Uncle Mu’s international commentary analyzes the situation in Ukraine.
The war lasted for 4 days, and the West’s sanctions on Russia became increasingly intense. Taking EU as an example, Uncle Mu received a press release from the EU Embassy in China to the media on February 25.
lists many sanctions, including attacks on the Russian oil refining industry and restrictions on Russia's acquisition of chips from foreign countries. It is comprehensive.
The Western world in particular has kicked Russia's major banks out of the Society for Worldwide Interbank Financial Telecommunications SWIFT system, through which most of Russia's international transactions pass. Although Russia has its own ruble trading system, it cannot compare with SWIFT.
Especially after the Russian currency market opened on February 28, the ruble was definitely sold off in large quantities by the market. This is a direct result of Western sanctions. This currency is increasingly devalued and will gradually lose its role in foreign transactions.
International rating agency Standard & Poor's has rated Russia's sovereign credit rating as junk. Russian people began to line up in front of banks to exchange foreign currency.
In the past, a friend told Uncle Mu that Russia had de-dollarized a long time ago, so there was no need to be afraid. There were still Euros and RMB available. This is too optimistic.
Now the US dollar and the Euro are basically saying goodbye to the Russians.
The RMB can certainly help Russia alleviate some economic pressure, but the RMB is not yet a freely convertible currency under the international capital account. Transactions between the two countries can be carried out, but Russia cannot use the RMB to trade with other countries.
From this, a basic judgment is:
Western sanctions will definitely bring pain to Russia. And a large part of this pain will be transferred to the Russian people.
The New York Times quoted the owner of a beauty salon in St. Petersburg as saying that those who used to praise him for his greatness were no longer so positive. "They are shocked by what is happening, how fast prices are changing and merchants are stopping deliveries."
Russia's second-largest airline suspended all flights to Europe, a sign that Russians' day-to-day dealings with foreign countries will become a thing of the past , photos of stores changing price tags also went viral on social media.
Some media said that although many people in Russia support the war, as the war drags on, their life crises will gradually emerge, and their views on the war will change.
However, Russia is not unable to deal with Western sanctions.
such as its oil and natural gas are weapons. In the words of Mr. Forman, an expert at Harvard University and an economic adviser to Obama , apart from energy, Russia has little impact on the international economy. The country is basically "just a big gas station."
But this is enough to make Westerners miserable. In other words, sanctions are a double-edged sword.
For example, one-third of Europe's natural gas depends on Russia. If Russia cuts off its supply of , Europeans will not be cut off from gas supply, but they will have to bear the cost of high prices in the short term, which will also be borne by the European people.
In addition, Uncle Mu also noticed that Russia is also rich in natural resources. For example, the production of titanium metal plays a decisive role in the world. And this material is important for aerospace. Ukraine 's special metals and minerals also occupy an important position in the world. The protracted war between Russia and Ukraine will cause problems for the supply chains of Western airlines.
A common expectation is that the effects of Western economic sanctions on Russia are divided into short-term and long-term effects. It will indeed take effect quickly in the short term, and Russia has already had countermeasures. So it could take months or even years for sanctions to be truly painful for Russia.
For example, Russia's GDP has not recovered in the 8 years since Crimea crisis was sanctioned by the West in 2014; the income level of Russian people has not increased for several years.
According to this logic, Russia's economy will gradually weaken as the country's response capabilities decline and international exchanges decrease.
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