Russia’s sanctions must be extended, to operate steadily – analysts

FILE PHOTO: A pedestrian walks with an umbrella outside the Embassy of the Russian Federation, near the Glover Park district of Washington, USA, February 22, 2022. REUTERS / Tom Brenner

February 25, 2022

By Philip Blenkinsop

BRUSSELS (Reuters) – Western sanctions will not stop the Russian invasion of Ukraine and will have to be extended and sustained for a long time to hit the Russian economy, economists and analysts say.

The European Commission said Friday that sanctions agreed with the United States and its allies in Russia’s financial and energy sectors and restrictions on technology exports should limit the Russian “regime” ‘s ability to finance the war.

Jacob Kirkegaard, a senior fellow at the German Marshall Fund, said export controls on the technology could directly affect the Russian military if a prolonged conflict did not allow the chips to go to the missiles.

But like others, he sees sanctions more as a long-term, broader economic game.

“The way we think about financial sanctions is a tool to encourage regime change in the long run. “For this to work, it does not matter how much we do now, but how long we can maintain unity,” said Eurointelligence.

Guntram Wolff, director of the Bruegel think tank, said sanctions needed to be imposed in the long term and that a key part of that was Europe’s ability to wean itself off Russian gas, which could be a challenge next winter, with sustainable energy can not cover the deficit.

“This may mean we need to heat up less and break taboos, such as igniting coal or nuclear power plants,” he said.

He also said that a major omission in the current sanctions was the freezing of assets of the Russian oligarchs, a measure that does not affect the average Russian and is likely to cause Putin a headache.

There are already questions about the unity of planned financial sanctions, which see the United States targeting Russia’s two largest banks and the EU focusing on smaller companies.

The removal of Russia from the global SWIFT payment system was a proposed option, which would complicate payment transactions, although there are new SWIFT rivals that the Russians could use.

EU officials point to $ 80 billion ($ 89.9 billion) in lost exports to Russia and gas payment problems based on EU members such as Germany and Italy. However, EU voices are calling for SWIFT to be included in a further package.

China is also likely to play a key role in the collective sanctions, especially after declaring “limitless” co-operation with Moscow earlier this month. It has not imposed sanctions on Russia.

“China’s role is crucial. “It has the capacity to help Russia circumvent technology sanctions and to help the financial sector,” said Kirkegaard. “But the EU and the US will learn to refine them and strike in other ways that also stifle China.”

($ 1 = 0.8897 euros)

(Report by Philip Blenkinsop. Edited by Jane Merriman)

Russia’s sanctions must be extended, to operate steadily – analysts

Source link Russia’s sanctions must be extended, to operate steadily – analysts

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