US and Western sanctions are making the Russian economy stronger!
Kenneth Rogoff indicates that if the West imposes sanctions on a third party that deals with Russia, this will increase pressure on the Russian economy, but at the same time, it will push back the wheel of economic globalization.
Increase in oil exports and growth in industrial production
It seems that the Western sanctions imposed on the Russian economy following the start of the Russian special military operation on Ukraine have failed to achieve their goal of pushing Russia into an economic crisis and therefore social crisis that puts pressure on the Russian leadership to submit to American and Western dictates.
Growth of the Russian economy
According to a report issued by the International Monetary Fund, the Russian economy has proven unexpected immunity and resilience in front of Western pressures by diverting its exports, especially of oil and gas, away from Western countries that impose sanctions on it, to other countries that do not impose sanctions on it, led by China, India, and Brazil. This contributed to the Russian economy restoring its activity in the third quarter of the year 2022, and it is expected that this improvement in the performance of the Russian economy will continue during the year 2023. The Russian economy has benefited from the high oil and gas prices in global markets to increase its revenues and achieve growth rates exceeding two percent this year, in light of the large import substitution by resorting to commodities produced in the local market.
In a report by Bloomberg Agency, Russian oil exports achieved the largest growth this year compared to the seven years that preceded it, despite Western sanctions. According to the agency, oil exports during the first three weeks of April of this year were about 1.9 million barrels per day, which is the highest figure since 2016, despite Moscow's announcement that it will reduce its oil production by 500,000 barrels per day in response to an attempt by the Group of Seven industrialized countries to put a cap on Russian oil prices. Through Turkey, Russia was able to reach new oil markets in North Africa, including Morocco, Tunisia and Libya. Russia has also increased the volume of its oil exports to Latin American countries, especially Brazil. Brazilian oil imports from Russia accounted for 53 percent of the total Brazilian oil imports by April, compared to last year, when Russian oil imports to Brazil were only 0.2 percent of the total Brazilian oil imports.
In parallel, the Russian industry has grown by 1.2 percent over the past month compared to April 2022 and 13.4 percent compared to February. The largest growth rate was in the metal industries sector with a growth rate of 30.4 percent, and the electronics and computer sector with a growth rate of 22.5 percent, and electrical equipment with a growth rate of 21.5 percent. This was accompanied by a significant decline in the inflation rate for this year, as the inflation index recorded 3.15 percent in April, compared to 10.99 percent in February, noting that this is the first time since 2020 that the inflation index has decreased below 4 percent. Experts expect the inflation index to rise again to between 5 and 7 percent in the coming months, but it will decline again to less than 4 percent in 2024.
Reasons for the failure of Western sanctions
Writer Frank Vogl attributes the reason for the failure of US and Western sanctions against Russian oligarchs who support President Vladimir Putin to the interest of many Western banks in recycling Russian money and the failure of the US and Western authorities to prevent these recycling operations. He cites, for example, that Danske Bank in Estonia in 2018 recycled no less than $235 billion belonging to Russian businessmen and obtained huge commissions as a result of these recycling operations.
As for writer Kenneth Rogoff, he attributes the failure of Western sanctions to paralyze the Russian economy to the fact that these sanctions are much lighter than those imposed on Iran or North Korea, especially since they did not include imposing sanctions on a third party. The writer indicates that if the West imposes sanctions on a third party that deals with Russia, this will increase pressure on the Russian economy, but at the same time, it will push back the wheel of economic globalization, which will harm the interests of the United States. He indicates that Russia continues to sell oil to India and China and buy fresh fruits and vegetables from the Zionist entity. In addition, a large number of Russian goods are exported through re-packaging and shipping operations, which contributed to the increase in the volume of trade between Russia, Turkey, Armenia, Kyrgyzstan, and Kazakhstan, after the decline in the volume of Russian trade with Europe.
Western sanctions on military technology and components have limited Russia's ability to replenish its reserves of high-precision missiles. It is worth noting that the sanctions did not prevent Russia from obtaining enough electronic chips to plant large parts of the front in Ukraine with smart land mines. According to some estimates, 30 percent of Ukrainian territory is now mined, and Russia has been able to do so without turning to China for military technology. The United States and the West have imposed large-scale and complex financial sanctions targeting even Russian officials, led by President Vladimir Putin himself. However, these sanctions focused primarily on the export of oil and exempted a large number of commodities and products. For example, the United States still imports Russian uranium to operate its nuclear power plants, which provide it with 20 percent of its electrical needs.
Before the special military operation in Ukraine, Russia was achieving large trade surpluses, which enabled it to build up large reserves in foreign currencies and was able to form a sovereign fund of about $700 billion in anticipation of the sanctions that it knew would be imposed on it immediately after the start of the military actions in Ukraine.
The United States and Western countries are afraid of imposing sanctions on third parties that do business with Moscow because this may lead to a global recession, especially since among the dealers are major economies such as India, China, and Brazil, and it is not easy to impose sanctions on them without having a negative impact on the economies of Western countries which are currently suffering from the repercussions of severing economic relations with Russia. Also, many third-world countries are not ready to cut off their economic ties with Russia. And in the event that Western countries resort to the option of secondary sanctions (i.e. sanctions against a third party that deals with Russia), then they will encourage the establishment of a parallel global economy that is independent of their hegemony, which will contribute to reducing their global influence and harm the economic globalization that it calls for, which is the main tool of hegemony for it. during the twenty-first century.