Skip to content

Some personal views on the follow-up impact of the Russian-Ukrainian military operation

When I wrote the email of 'prediction of 2022', I didn't expect that Russia would take a military operation this year. However, Combined with the information gathered by now, I think both the background factors( one of which is American authority is challenged by resources owners) and conclusion(the rising prices of energy also increase manufacturing costs) remain true now. 


Now Russia faces maybe the worst sanctions in history, and what's the result?

I compile some sanctions numbers against Russian and Ukrainian individuals, companies, and officials from March 2014 to now. There are two significant features:

1. Too much: from March 2014 to Sep 2018, there are at least 83 sanctions targeting personal and cooperate, Covering the fields of diplomatic, financial and economic. Now, sanctions grow with each passing day.

2. Too casual: the US government imposes sanctions based on the International Emergency Economic Powers Act (IEEPA). This Act basically authorizes the then president of the USA the right to sanction any target in any field.


And what's the impact of these sanctions? 

Since 2014, Russia's economy has grown by an average of 0.3% per year (compared with the world's 2.3% uptick). On the one hand, the sanctions forced Russia to be a food-self-sufficient country. And the GDP remains stable. It seems that the sanctions didn't hurt much. 

On the other hand, the stable GDP growth suggests that Russia's current development status and prospects are quite different from its expectations. After Russian selected banks are removed from SWIFT on 26th Feb, it will be harder to develop the economy in the future: In the last hundred years or so, there has been no successful precedent for being excluded from the world economic system.  


Talk from the financial part, Russia has its own SPFS. 

Pulling Russia out of SWIFT inevitably pushes Russia into CIPS. For example, Gazpromneft-Aero switched to the yuan in settlements for refueling flights of Russian airlines in China from 14th Feb. The move comes amid threats from the US and the UK to ban Russia's use of the SWIFT global payments system. 

The reaction force of all the sanctions is to push global economics away from US dollars. No mention of blockchain-based systems that would reduce global reliance on the U.S.-centric international monetary system. Altogether, SWIFT sanctions could very well incite the dedollarization of the world economy. 


Currently, military operations and negotiations are still in progress. A few days ago, I thought there would be nothing more surprising to me. Now it seems I can only say that the world is unpredictable.

Leave a Reply

Your email address will not be published. Required fields are marked *