03/09/2022, 10.12
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Sanctions lead to collapse of Russian economy

by Vladimir Rozanskij

With 5,530 punitive measures, Russia is the most affected country in the world. The likely risk of becoming a global "financial pariah". Crises are expected in all sectors, from banking to construction. China will not be able to compensate for the lack of Russian gas and oil exports to Europe.

Moscow (AsiaNews) - Russia has reached a record number of 5,530 sanctions, making it the nation most affected by these punitive measures in the world. According to the Castellum.ai portal, the Kremlin has beaten off "competition" from Iran, Syria, North Korea, Venezuela, Myanmar and Cuba. Since 22 February, the US and its allies have issued 2,778 new restrictions, most of which affect individuals (2,427). The nation that has imposed the most sanctions on Russia is Switzerland, with 568 actions.

One of the founders of Castellum, Piter Pjateckij, told Bloomberg that this is a 'financial nuclear war', and that Russia will 'turn into a financial pariah in less than two weeks'. Until the invasion of Ukraine, the most sanctioned country was Iran with 3,616 measures, targeted for its nuclear and missile programmes.

Now, in Russia, the storage, office rental and commercial sectors are collapsing. Transporters of imported products and the sale of these products are also in trouble, and everything is sinking into an abyss from which it will be impossible to recover for who knows how long. The galloping devaluation of the rouble is also making all imported products inaccessible to consumers, as was the case in the 1990s. The banking sector is undergoing massive cutbacks and sudden nationalisations, which are of little use anyway.

The fate of civil aviation is still unclear. Without maintenance and supplies, Airbuses and Boeings, which make up 90% of the national aircraft fleet, will no longer be able to fly without posing a serious danger to passengers. The construction and housing sector is holding out for now thanks to state incentives, but these cannot be renewed in the coming months. New houses will no longer be built, leaving the existing ones to deteriorate, not to mention the entire construction industry.

China would have to replace exports to the US and the EU, thus circumventing Western sanctions; there are trillions of dollars at stake. Even if the Chinese were to take on this heavy burden, a snap of Beijing's fingers would be enough to sink any sector of industry and trade in Russia. Payments would be made in yuan, which would buy oil and gas at laughable prices compared to the world market. Not to mention that the conversion of gas supplies from Europe to China would cost astronomical sums, estimated at a base of 0 billion - to be invested in new pipelines. And China in return for unpaid debts could demand infrastructure assets from the Russians.

In the best-case scenario, the Chinese would use Russia as a reserve for low-cost jobs, transferring its 'dirtiest' and most burdensom production. Russia would thus become for China what China has represented to date for developed countries.

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