OBORRI Webinar - Sanctions and Anti-sanctions: The Russian Case

Webinar named “Sanctions and Anti-sanctions: The Russian Case” was organized by One Belt One Road Research Institute (OBORRI), Chu Hai College of Higher Education on 18^th Jun 2022. In the beginning, Prof. Oleksandr Rogach (Professor, One Belt One Road Research Institute, Chu Hai College & Taras Shevchenko National University of Kyiv, Ukraine) gave an opening speech and he introduce the topics’ background and guest speakers. 

The first speaker was Mr Ryan Chan Ming Tai (Deputy Director General, Silk Road Economic Development Research Center) and his topic entitled “General background of the sanctions imposed on Russia”.  Firstly, Mr. Chan stated the background such as the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury which enforces economic and trade sanctions.

Then Mr. Chan briefed the scope of sanctions on Russia and history of USA’s sanctions since 2014 including energy sector, financial sector, military goods, mercenaries and transportation.

And then he mentioned the impacts on aviation industry and international companies (e.g. McDonald’s, Coca-Cola and Starbucks). Then he introduced Russia’s defense against global sanctions.

After that the Russia’s key role in energy exports, global supply chain and global food crisis were discussed.

Since Russia is lacking high-tech products domestically, Mr. Chan showed the diagram of high-tech goods in 2019 and found that Europe is dominated. However, China involvement is expected to increase.

Finally, Mr. Ryan Chan using global value chain to explain Russia’s involvement in the global economy. Europe and Central Asian countries are most dependent on Russia’s large exported metal products that not only oil and gas.

Lastly, the role of Russia in the global supply chain was explained and Russia would gradually shift its focus to Asia.  He concluded the short-terms impacts including hyperinflation on energy and food, as well as, lower economy growth in the Euro zone. The long-terms impacts were dramatic reorganization of the global economy; localization, regionalization and politicization of production chain and supply chain by higher geopolitical risk and a fragmentation of the trade system.

The second speaker was Prof. Oleksandr Pidchosa (Associate Professor, One Belt One Road Research Institute, Chu Hai College & Taras Shevchenko National University of Kyiv, Ukraine) and his topic named “Russian Economy Under Sanctions: Implications for the Financial Sector”.  Firstly, he showed western expected results in the beginning of the sanctions but it didn’t happen.

Then Prof. Pidchosa briefed some background of Russia historical experience and competence in circumventing sanctions and could trace back to USSR in 1918.  Then he introduced the structure of Russia’s GDP in 2021.

And then he stated the current condition of Russia’s Economy that the macroeconomic stability of the country was not significantly affected, as well as, low unemployment rate (4%). As a result of Western actions, confidence was broken in the Jamaica monetary system, the US dollar, the Euro and Western financial institutions.

After that Russia solved the cross-border payments using SFPS (System for Transfer of Financial Messages) and the Chinese CIPS (Cross-Border Interbank Payment System) since 2017.  Russia and Iran, India & other counties had agreed to use national currencies.  Blockchain technology would be employed to replace SWIFT and planned to use the digital ruble in 2023. 

Those cryptocurrencies (along with physical gold) were considered as one of the options for conducting financial transactions.  Moreover, a mechanism for circumventing “Gold sanctions” was also mentioned because of sanctions on LME in London, COMEX in New York and Switzerland.

The diagram showed the comparison on the effect of sanctions through Russia’s unfriendly countries and friendly countries.

Finally, he mentioned about Hong Kong situation on Russia trading cases. Lastly, Prof. Pidchosa concluded that “In general, the question is not about sanctions and counter-sanction in long-term perspective, but about those tectonic shifts and processes launched in the global economy.”

Reference:

OBORRI - https://www.chuhai.edu.hk/node/1794

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