The pro-European Bruegel comes with slaps at the EU on sanctions against Russia
According to Maria Demertzis, economist at the European University Institute and fellow of the Brussels think tank Bruegel, the EU sanctions on Russia have not been successful. Here because
“If the goal of the sanctions is to reduce Russia's military capability, then why have they not been successful?” This was asked by Maria Demertzis, professor of Economic Policy at the European University Institute of Fiesole (an independent body of the European Union) in a speech on the website of the Brussels think tank Bruegel.
WHO IS MARIA DEMERTZIS
According to the biography published in Bruegel, of which she is a senior fellow and was deputy director until December 2022, Demertzis is currently a part-time professor in Fiesole. He previously worked at the European Commission and the Central Bank of the Netherlands. He obtained a doctorate from the University of Strathclyde, UK, and also worked at the Harvard Kennedy School of Government, US.
WHY EUROPEAN SANCTIONS DIDN'T WORK: THE STARTING POSITION
According to Demertzis, the first of the three reasons why European sanctions on Russia would not have worked is that the Union "started from a point of weakness", because the bloc's deep dependence on Russian energy – in particular natural gas , but also from oil – “resulted in only a partial reduction in economic ties” with Moscow.
This is because, if you put energy aside, the European Union does not buy much else from Russia, nor is Russia such an important market for EU exports of goods. “As a result,” writes Demertzis, “the sanctions packages that the EU imposed on Russia during the first year made very little difference to the revenue stream that Russia received.”
THE LACK OF ALLIES
The second reason for the alleged failure of European sanctions is the lack of allies: in the world, many countries – although not openly siding with Moscow for the invasion of Ukraine – did not want to take a stand so as not to jeopardize any economic relationship. Indeed, in addition to the European Union, the United States, the United Kingdom, Canada, Japan and Australia, among others, have also imposed sanctions against Russia.
HAS RUSSIA REPLACED EUROPE WITH CHINA?
According to Demertzis, Russia has redirected its energy exports destined for Europe towards China and India, which would have "managed to absorb what the EU previously purchased". In reality, there is a difference not only in income (Moscow has sold gas and crude oil to Asia at a strong discount ) but also in volumes . Relative to China, exports of Russian gas via pipe to this country are expected to reach 22 billion cubic meters in 2023, compared to 15.5 billion in 2022; in 2021, before the war, the European Union imported almost 146 billion cubic meters of Russian gas via pipes.
THE FRAGMENTATION OF THE GLOBAL SYSTEM
The third reason, concludes Demertzis, is that European sanctions “contribute to an already fragmented global system, which further complicates their application”.
“After the freezing of the assets of the Bank of Russia,” explains the professor, “countries increased the diversification of foreign reserves in their balance sheets by moving away from the most tradable currencies. While the dollar and euro have maintained their relative positions in international reserves, 2022 has seen a global reduction in reserves of around 10% in favor of more gold.”
It is recent news that Russia would like India to buy its oil by paying for it in yuan, the Chinese currency, but New Delhi is rejecting these requests so as not to benefit Beijing, its rival in Asia. Moscow needs yuan because in the last year its trade with China has grown a lot, and the demand for this currency has increased significantly to pay for imports; on the other hand, the Kremlin has an excess of rupees that it has difficulty disposing of (the Indian rupee is not a fully convertible currency at an international level, therefore it is difficult to use it in international trade).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/efficacia-sanzioni-ue-russia-bruegel/ on Mon, 20 Nov 2023 05:50:08 +0000.