Why Russia sanctions could hurt the U.S. more than Russia
“No.. No… No”.
That’s the answer leading American economist Professor Richard Wolff provided when asked if the Russia sanctions imposed by the United States and its allies would have their desired effect – to hurt Russia and stop war in Ukraine.
“Did Russia withdraw from the Crimea after 2014 when big sanctions were levied? No,” Said Professor Wolff.
“Did the Chinese change their international or local or domestic economic activities after Trump hit them with tariffs, trade wars and sanctions? No.
“These activities are now routine, and the ways to get around them and to escape them are equally routine… I don’t think it’s much more than political theatre.”
Many experts like Professor Wolff say the major loophole for Russia to circumvent trade sanctions is through China.
Just days before the invasion of Ukraine, Presidents Vladimir Putin and Xi Jinping met in Beijing. Following meetings they said in joint statements there are “no limits” to the friendship between the two countries.
According to the World Bank, China is Russia’s top export and import partner, followed by the Netherlands, Germany, Belarus and Turkey.
The nation has been working for over a decade to make its economy less reliant on major western economies.
Impacts of Russia sanctions on U.S. soil
With inflation already at highs not seen since the 1980’s, Professor Wolff says the Russia sanctions could be just days away from causing severe economic pain for everyday Americans.
Russia is one of the world’s top exporters of key commodities such as oil, natural gas, copper and aluminium.
“For those who are concerned about the inflation here in this country (United States), hold on to your hats, because if this lasts more than a few days – maybe a week or two – you’re going to see the effects.
“Probably the biggest immediate impact on the American people will be a worsening of inflation, which will make it very clear that we’re going to be paying daily in our lives for whatever goes on in that far away place of the Ukraine.
“Number one. Russia is a huge supplier of oil and gas (to the United States). Withdrawing that supply, even in part will have the effect of driving up the price. California already spends more than $5 a gallon to fill up the automobile and we’re going to see that go much higher.
“Number two. Since you bring everything in to every store in the United States with a truck that uses oil and gas, we’re going to see everything go up in price. We already have a 7.5% per year inflation. All of this is going to raise it.
“And here’s what is probably the biggest one. Every business in the world has been juggling this problem… ‘I want to raise my prices but I don’t want the bad reputation with my customers that comes with raising the prices’… They all now have an excuse.”
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What are the Russia sanctions?
The key sanctions imposed on Russia by the Unites States since the invasion of Ukraine include:
– Cutting off the link between Sberabank (Russia’s largest bank) and the U.S. financial system.
– Cutting off the link between VTB Bank (Russia’s second-largest bank) and the U.S. financial system, while also freezing all VTB Bank assets held in U.S. financial institutions.
– Blocking sanctions on Otkritie (a large Russian commercial bank).
– Blocking sanctions on Novikom (a Russian bank which specializes in oil and gas financing).
– Blocking sanctions on Sovcombank (Russia’s third largest privately-owned bank).
– Restrictions on 13 other major Russian enterprises including, Gazprom (world’s largest natural gas company), Rostelecom (Russia’s largest telecommunications company) and Alrosa (world’s largest diamond mining company).
– Sanctions preventing powerful Russian business and political figures from doing business in the U.S., including friends and family of Vladimir Putin, high-ranking Russian Government officials and executives of Russian state-owned companies.
Secretary of Treasury, Janet Yellen, announced the sanctions following the invasion.
“Treasury is taking serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity,” said Yellen.
“Our actions, taken in coordination with partners and allies, will degrade Russia’s ability to project power and threaten the peace and stability of Europe. We are united in our efforts to hold Russia accountable for its further invasion of Ukraine while mitigating impacts to Americans and our partners.”
She also warned of further sanctions if military action did not cease.