Nearly two weeks into Russia’s military assault on Ukraine, Moscow has faced an onslaught of coordinated sanctions by Western governments and boycotts by private companies and state-owned multinationals like never before, according to reports. economic experts.
Governments have imposed sweeping economic sanctions on Russia that have targeted its financial institutions, including the central bank, the shipping and trade industry, the technology and aviation sectors, and the community wealthy oligarchs and their circles, stopping until Tuesday to target the country. oil and energy sector.
Energy exports have maintained a steady flow of cash to Russia despite otherwise severe restrictions on its financial sector. But the United States is not a major importer of Russian oil, while Europe gets about 40% of its gas and 30% of its oil from Russia, and has no immediate or easy alternative if the supplies are interrupted.
Dr. Tomer Fadlon, a research fellow with the Economics and National Security Program at Tel Aviv University’s Institute for National Security Studies (INSS), estimated that Russia’s oil and gas sector accounts for about 55% national exports and brings in around $1 billion a year. daytime.
For the sanctions against the Russian energy sector to have an impact, “Europe will have to feel the pain, and since it has no other alternative at the moment, it is difficult to do”, he said. he told The Times of Israel by phone. interview on Wednesday.
Meanwhile, a host of tech companies, major manufacturers and consumer brands have either suspended or halted operations in Russia or restricted their services in an effort to punish the Kremlin during the war.
McDonald’s, Coca-Cola and Starbucks were the latest to join the corporate boycott which now includes more than 300 companies, according to a team of researchers from Yale University. These include Visa, Apple, Facebook, Mastercard, Amazon, Google, Ford, Dell, DHL, Nike as well as luxury brands like Burberry, Hermes, Ferrari and Rolls Royce.
“Without a doubt, we haven’t seen anything like it. This situation is different from other sanctions we have experienced in the past. Russia would never have expected the West to be so well coordinated,” said Dr. Jennifer Shkabatur, consultant for the World Bank and faculty member of the University’s Lauder School of Government, Diplomacy and Strategy. Reichmann in Herzliya.
Historically, sanctions have never been imposed on major economies such as Russia, Shkabatur told The Times of Israel in a phone interview this week as Moscow stepped up its military assault on Ukraine. “There were sanctions against Iran, Somalia – they were small economies and they didn’t change the geopolitical landscape much,” she said.
“The extent of the sanctions [on Russia] is a surprise and it’s different because the West is likely to suffer too — oil and gas prices go up, food prices go up, inflation, etc. “, she explained.
European wholesale gas and crude oil hit a near-record high this week on supply fears related to Russia’s February 24 invasion of Ukraine. The price of Brent crude oil, the international benchmark, was up near $130 a barrel on Wednesday.
Fadlon said “to have so many sanctions in such a short time is unprecedented. Russia has been integrated into the world economy for some time, it has already experienced globalization. This is not the Russia of the 1980s. And therefore there are many tools to punish Russia.
Previous rounds of sanctions against states like Venezuela, for example, have hit “countries with an already poor quality of life, but have not hit the regime. These current sanctions affect the quality of life of Russians,” Fadlon said.
Shkabatur said Moscow “probably expected sanctions against the banks, similar to the sanctions imposed on Russia in 2014 over Crimea. He also expected that personal sanctions would be imposed on those in [Russian President Vladimir] Putin’s inner circle, which was obnoxious but not huge, and knew some assets would be frozen.
However, the scale of the sanctions now affects “not only the oligarchs and the ruling elite, but the country as a whole” and Russia’s isolation is now “increasingly important”, she described. .
Fadlon said sanctions against Russia’s central banks have been particularly strong since Moscow “has built up its currency reserves to around $630 billion, but now 30% of that is frozen in foreign countries.”
“At the same time, you have completely new aspects like the Moscow Stock Exchange closed for days, queues at ATMs and banks to withdraw money. The ruble is collapsing. The effect is therefore huge,” he said.
Shkabatur noted that the departure of international companies and foreign brands from Russia is particularly stinging.
“For Russia, brands are very important. In the days of the Soviet Union, many aspired to have international brands – it was huge to have shoes from Italy, or jeans from the United States, or to eat cheese from France. In the 1980s, that was the biggest aspiration because it was so out of reach for most people. In the 1990s and later, brands became much more important for Russians, much more than for us in Israel or for Americans. So, in a sense, this isolation brings them back to the Soviet era where they couldn’t buy [brands] and I couldn’t access it,” she explained.
“It’s not like people have nothing to eat or nothing to wear, but it’s definitely something they’re already feeling,” she said, adding that no one knows if it will influence public opinion given the powerful Russian state propaganda and tightly controlled media and information. to flow.
But at the government level, there are signs that the sanctions are starting to take their toll, Shkabatur said, pointing to reduced Russian demands in talks with Ukraine.
“Initially, Russia wanted to ‘absorb’ Ukraine. In the Russian news there was talk of “Mother Russia”, fighting the neo-Nazis [in Ukraine], ‘us against the world.’ Now we see that the conditions are the recognition of Crimea and Donbass [include the separatist Donetsk and Luhansk regions],” she explained.
Putin and the Kremlin had indeed declared that their goal in Ukraine was demilitarization and “denazification”, accusing the democratically elected government of Ukrainian President Volodymyr Zelensky of atrocities in the separatist regions.
But on Wednesday, Russia appeared to backtrack, with a Foreign Ministry spokesman telling a briefing that Moscow was not seeking to overthrow the Ukrainian government.
Both Fadlon and Shkabatur said the Ukrainian narrative shaped by Zelensky on the world stage also has a huge effect on what actions companies and governments are prepared to take, including Russia.
Ukraine’s leaders have been incredibly active on social media, openly calling for tougher sanctions against Russia and urging global companies to sever ties with Russia.
Zelensky painted a picture of “good versus evil, so it became so simple for businesses [to decide] that they should leave, and this level of unity was completely unexpected for Russia and Ukraine,” Shkabatur said.
The Ukrainian president’s skillful browsing of social media was a major contributor to the sanctions assault on Russia, she added. Zelensky “really knows how to convey a personal and powerful message, and he managed to inspire and motivate Ukrainians, and also tell the story to the rest of the world, which certainly helped this coordination with the sanctions”, Shkabatur mentioned.
“It’s hard to believe Putin ever imagined Western countries would come together like this in imposing sanctions and in such a short time,” Fadlon said.
An added element was the the ferocity of the Ukrainian resistancewhich, according to Fadlon, must have been a “major surprise” for the Kremlin.
This factor, combined with global sanctions, imposes a high price on Moscow, he concluded.
Agencies contributed to this report.