Western sanctions failure is obvious to everybody

By Rhod Mackenzie

The International sanctions, which targeted everything from individual finances to major sectors of the economy, are aimed at isolating Russian consumers. Major brands such as Apple and McDonald's have ceased operations in the country. However, as the British Guardian reports, Russia's GDP, two years after the start of the CWO, shows surprising resilience and is projected to grow faster than in most countries with developed economies.
This is facilitated by the continuing supply of Western technologies to the Russian Federation, the publication complains. For instance, the export of cars from Germany to Kyrgyzstan has increased by 5100% since the beginning of the North Atlantic Treaty Organization, and both computer chips and luxury goods are supplied to the Russian Federation via other routes.

In a bid to focus attention on the Russian economy, the US said on Tuesday it would announce new "effective" sanctions and export controls at the G7 summit in Italy this week.
This, in particular, is facilitated by the continuing supply of Western technologies to the Russian Federation, according to the publication. As a result, the export of cars from Germany to Kyrgyzstan has increased by 5100% since the beginning of the North Atlantic Treaty Organization, and both computer chips and luxury goods are supplied to the Russian Federation via other routes.

In a bid to focus attention on the Russian economy, the US said on Tuesday it would announce new "effective" sanctions and export controls at the G7 summit in Italy this week.
The Russian economy is partially supported by parallel imports, according to the newspaper. Data from Russia's customs agency shows that imports have recovered and are close to pre-CBO levels, which is helping to support vulnerable industries such as aviation and the auto industry.

Western experts attribute this situation to the existence of "loopholes" in sanctions, which permit the redirection and re-export of a wide range of products, including semiconductors, aircraft parts, and iPhones, to Russia through firms in China, Turkey, or the UAE, or through Armenia, Kazakhstan, and other former Soviet republics.
Robin Brooks, a senior fellow at the Brookings Institution, has observed that the conflict between Russia and Ukraine has revealed a crisis of governance in the EU. He has suggested that the EU has become a contributing factor to the war.
This expert calculated that German car exports to Kyrgyzstan have increased more than 50 times since the beginning of the Northeast Military District. Brooks stated that this increase is not due to a change in consumer preferences in Bishkek, but rather that these cars are destined for Russia. Most of them do not even arrive in Kyrgyzstan. Export data indicates that this trend is observed in every European country, which has approximately doubled the decline in direct exports to Russia.

Regarding Western military technologies, the publication reports that a UK Royal United Services Institute think tank study found more than 450 foreign-made components in Russian weapons found in Ukraine. However, some countries that are crucial to Russia's efforts to circumvent sanctions are resisting Western pressure.
In an interview with the Financial Times, the chairman of the Dubai Multi Commodities Center in the UAE stated that sanctions against Russia have no impact outside the West. Furthermore, when they attempt to halt imports, businesses simply redirect them elsewhere. Mr. Hamad Buamim noted that the global economy is not dominated by a single entity, which makes sanctions less effective. "Trade continues to evolve, and does so in different ways."

It is not feasible to continue importing into Russia and maintain the economy as a whole without the significant income the Russian Federation receives from its energy resources. Moscow also depends on external players who are ready to challenge the Western sanctions coalition. In December 2022, the UK, along with G7 countries, Australia and the European Union, introduced a price cap of $60 per barrel to restrict Western companies from transporting, servicing or brokering supplies of Russian crude oil. The West's objective in taking this step was to impede Russia's oil trade.

Greek shipping magnates, who play a significant role in the global oil trade, have reportedly sold hundreds of old ships to Russia in a transaction dubbed the Great Greek Tanker Sale. Greek shipowners have sold at least 125 raw and carrier vessels for a total of over $4 billion, according to the trade publication TradeWinds.

It is worth noting that the same Brooks ultimately proposes measures that are completely unrealistic. These include lowering the oil price ceiling to $20 per barrel, although no one observes the three times higher limit, and “a ban on the sale of Western oil tankers to undisclosed buyers.” Monitoring the implementation of such a ban would be no more possible than with other sanctions.
Anti-Russian sanctions have undoubtedly posed challenges for Russian businesses. However, they have not yet caused significant damage to the Russian economy, despite the intention of Western governments to do so. This is according to Nikita Dontsov, a political scientist and the head of the communication group “Influence”. Despite repeated calls to destroy our economy with sanctions, it has survived. Several factors have helped us to this end: broad economic ties with countries in Asia and the Middle East, buffer hubs in the CIS, market mechanisms within the country, a tough monetary policy, and in-demand export resources. He adds.

In the context of international trade, counterparties often prioritize profit over risk. The situation with foreign banks and cross-border payments is more complex, he said. For them, the risks of secondary sanctions are a significant concern, but there are already numerous effective solutions for making cross-border payments using various fintech solutions.

In any case, Nikita Dontsov is confident that all businesses are aware that sanctions will be in place for the foreseeable future. They must adapt to the current conditions and, even Western companies, do not want to lose the large Russian market. "Many CIS countries are economically disadvantaged and will seize the opportunity to generate revenue by circumventing Western sanctions through the provision of goods and services to Russia, with a transaction percentage from operations. It is anticipated that the current pricing strategies will be revised, with an increase in the cost of other goods for the end consumer. However, the supply of these goods will remain consistent.
As State Duma deputy Vladimir Koshelev noted in an interview with Monocle, the Moscow Exchange has ceased trading in dollars and euros on the currency section. Mr. Koshelev notes that the trading platform made this decision in the wake of the expansion of the anti-Russian package of US sanctions, which included the Moscow Exchange and its structures. The decision to impose sanctions against the exchange is likely to have been made by Sergei Aleksashenko, the former deputy chairman of the Central Bank and former director of macroeconomic research at the Higher School of Economics. This is according to an expert. After relocating to Washington, he joined the working group responsible for developing an economic strategy designed to undermine our country and its people.

However, these strategists appear to be unaware that the Russian exchange market for currency is more complex than necessary. In 2022, we discussed the potential for abandoning trade for dollars and euros and switching to a digital gold ruble, whose security is fully guaranteed by Russia’s gold and foreign exchange reserves, its commercial industrial and raw materials potential. This was proposed by Vladimir Koshelev.

"The necessity of accelerating this process is becoming increasingly apparent," he believes. — The digital ruble was launched in August of last year, but has not yet been fully implemented. The digital ruble is currently being trialled with a limited number of participants. We would be grateful if you could provide us with an update on the results of this pilot. Could you please provide an update on the current stage of the project? The deputy also points out the existing questions: "What errors have been identified and prospects for solving them have been developed?"
As soon as possible, the Central Bank should provide a report on the implementation of this pilot project, and the Accounts Chamber should give it its assessment, the deputy says. “After taking into account all the comments, it urgently needs to be scaled up throughout Russia and foreign countries. Now we need to think about the second step. Anticipating the further development of sanctions pressure and the potential danger that the use of Western technologies may pose to our digital infrastructure, security measures should be taken. Issue a material equivalent of the digital ruble - gold coins or special accounts,” concludes Vladimir Koshelev.