Is It Really Possible to Isolate Russia from the Global Economy?


Russia’s continued invasion of Ukraine is beginning to cause convulsions in Europe and around the world, as pipelines are restricted and sanctions imposed on Russia.



Is it really possible to isolate Russia from the global economy?

So far, the gas cut hasn’t caused too many disruptions, but it will be in the winter months when it will really hit hard. This is because now is the time to fill the reserves prepared for winter, but this is difficult when Russia is closing the pipelines amid claims of necessary maintenance work.

The sanctions imposed on Russia so far also do not appear to have persuaded Vladimir Putin to suspend the invasion, and it appears that it is adapting to an occupation that will not end soon.

So what can the world do about it, doesn’t that mean increasing violence even more?

Economic sanctions to prevent military conflicts

A number of sanctions have already been imposed that will cause the Russian economy to contract by 15% if they continue throughout 2022. These sanctions include the removal of many Russian banks from the SWIFT cross-border payment platform. Russia has also frozen much of its foreign reserves. The country has a total of $ 630 billion in reserves, half of which remain abroad and are now inaccessible.

The United States has also enforced a number of banking restrictions, such as banning Russia’s largest bank from making most US dollar transactions. They have also been banned from accessing their U.S.-based assets.

Many technology exports have also been prevented from reaching Russia, which could restrict its intelligence services, defense industry and oil drilling and refining capabilities. The US has banned Russian gas and oil imports, while countries such as the UK have pledged to phase out Russian oil and gas imports by the end of the year. If the EU joins the ban, the Russian economy could fall by 20% this year.

Other sanctions include many US companies suspending operations in Russia. These include Coca-Cola, Disney, Google and Microsoft, among many others.

Russia’s reaction to the sanctions

Russia has received sanctions many times before, although the latter cut a little more than the former. This time the sanctions affect major Russian banks as well as secondary capital markets. This type of economic isolation could severely affect Russia, as they are deeply integrated into global markets.

In response, Russia has raised gas prices as the main retaliation, and is also expected to increase grain prices, as much of it comes from occupied Ukraine.

Another reaction to the sanctions was to remove intellectual property rights from all American companies. This led to the immediate introduction of new fake Russian versions of Instagram, McDonald’s and Starbucks.

Russian investors have reacted by investing in gold, as it is considered a lower-risk investment during market volatility. This has brought the price of gold to a maximum of eight months.

Financial war against Russia

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