Swift, will financial sanctions against Russia work?
Sanctions: This is how Russia with China is already working on an alternative to the Swift system. The in-depth study by Giuseppe Gagliano
Will financial sanctions against Russia work?
Economic sanctions are a geopolitical instrument as much as other instruments and have no neutral or super partes value at all. However, it is undeniable that sanctions have a high symbolic value, especially at the international level, also because up to now they are one of the few tools, if not perhaps the only coercive foreign policy tool available to the EU. .
But often the use of sanctions determines effects contrary to those foreseen, such as the strengthening of the support given by the population to the Malian regime which was sanctioned in 2021 and 2022. But let's come to Moscow.
EFFECTS OF THE SANCTIONS AGAINST RUSSIA
Russia has been fully aware for years that it is subject to sanctions and therefore has decided to know how to adapt dynamically and to take advantage of them. How? Russia, for example, has put in place an embargo on the import of agricultural products from the European Union, North America, Australia and Norway and all this has led to a protectionist choice, giving a great boost to national production. in Russia's agribusiness sector they reached a record $ 30 billion in 2020 even higher than that of natural gas, making Russia a net exporter of agricultural products.
As regards the strictly financial sector, Russia has tried at all costs to limit its dependence on the US dollar. How? Its central bank, for example, has accumulated substantial reserves that are the equivalent of one-third of its gross domestic product precisely in order to deter any attack or economic war against its currency.
SWIFT DOSSIER
A concrete step in this direction occurred in 2018 when he got rid of the American treasury bonds that he exchanged at least in part with the Chinese sovereign debt of which Russia – let's not forget – has now become the main foreign buyer. But Russia went even further: to protect its banking system from western destabilization in 2015, Russia put in place its financial messaging system called SPFS and a national bank card, Mir, which would guarantee transactions within the country. if Westerners excluded Russia from Swift . In 2021, 87% of the population will have the Mir card, which however only provides a quarter of transactions, as the middle classes continue to prefer Western cards, which can be used abroad.
THE CHINESE ESCAPE
But Russia has also been able to implement a policy of alliance with China: Moscow was in fact able to count on China's support to defend itself before the UN international community. In fact, both Russia and China have repeatedly invoked the principle of non-interference in internal affairs by referring precisely to article two of the United Nations charter.
However, the counter sanctions that both Russia and China have applied from time to time are minimal and quantifiable at around 3% compared to the United States, which globally has reached the record figure of 53% of sanctions imposed globally. Why this gap? It is easy to say: both Russia and China do not have a tool as powerful as the dollar. Faced with this power, Russia and China are trying to put a stop and a limit as evidenced by the fact that bilateral trade agreements in US dollars have fallen: to 46% in 2020 compared to 90% in 2015.
Not only that: but Russia has also entered into partnerships of a banking nature with Russia, perhaps little known but of extreme political significance: twenty-three Russian banks are connected to the Chinese financial messaging system (CIPS), compared to a single Chinese bank on the Russian SPFS .
However, let it be clear that CIPS is just a backup plan, not a serious competitor to its western counterpart. Ultimately we are convinced that the sanctions that will be implemented will have either little or no effect on Russia. Think for example of Iran and the very poor results that the United States has achieved with the policy of sanctions.
These sanctions will have enormous repercussions on the EU economy more than Russia's.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/primo-piano/funzioneranno-le-sanzioni-finanziarie-contro-la-russia/ on Sat, 26 Feb 2022 08:14:36 +0000.