President Joe Biden has announced sanctions against Russia for its attack on Ukraine. But what does that really mean? Certainly, the rest of the world has felt a rise in inflation, lesser so for the United States, though still high. But for Russia, “they’re particularly devastating.”
A new 118-page paper, Business Retreats and Sanctions Are Crippling the Russian Economy by 19 Yale authors showed the actual effects of sanctions on Russia. They questioned whether the sanctions had teeth and involved Russian President Vladimir Putin’s country’s gas and oil industry, which fuels the nation’s economy.
The official Russian statistics have indicate that oil and gas money has kept the country’s economy sound. But they lie.
The paper’s authors uncovered “massive supply shortages” especially when it came to various forms of technology and replacement or manufacturing parts, The Axios reported:
“Russian imports have largely collapsed. Russian domestic production has come to a complete standstill.’
A full 40 percent of the Russian GDP has been attributed to foreign companies inside of the nation. But these corporations have pulled up stakes, and few intend to ever return:
‘Looking ahead, there is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions pressure.’
In spite of the cost to his own people, Putin decided to cut more of its national gas supply to Europe. Of course, that was his prerogative, given dictators technically answer to no one. Interestingly:
‘[T]he paper makes the case that Russia needs Europe to buy its natural gas more than Europe needs Russian natural gas to buy.’
The reason for this has been that 83 percent of the gas Russia exports has gone to Europe. Conversely, Europe imports “just 46 percent of its natural gas from Russia.”
Russia’s Gazprom indicated that it would stop one of the turbine engines that move the Nord Stream 1 pipeline’s natural gas to Germany in late July. Doing so pulls that pipeline down to 20 percent capacity. Coming out of a “10-day shutdown for maintenance,” that will further cause a dip in Russia’s economy.
How will Europe handle the new oil and gas restrictions? NBC News reported it will ration gas in the coming winter months:
‘European Union governments agreed Tuesday to ration natural gas this winter to protect themselves against any further supply cuts by Russia as Moscow pursues its invasion of Ukraine.’
President Volodymyr Zelenskyy called Russia’s efforts “a form of terror,” according to his presidential page:
‘Russia is not going to resume gas supplies to European countries, as it is contractually obligated to do. All this is done by Russia deliberately to make it as difficult as possible for Europeans to prepare for winter.’
‘And this is an overt gas war that Russia is waging against a united Europe – this is exactly how it should be perceived. And they don’t care what will happen to the people, how they will suffer – from hunger due to the blocking of ports or from winter cold and poverty… Or from occupation. These are just different forms of terror.’
The world came together to squeeze Putin out of Ukraine. Fortunately the U.S. has its own supply of gas and oil, so we are not as impacted by the Russian sanctions responses.
Featured image is a screenshot via YouTube.
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