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Putin has won the sanctions war

Abhishek Kumar Singh by Abhishek Kumar Singh
1 August 2022
in Geopolitics
Russian oil
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Ideologies are only a brief snapshot of reality. That is why ideologically driven solutions to a particular problem only exacerbate it. No one knows it better than western powers. These countries are now buckling on the sanctions they imposed on Russia.

Canada forced to break the shackles

Putin’s plan of prolonging the Ukraine-Russia conflict has started to bear fruits now. Countries that were taking high moral grounds are now rushing into what their journalists themselves term as “funding of war”. It all started with Russia shutting down Nord Stream 1 gas pipeline. Though shutting down the pipeline is an annual event and both EU and Russia are on the same page, but European Countries feared that Russia will prolong it further.

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Putin being Putin was their biggest fear which came true, albeit in a different fashion. Nord Stream 1 did restart, but it was operating at only 40 per cent of its capacity. Russia reasoned that until it is provided with Turbines in the control of Justin Trudeau, it won’t resume supply. Soon, Trudeau was forced to release the seized turbine, terming it a “very difficult decision”.

Russian assets unfrozen

Once the shackles were broken by Canada, it paved the way for more relaxations. Europeans were hit by increased inflationary pressure due to the Ukraine-Russia crisis. Ukraine and Russia together supplied 29 per cent  of wheat, 19 per cent of corn, and nearly 80 per cent of sunflower oil needs of the world.

Due to war, the supply chain crisis hit the European nations hard. And then ill-thought self-sanctions of the West further complicated the issue. In July, the inflation rate in Euro Zone was around 8.9 per cent, well over 2-3 per cent required for a healthy economy.

The increased discontent among people forced Europe to release seized Russian assets. Now, Russian lenders like VTB, Sovcombank, Novikombank, Otkritie FC Bank, VEB, Promsvyazbank, and Bank Rossiya among others can use their assets erstwhile seized by European banks. EU has added a caveat that these assets should only be utilised in tackling the food crisis.

Read more: Putinomics: How Western sanctions proved to be a child’s play for Russia

Oil Sanctions not feasible

In the list of their excuses to relax self-sanctions, Europeans added the energy crisis as well. EU had earlier prohibited transactions with Russia-owned companies for sending oil to third countries. In other words, the EU’s policy was that neither it will be buying Russian oil nor its companies will enable the sale of Russian oil to other countries. Even insurance and reinsurance was prohibited.

But, with its own arrangements, Russia was easily carrying out trade with other countries. Russian innovations included the ship-to-ship transfer of oil as well. Additionally, countries like India, Saudi Arabia and China were actively buying Russian oil. The sanctions in fact negatively affected Europe’s prospects. In year-on-year terms, Russian revenue from oil and gas increased by 80 per cent from March-July. Finally, Europe was forced to allow Russian state companies to sell oil to third countries.

Read more: This is how India is importing oil from Russia even when insurance companies have blocked Russia

The US joins the bandwagon

Anti-sanctions waves have increased at such a dramatic height that they have taken even the United States under their shadow. Recently, the Biden administration wanted to declare Russia as a terrorist state. Even a bill supported by the speaker of the House of Representatives Nancy Pelosi was also introduced. But, Anthony Blinken, US Secretary of state has refused to support the bill.

Amidst all this drama going around, Russia is easily eating the sweeter side of pie. While values of currencies all around the world are falling, Rouble has hit historical highs against the Dollar. On the other hand, the Western bloc is suffering from a legitimacy crisis. The ill-thought sanctions have only conveyed to the world that the West is not a reliable partner.

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