Did sanctions hurt Russia?

This is a billion dollar question in geoeconomics. Russia is a top notch enemy to the west led by America when it comes to the matter of being targeted with crunching sanctions. You name it Russia have it? But had this sanctions ploy hurt Russia. Let me assess how Russia beat sanctions regime imposed upon her:

Sanctions play havoc in all three areas: geopolitics, geoeconomics and geostrategy. My ambit is geoeconomics only. Here are ways and means Russia used to deflect the impact of sanctions and what is more, made use of it to further her interest in the global stage.

1. As Putin ascended the throne as supremo of Russia he re-formulated the sweet old Soviet system. By the way, readers must not forget the adage: you can take a Russian out of Soviet but you can’t take Soviet out of a Russian. Therefore, Putin’s fond remembrance of the old Soviet ways always lingered in his psyche. The first thing he did was to engage in an undeclared war against oligarchs. Yeltsin gave them quite a leeway in Russian polity. Putin packed them one after another. When the collective West imposed sanctions there were no notable oligarchs to rally around the west to bring pressure upon the Putin club.

2. What the western society elicited was to sow the seeds of protest against the Putin hierarchy ending in a regime change. Instead the public rallied around the Putin apparatus as these sanctions were rightly interpreted as against Russia as a state and not to overthrow Putin and his team. Since many of the regime changes attempted by American led west against strongmen such as Gadhafi and Saddam ended in the destruction of the countries they led previously, Russian public drew the right conclusions and gave unstinted support to Moscow.  

3. Putin played a different ball game. He called the West “our friends”. He praised their culture, technology and export orientation, in sum he never criticised the psyche of the West but branded the leaders of individual countries in EU & America as power hungry and intent upon the destruction of Russia as a whole. His make-up was pro-peace and not pro-war. Ostensibly, the western leaders got painted as pro-war and anti-peace.

4. Putin pounced on the jugular.  Discounted oil as geoeconomics strategy was unveiled. He could do that because average cost of Russian oil production is just around US$ 25 per barrel. Therefore, when ceiling of oil at US$ 60 per barrel was imposed, Putin was ready and willing to supply oil even at fairly discounted price to the market. Main beneficiaries India & China were elated. In fact, India bought Russian oil and either tended upon to purify & improve or just simply re-export at US$ 60 per barrel, thereby gaining a big windfall.

5.Unintentionally sanctions gave a major fillip to Russian military hardware complex not only to enhance military hardware & software production, but made it much cheaper than the US & EU production cost. Ukraine war gave much more leeway. Rising military production could only be partly used in the Ukraine theatre and the excess need to be exported. Russian forage into African countries, especially in the Sahel region that evicted French Gendarme was a simply a master stroke in business strategy that brought name, fame and tons of gold.

So much so Russia being the second largest gold producer of gold and now filled with incoming gold too, recently announced that gold trading would begin in St. Petersburg landing a knock-out punch on London gold exchange. Before venturing into sanctioning others America led West must craft their business strategy navigating amid geoeconomics!

Cheers!

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mailcosmicgems@gmail.com

Blog:   Business Strategist