commodities, and agricultural products. Ukraine is also a very important exporter of some metals and agricultural products. The sanctions will have effects there, and it will have effects on global inflation, and then the question is how global central banks will react in each individual country’s conditions. In the financial channel, Russia is not as significant as some other emerging markets in terms of foreign investor participation in the local market. So, it might not have massive direct effects. But Russian financial institutions, its central bank, they are important players in certain global markets. They have $640 billion in foreign exchange reserves, so they have positions still, or were hedging via financial instruments. So that’s something to watch for as the situation develops. And then there’s pure contagion if there is a risk of high inflation and tightening of global financial conditions. There is definitely a high risk posed for global repercussions from this war. Thus the economic sanctions against Russia will not only have the adverse bearing upon the Russian economy only but the sanctions will have global economic complications and these economic sanctions will have adverse effect upon the international community. To conclude we can say that the economic sanctions imposed upon Russia by America and other European countries will have the devastating effect on Russian economy only but it will have adverse effect upon the world economies. It is hoped that the sanity will prevail upon Russian President Putin and he would desist from war against Ukraine.
(The author is a columnist and social activist).