When it comes to the Russian invasion of Ukraine, the primary weapon the west has monopolised economical sanctions. This raft of wide-ranging sanctions is designed to isolate Russia and paralyze its economy.
We’ll take you to the Russian Sanction Saga question that everyone is asking: are they actually harming Russia or are they hurting Europe more? We’ll explore that in this article.
Sanctions are nothing new in the world of politics and international relations, but a long-standing democratic tool used to curb a country’s behaviour and prevent all-out war.
But the perks of imposing sanctions on a country are not as simple as punishing the one in the wrong. In fact, it has its drawbacks and challenges pertaining to those imposing the sanctions.
To understand this better, let’s discuss what exactly sanctions are and how they work.
What are Economic Sanctions and how do they work?
Sanctions are the withdrawal of trade or financial relations with a country for foreign and security policy purposes. Sanctions extend to various forms including travel bans, asset freezes, capital restraints, arms embargoes, foreign aid reductions, and trade restrictions.
So, by definition, sanctions are a ban on the exchange of goods or services that is extended from one country to another in exchange for money, which means by restricting one country to sell or provide, we are also challenging the demands and requirements of the other.
Thus, the western sanctions will cost European countries big-time. Here’s how!
The toughest Russian sanctions will hit the European Countries the Hardest
The turmoil of the war already comes with an economic cost affecting energy costs, prices of raw materials, and inflation. With the rapid sanctions on Russia, the economic backlash can amplify impacting the prices of gas, electricity, food, and other necessary items in European countries.
Sanctions “will have dramatic long-term implications and, relatively soon, very strong price implications, starting first with energy but then trickling down through the entire economy,” said Georg Zachmann, a senior fellow at Bruegel, a Brussels-based think tank.
Zachmann also added, “We will need gas, we will need oil. And if that doesn’t keep coming, then political unity in Europe will be difficult to maintain,”.
Germany imports 50% of its natural gas from Russia. With a sanction on gas, they
Germany is Russia’s largest trading partner and it imports 50% of its natural gas from Russia. With a sanction on gas, they will be compelled to find alternatives.
Italy the second-largest trading partner to Russia gets 41% of its supply from them. It has been also pointed out by Putin that around 500 Italian businesses have running operations with Russia and bilateral investments amount up to $8 billion in worth.
Besides Germany and Russia, Austria, Turkey, and France are also largely dependent on Russia for natural gas. This list also extends to Central and East European countries Hungary, Poland and the Czech Republic, and Slovakia.
The sanctions on Russia will put all these countries under the pressure to find an alternative supplier and while they might find a solution, in the long run, the initial burn can lead to a severe shortage of power and other materials for them.
Although these issues are alarming, European leaders seem to put the economic concerns aside in the aftermath of the invasion. While we can be sure of the adversities the Russian Sanctions will pose to Russia, the cost will inevitably extend to Europe as well.
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