Sanctions vs Russia Will Restructure Global Economy, Scholar Says

The barrage of Western sanctions against Russia has moved political and economic systems around the world into uncharted territory, Nicholas Mulder, an expert on sanctions, declared in an essay carried by The Economist.

Photo Insert: Although Vladimir Putin’s sudden and brutal invasion may have shocked the world, but the Western economic response has been just as astonishing.

In December, it was already clear that Russian aggression against Ukraine would meet a wave of American and European economic pressure. But although Vladimir Putin’s sudden and brutal invasion shocked us all, the Western economic response has been just as astonishing.

An initial round of sanctions on February 24th targeted Russian banks and technology exports; a second round on February 26th severed access to the SWIFT financial messaging network, seized the foreign wealth of Russian oligarchs, and, most significant of all, froze most Russian overseas central-bank reserves.

Oligarch money is actually public money and the funds stashed overseas had denied Russia the chance to modernize its industrial sector, reducing the economy to a mere supplier of raw materials and energy to global clients.

Before this, no G20 economy had ever faced such drastic economic sanctions or experienced so many of them in such a short span of time, Mulder argued. If anything, it signaled that the world has had enough of Putin’s dream of pan-Slavic domination and the entrenchment of his Eurasian empire, 32 years after the Soviet Union collapsed.

Since Putin took power two decades ago, he has failed to modernize the Russian economy, with studies showing that the military budget alone loses a maximum of 40% to graft. Perhaps more is shed in the naval budget, which eats up 26% of the military appropriation annually.

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