War in Ukraine: Biggest sanctions target, Russia feels initial effects on economy

This is the War in Ukraine newsletter. Do you want to receive it in your email? Sign up below.

The invasion of Ukraine, which is in its 37th day, has made Russia the country with the most economic sanctions in history, surpassing Iran, according to a survey by risk consultancy Castellum.AI.

The measures imposed by the United States, the European Union and the United Kingdom, among others, involve blocking the assets of authorities such as President Vladimir Putin and the financial elite, restrictions on the granting of visas, a ban on imports and exports of some sectors and the exclusion of Swift Banks (Global Transaction System).

In response, Putin announced measures against “hostile countries”, such as a ruble charge for exported natural gas. Moscow has reason to be concerned.

• On Wednesday, the Russian Ministry of Economy announced the acceleration of annual inflation to 15.66% until March 25, the highest rate since September 2015;

• International Finance Institute projects declines in GDP (15% in 2022), exports (30%) and imports (34%) in the 2nd quarter.

The extent and severity of the measures are so great that analysts say they could have as much impact on the global economy as the war itself — or even greater, as World Bank President David Malpass has declared.

There are those who are skeptical about the consequences of the measures for the target countries, such as political scientist Benedicte Bull. For her, similar experiences, such as the one adopted against Venezuela, show that economic pressure has limited and even opposite effects to the goals of those who punish. This because:

1. countries sanctioned members can find new members and new paths —and China has stood out as an offer from these partners;

2. sanctions saw scapegoat: rulers attribute economic problems to the embargoes and not to their management, which helps in the popularity and maintenance of power;

3. measurements hit the wrong targetas opposition businessmen, equally suffocated by the measures.

Do not get lost

Columnist Tatiana Prazeres, international analyst and former Foreign Trade Secretary, explains the possible effects of sanctions on Russia, China and the world:

After a month of the first waves of measures motivated by the invasion of Ukraine, what impacts are already being felt by the country now? Even if a month is not enough to draw conclusions, the devaluation of the currency, inflation and rising unemployment are already being felt in Russia. There is an outflow of foreign investment. Difficulty in accessing inputs threatens production. And, of course, unpredictability hurts business.

The political aspect must also be considered, because, after all, sanctions are adopted to affect the political calculation of those who decide, to make the population press for changes. In this regard, news reports that Putin’s approval would have risen after the invasion. In other words, sanctions, at least in this first month, would not have had the effect desired by the G7.

Is there a way out to Russia? And what is China’s role in it? China has, like no other country, the ability to lessen the impact of sanctions on Russia. But Beijing’s actions will not be enough to neutralize the consequences of the restrictions.

The departure of US and European companies from Russia was seen as a great opportunity for Chinese companies, but there are reports that many companies have been acting cautiously, fearing being hit by US and European Union sanctions.

From an economic point of view, Beijing’s action in opposing sanctions is fundamental for Moscow, but it does not solve its problems. The war makes China even more important to Russia, which, under Putin, will always be viewed with enormous suspicion by the G7.

What are the global repercussions? Because of the war, but also because of the package of punishments, the expectation of the Economist Intelligence Unit (EIU), for example, is that the world economy will grow 3.4% in 2022, instead of 3.9% as previously predicted. of the conflict. In addition to sanctions, the increase in commodity prices (fueling inflation) and logistical problems associated with international trade contribute to this result.

What happened this Friday (1st)

• Civilian evacuation from Mariupol failed for lack of security, said Red Cross;

• Ukraine reported missile attack hit residential area near Odessa;

• UNESCO pointed out that conflict destroyed 53 cultural sites in Ukraine;

• Erdogan has declared that he will ask Putin for a step towards ending the war.

picture of the day

What to see and hear to stay informed

The images of the attack attributed to Ukraine by Russia and another scene of the daily war lived by the Ukrainians: