Whilst the formal “special military operation” in Ukraine was declared on the 24th of February, the threat of Russia has been there for years. With a slow build-up of troops on the border over the past 11 months and having invaded Georgia in 2008 and Crimea in 2014, all of the warning signs were there. Yet, the war crimes that Vladamir Putin has recently committed remain a shock to the world and something we were not prepared for.
Despite the achievements of the EU’s peace project, the continent of “never again” is very much back in a state that it couldn’t have conceived of a few months ago. Despite the invasion’s effects of giving a second wind to the motive behind the EU and even NATO, such reunification of the west appears to not fully extend to Ukraine.
NATO’s unwillingness to directly confront Russia has meant that sanctions and the supply of defensive weapons have been the two major ways to support Ukraine – and to some effect.
Are the sanctions hurting Russia?
The sanctions on Russia from the US and EU have centred around target asset freezes on designated persons, such as Russian politicians and oligarchs, as well as prohibitions on things such as loan arrangements exceeding 30 days and dealing directly with transferable security. Flights from Aeroloft have been banned, as have Russia’s participation in some sporting events.
However, one of the most effective sanctions on Russia was their partial ban from SWIFT, further isolating them economically, denying seven of their major banks from accessing international markets. Besides almost causing a bank run, the Ruble went from 75 per dollar to around 140 – halving its value but is now back at 98.
One way that Russia attempted to stabilise the Ruble was by hiking up interest rates up to a staggering 20% in a desperate attempt to make the Ruble more attractive. They’re also demanding that customers pay for Russian energy exports in Rubles, too.
The Institute of International Finance has estimated that 15 years of economic progress will be wiped out in Russia, bringing a heavy recession that’s difficult to recover from and may depend on the length of the sanctions – and how quickly Europe can increase its energy independence.
It’s also clear that Russia’s financial troubles are having an impact on its military. Not only has there been logistical issues from start to finish, but each day is costing around €20 billion per day – money that they’re quickly running out, particularly with their credit score downgrading and limited exports.
Long queues, a crashed stock market, and food shortages are all economic ramifications that Russia is feeling right now. It’s far from just the oligarchs that are paying a price, with small businesses and ordinary citizens struggling to access their foreign currency or do international business in Russia.
We can use the example of Youtuber Roman Abalin, who has documented his journey so far. Very early on into the conflict, Roman could not receive any income from his online business, forcing him to not only move abroad but promote cryptocurrency donations in order to avoid swift – after all, Youtube, Upwork and other major platforms, pay via SWIFT. Transferring foreign currency internationally can be done without SWIFT, but this means not using high street Russian banks. Plus, some money transfer companies like Revolut and Wise have banned payments in and out of Russia.
So with some ways to withdraw USD, but with heavy limits, and with some ways to conduct business overseas, but with heavy limits, the ordinary citizens are in a state of very low business and consumer confidence. In the distant future, it’s possible that Russia turns to China’s Swift equivalent that is being rapidly developed, but the next year or so could spell a serious crisis.
Has the West done all that it can do?
Unsurprisingly, the media has shown us all of the things that NATO and Europe as a whole have done to collectively supply Ukraine with more defensive weapons and all of the sanctions inflicted on Russia. This is as united as the West has felt in a long time – particularly since Brexit.
However, Europe and the US are still paying Russia $1 billion per day for gas and oil. Although the US is better prepared to supply itself with gas, Europe looks far away from being energy independent, and appears to continue paying Russia for these commodities in the near future. It’s estimated that there will be not only an energy crisis but an economic crash in Europe if they turn away from Russian energy entirely. In fact, Putin’s demands to be paid in Rubles for energy borders on a troll – or a highlighting – towards Europe’s dependence on Russia for commodities.
There have also been questions over the effectiveness of British sanctions on Russian oligarchs, with some claiming they had time to move their funds into trusts and remain financially protected.
As for military support, NATO’s public stance is that it must avoid any direct conflict with Russia, though there are some middle-ground grey areas that Ukraine is keen for NATO to up their support in – such as providing drones, aircrafts, and more defensive weapons. Although Zelensky has continually asked for a no-fly zone, NATO sees this as unlikely to be achievable without direct conflict.
If we look at Sun Tzu’s declaration some 2,500 years ago, “The greatest victory is that which requires no battle.” It’s difficult to judge the West’s competency over the handling of the Ukraine situation, but much of its shortcomings likely stem from past regrets. It is possible that Russia had underestimated the extent of the sanctioning, and it’s clear that western threats prior to the invasion were clear enough to convey this. Had they been more explicit, or already agreed upon in the instance of an invasion, it may have offered a way out for Russia before it had even begun.
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