Russian economic resistance to sanctions has frustrated the West, especially as the war in Ukraine continues into its third year – but lessons from this experience will be valuable, says one economist.
“The key lesson is that seeking complete isolation of a large, complex, globally integrated economy is expensive and elusive,” Elena Rybakova wrote in the Financial Times on Tuesday.
Despite widespread Western sanctions over the invasion of Ukraine, Russia recorded GDP growth of 3.6%. In 2023 after a decrease of 1.2%. In 2022. The International Monetary Fund expects the economy to continue growing at 2.6 percent. In 2024.
The Russian economy has managed to maintain its health as Russian President Vladimir Putin has been preparing to impose sanctions since 2014. Moscow and Beijing have also launched alternative payment systems to bypass the widely used SWIFT system.
While Russia's official statistics should be “cautiously treated,” Rybakova said the country's economy appears stable thanks to war spending. The West has not completely stopped buying Russian energy products.
“It took the coalition governments nearly a year to reduce their purchases of Russian oil and gas — and many of their companies are still actively engaged in trade with Russia,” says Rybakova, a senior fellow at the Peterson Institute for International Economics. He is also Director of the International Affairs Program and Vice President of Foreign Policy at the Kyiv School of Economics.
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Failure in Russia, lessons for the future
However, the West can learn valuable lessons from its experience imposing sanctions on a large economy like Russia, Rybakova said. Especially since the United States may one day impose trade restrictions on China due to a potential conflict in Taiwan, which Beijing claims.
She added that China, like Russia, has been integrated into global markets and is unlikely to be surprised.
“In the case of China, the United States should look for weaknesses while remaining realistic about the limits of sanctions,” Rybakova wrote in the Financial Times.
The expert says there should be harsher penalties for those who evade sanctions.
“The experience with Russia is an invaluable opportunity to tighten sanctions as an instrument of foreign policy,” Rybakova wrote.
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Secondary sanctions work
Chinese banks are tightening compliance controls on Russian companies because they fear they will get caught up in increasingly restrictive Western sanctions against Russia.
They include secondary sanctions approved by the United States last December targeting financial institutions that help Russia circumvent the restrictions.
Russian news site Izvestia reported on February 21 that three of China's four major state-owned banks had suspended payments from sanctioned Russian financial institutions.
The Kremlin has acknowledged problems with Chinese banking transactions, and its spokesman Dmitry Peskov said earlier this month that authorities were “working” with Beijing to resolve them.
The above text is a translation from American edition of Insidercompletely prepared by the local editorial office.
Translated by: Dorota Salos
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