US/NATO sanctions against Russia are succeeding beyond their ‘wildest hopes’: journalist

Some of the far-right pundits at Fox News and Fox Business have been claiming that the Biden Administration/NATO sanctions against Russia in response to its invasion of Ukraine aren’t working. But journalist Eric Levitz, in an article published by New York Magazine on March 7, lays out some of the ways in which the sanctions are working well — so well, according to Levitz, that they may also inflict some economic pain on Russia’s adversaries.

“In addition to sanctioning Russia’s oligarchs and seizing their western assets, the U.S. and EU have effectively evicted Russia’s entire banking system from the global financial order,” Levitz explains. “Russian banks can no longer use the international payments known as SWIFT to complete transactions, forcing the firms to conduct business at a snail’s pace, one telephone call at a time. Not that Russia’s banks have all that much business to conduct, given that engaging in virtually all forms of commerce with Russia will now expose foreign firms to secondary sanctions.”

Levitz continues, “Even more significant than these measures, however, was the freeze that central banks throughout the West put on Russia’s sovereign assets…. One of the worst consequences of sanctions for the penalized nation is that they debase its domestic currency: When most of the world is boycotting Russian exports, demand for rubles dries up. That increases the Kremlin’s borrowing costs and the prices that Russian consumers must pay for imported goods.”

Economically, the worst may be yet to come for Russia if the Biden/NATO sanctions are expanded to include Russian oil. Russia’s energy imports, Levitz notes, have been “exempted from” the sanctions so far.

“Never in modern history has an economy of Russia’s scale been subjected to such extraordinary ostracism,” Levitz stresses. “The ruble’s value swiftly plummeted. According to analysts at JPMorgan Chase, the Russian economy is now poised to shrink by 7% this year. Other forecasters paint an even darker picture, with the Institute of International Finance projecting a 15% contraction in Russia’s GDP.”

The journalist points out that if Russian oil suffers in a big way, other countries — including Russia’s adversaries—will feel the sting as well.

“Russia is struggling to find buyers for its top export, even as it offers the nation’s highest quality oil at a discount of $20 a barrel,” Levitz writes. “Should this de facto embargo continue, the implications will be devastating for Russia’s economy and burdensome for virtually everyone else’s…. In drafting its sanctions, the West set out to wreck the Russian economy. At the moment, it appears to be succeeding beyond its wildest hopes — and/or fears.”