If Russia wants to remain a major player in the world, it must be able to survive sanctions. The most difficult stage of sanctions is the rehabilitation stage. The aim of sanctions is to force a country to change and rehabilitate. To rehabilitate, a country must be able to remove all its troops from the Ukrainian territory and remove the recognition of two new republics. Unfortunately, this is a very difficult task to accomplish, especially for modern czars.
There are two main ways in which China can help Russia survive sanctions. The first is through business. China is a key market for Russia’s oil and gas and it will likely want to retain its trade relations with Russia. Nevertheless, China may be reluctant to step in because it would have to risk losing access to the international markets. And even if it does, it would not want to risk a direct confrontation with the United States.
Second, Russia will need some critical technology from China. Its telecommunications industry is increasingly dependent on Chinese products, and some of these companies are pulling out of the market. The country has limited access to American technology, so China may be able to supply replacement parts and products. However, it will have to balance the interests of its domestic audience, which is on Moscow’s side.
Third, China may want to protect its financial system. China is the second largest economy in the world, and is an important part of global supply chains. Any sanctions that hit China will have global consequences, and will probably result in more economic pain for the West than for Russia. So, China may want to protect itself by partnering with Russia as a way to avoid sanctions.
China may also be willing to buy more Russian gas and negotiate a good price for it. China can also help Russia survive sanctions by buying its semiconductors. China is an excellent middleman for sanctioned countries, and its experience can help Russia.
Self-sufficiency in basic food supplies
China has already begun buying grain from Russia’s vast farmlands. Russia is also tapping into China’s billion-dollar Belt and Road infrastructure project to attract investment and increase its transit potential west into Europe. Beijing has also kept its Cross-Border Interbank Payment System (CBIPS) open to Russia, which is banned from using SWIFT. This system, launched by China’s central bank in 2015, has helped Russian banks make payments to China and other Western countries.
While the United States and EU countries have put sanctions on Russia’s oil exports, the vast majority of nations have not yet imposed any such measures. This has allowed Russia to build its economy and survive the current crisis. As a result, the Russian population has grown increasingly poorer. It has been reported that 25% of the country lives in the countryside and relies on subsistence agriculture. The other half lives in urban areas and relies on imported goods. This means that the population of urban Russia will be particularly hit by inflation.
The consequences of the sanctions are already affecting the global economy. Rising food, fuel, and transport prices have exacerbated the already crippling situation for humanitarian agencies. This has reduced the amount of resources available for essential goods like water, agricultural supplies, medical care, and sanitation.
In addition, the sanctions have hit Russian consumers of imported goods. For example, it has become difficult to find imported pet food and medicine. In Moscow, Svetlana Ryabova runs a stray cat rescue program. As a result, the import of foreign pet food has become harder than domestic brands. Similarly, the availability of foreign vaccines has been reduced. In some cases, domestic manufacturers are trying to make up for the shortfall.
Leverage over Europe
Russia believes its dependency on energy resources gives it unique leverage over the West. It earns about half its budget through energy exports and saw oil revenue increase by 50 percent this year. Its average export price is 60 percent higher than last year. According to the Center for Research on Energy and Clean Air, Russia earned a record 93 billion euros during the first hundred days of the war. But Moscow isn’t sitting still. It is trying to find a way to adjust for the longer term.
The Russian military action in Ukraine, now in its seventh week, has triggered a deep uncertainty in global affairs. This latest act of aggression has turned Russia into a global pariah and triggered international sanctions far beyond Kremlin expectations. The war in Ukraine has also strengthened transatlantic unity. The Russian invasion in Ukraine reflects President Putin’s obsession with Ukraine, which he sees as part of Greater Russia and fears as a pro-Western country.
China is also preparing for this crisis. It has already set up task forces to study ways to deal with U.S. sanctions, and is likely to get creative as well. This means new payment systems, new trade routes, and greater self-reliance in the procurement of high-tech components. These tools could be valuable to Russia.
Oil and gas exports
The EU’s recent crisis in Ukraine forced Europe to make some hard choices over its energy links to Russia. For example, the German government decided to freeze the approval process for Nord Stream 2, a pipeline connecting Russia and northeastern Germany that is scheduled to double the amount of natural gas sent directly from Russia to Germany. The decision was a significant about-face for Germany, which had long separated its energy needs from its political interests.
There is also a chance that the sanctions will hurt oil and gas exports from Russia to Europe. Oil exports from Russia account for almost a third of the country’s national budget, and restricting them would hit both Russia and Europe. This could prove difficult for Russia, which depends on energy exports to finance its infrastructure.
However, Western nations are wary of cutting off Russia’s energy supply, which would be costly for Europeans and American citizens alike. However, it is important to note that sanctions are unlikely to be lifted easily. The European Union and other Western nations have not yet decided if they will lift the embargo – a move that would harm Europeans and their economies. Therefore, a compromise is needed between punishing Russia for its aggression while protecting their own economies.
The impact of sanctions on Russia’s oil and gas exports is already being felt. In the past month, the country’s oil deliveries have dropped 13 percent. However, oil revenues are higher than they were in the same period in 2021. However, the impact is expected to worsen in coming weeks and months. Furthermore, big Russian manufacturers are having trouble importing semiconductors and electronic components. Some products are disappearing from store shelves. Meanwhile, prices for basic goods are rising rapidly, causing a pinch on regular Russians.
The most important sanctions targeted Russian companies’ access to foreign capital. US and EU investors were banned from providing capital to five major Russian banks, as well as military companies. As a result, the targeted companies underwent a sharp decline in performance, a study suggested. Foreign investment in Russia declined by as much as $700 million per quarter.
The energy sector, however, has largely escaped the worst of the sanctions. The energy sector is one sector where Russia depends on foreign investment and is unlikely to be affected in the short term. However, stakeholders are struggling to figure out how to adapt in the longer term. Despite the sanctions, many ambiguities and gray areas remain.
If Russian companies can diversify their suppliers and obtain imports through indirect routes, it may have an upper hand in surviving sanctions. It is important to note that Russia shares a land border with countries that are not implementing sanctions. This is one of the ways it was able to evade sanctions in the past. But despite this, the economic sanctions imposed on Russia will affect the global economy. They will hit Russia’s exports of commodities like wheat and corn, as well as its imports of platinum and neon. Furthermore, Russia has been testing the feasibility of cutting itself off from the world internet by operating a domestic version.
For years, the Russian economy was plugged into the world. But in the last few years, that global connection has become increasingly remote. As a result, foreign companies have ceased doing business in Russia. Nike and Apple have shut their online stores, major shipping lines stopped shipping container goods to Russia, and Boeing has stopped providing support for Russian airlines. As a result, foreign companies have been forced to seek alternative markets.