The Russia - Ukraine Conflict

loyola llothta

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Russia to Reach Record Trade Surplus. US-EU Financial Sanctions Have Failed?​

By Uriel Araujo

On March 1, French Finance Minister Bruno Le Maire, in an interview to France Info radio, described the Western sanction packages as “extremely effective” measures that would cause “the collapse of the Russian economy”. This has failed – the ruble has recovered, and analysts also expect Moscow’s trade surplus to hit record highs in the coming months.

The West did sanction the country in an unprecedented way, targeting its foreign reserves particularly, and, as response to that, worried citizens rushed to their banks to withdraw cash. The financial system thus seemed to be on the way to its collapse.

Imports fell, as expected, due to logistical disruptions and also due to the regulatory uncertainty that arose as a result of the new sanctions and their relative vagueness. For example, Kazakhstan’s vice-minister of trade and integration, Kairat Torebayev, complained in an interview to EURACTIV on May 13 that “nobody can tell me if Kazakhstan can sell yogurt to Russia”.

Moreover, the sanctions and the expulsion of some of the Russian lenders from the SWIFT network made it harder for firms in Russia to buy goods from the West. Initially, the ruble depreciated dramatically and there was talk of an inevitable default on Russian debts. With its assets frozen, and sanctions preventing its Central Bank from using about half of its $640 billion in foreign reserves (to pay back its creditors), plus rising inflation and capital flight, things certainly were not looking good.

However, at the end of March, the currency began to recover. By mid-April, its value had already reached 1 RUB = 0.013 USD, which was the rate just before Russia’s special military operation in Ukraine.

On April 26, the rouble hit a more than two years high (trading at 76.90 versus the euro) before it stabilized near 77. And, on May 5, it was then reported that the ruble briefly reached its highest level (against the US dollar) since March 2020. It hit a high of 65.31 per dollar.

Finally, on May 20, the ruble reached both its strongest level against the Euro since June 2015 (touching 59.02) and the strongest level against the US dollar since March 2018 (hitting 57.0750).

On May 19, Moscow stated that about half of the 54 Russian gas company Gazprom’s clients have opened accounts at the Gazprombank; analysts have attributed the ruble rally to this fact. The EU after all has allowed its member states to keep purchasing Russian gas without breaching the sanctions they themselves imposed on Moscow – by using rubles for payment.

But it is not just the currency that has recovered.

Exports are going well too. According to the Economist, Russia in fact can expect a record trade surplus.

Even though the Kremlin has ceased to publish detailed monthly trade data, one can still work on the data pertaining to Russia’s trading partners themselves.

The data available shows that China, on May 9, reported that its goods exports to the country did fall by more than a quarter (in comparison with last year), but its imports from Russia rose by over 65%. Based on data from the eight largest Russian trading partners, the Economist estimates that while Russian imports may have fallen by approximately 45% (since February), its exports, on the other hand, have risen by around 8%.

The Institute of International Finance (IIF), which is a bankers’ organization, estimates that the current-account surplus (including trade and financial flows) can come in at $250 billion in 2022. That is more than double the $120 billion that was recorded last year. Thus it would appear that sanctions in fact have boosted Moscow’s trade surplus. Even the exports directed to the West have been holding up well. The global rise in energy prices has boosted the revenues even further. Russian inflation is still high, but it is slowing. With economic activity indicators improving, the Russian authorities have reasons to be optimistic about avoiding a financial crisis.

The truth is that the Russian Federation, being an almost 140 million people market, comprises half of the whole Eurasian Union. The Russian market is quite irreplaceable from the perspective of these countries. Moreover, in Europe, there is no quick alternative for Russian energy sources.

Meanwhile, Germany’s inflation rate rose in April at its fastest pace since before the country’s reunification in 1981. This is fuelled by the rising energy prices, which in turn have been exacerbated by the current Russo-Ukrainian crisis. Similarly, with energy bills soaring, the UK inflation rate is rising at its fastest rate for 40 years.

At this point one can already say that the Western sanctions against Russia have failed and even backfired.

This means the West is losing the economic and financial war it waged against Moscow. Sending weapons to Ukraine is not working either.

This explains why talks of a cease-fire are being echoed by the main European leaders and by the US itself, even though the very same players had signaled their intention to a full-spectrum confrontation quite recently. Even Ukrainian President Volodymyr Zelenski has changed his hitherto uncompromising tone: speaking on national TV, on May 21, he stated that “only diplomacy can end the Ukraine war”.

The West is losing its proxy war against Russia in Ukraine – both militarily and economically. Now it has to reopen diplomatic channels. The only other choice is a global nuclear war.
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Cost of the Ukraine War Felt in Africa, Global South
Ramzy Baroud
11 May 2022


Cost of the Ukraine War Felt in Africa, Global South
Sanctions against Russia increased worldwide fertilizer prices. Kenyan farmers now use livestock manure. (Photo: Brian Inganga / Associated Press)


US/NATO sanctions against Russia have resulted in food shortages and price increases throughout the Global South.

This article was originally published in Palestine Chronicle .


While international news headlines remain largely focused on the war in Ukraine, little attention is given to the horrific consequences of the war which are felt in many regions around the world. Even when these repercussions are discussed, disproportionate coverage is allocated to European countries, like Germany and Austria, due to their heavy reliance on Russian energy sources.

The horrific scenario, however, awaits countries in the Global South which, unlike Germany, will not be able to eventually substitute Russian raw material from elsewhere. Countries like Tunisia , Sri Lanka and Ghana and numerous others, are facing serious food shortages in the short, medium and long term.

The World Bank is warning of a “human catastrophe” as a result of a burgeoning food crisis, itself resulting from the Russia-Ukraine war. The World Bank President, David Malpass, told the BBC that his institution estimates a “huge” jump in food prices, reaching as high as 37%, which would mean that the poorest of people would be forced to “eat less and have less money for anything else such as schooling.”

This foreboding crisis is now compounding an existing global food crisis, resulting from major disruptions in the global supply chains, as a direct outcome of the Covid-19 pandemic, as well as pre-existing problems, resulting from wars and civil unrest, corruption, economic mismanagement, social inequality and more.

Even prior to the war in Ukraine, the world was already getting hungrier. According to the United Nations’ Food and Agriculture Organization (FAO), an estimated 811 million people in the world “faced hunger in 2020”, with a massive jump of 118 million compared to the previous year. Considering the continued deterioration of global economies, especially in the developing world, and the subsequent and unprecedented inflation worldwide, the number must have made several large jumps since the publishing of FAO’s report in July 2021, reporting on the previous year.

Indeed, inflation is now a global phenomenon. The consumer price index in the United States has increased by 8.5% from a year earlier, according to the financial media company, Bloomberg. In Europe, “inflation (reached) record 7.5%”, according to the latest data released by Eurostat. As troubling as these numbers are, western societies with relatively healthy economies and potential room for government subsidies, are more likely to weather the inflation storm, if compared to countries in Africa, South America, the Middle East and many parts of Asia.

The war in Ukraine has immediately impacted food supplies to many parts of the world. Russia and Ukraine combined contribute 30% of global wheat exports. Millions of tons of these exports find their way to food-import-dependent countries in the Global South – mainly the regions of South Asia, the Middle East, North Africa and sub-Saharan Africa. Considering that some of these regions, comprising some of the poorest countries in the world, have already been struggling under the weight of pre-existing food crises, it is safe to say that tens of millions of people already are, or are likely to go, hungry in the coming months and years.
Another factor resulting from the war is the severe US-led western sanctions on Russia. The harm of these sanctions is likely to be felt more in other countries than in Russia itself, due to the fact that the latter is largely food and energy independent.

Although the overall size of the Russian economy is comparatively smaller than that of leading global economic powers like the US and China, its contributions to the world economy make it absolutely critical. For example, Russia accounts for a quarter of the world’s natural gas exports, according to the World Bank, and 18% of coal and wheat exports, 14% of fertilizers and platinum shipments, and 11% of crude oil. Cutting off the world from such a massive wealth of natural resources while it is desperately trying to recover from the horrendous impact of the pandemic is equivalent to an act of economic self-mutilation.

Of course, some are likely to suffer more than others. While economic growth is estimated to shrink by a large margin – up to 50% in some cases – in countries that fuel regional and international growth such as Turkey, South Africa and Indonesia, the crisis is expected to be much more severe in countries that aim for mere economic subsistence, including many African countries.

An April report published by the humanitarian group, Oxfam, citing an alert issued by 11 international humanitarian organizations, warned that “West Africa is hit by its worst food crisis in a decade.” Currently, there are 27 million people going hungry in that region, a number that may rise to 38 million in June if nothing is done to stave off the crisis. According to the report, this number would represent “a new historic level”, as it would be an increase by more than a third compared to last year. Like other struggling regions, the massive food shortage is a result of the war in Ukraine, in addition to pre-existing problems, lead amongst them the pandemic and climate change.

While the thousands of sanctions imposed on Russia are yet to achieve any of their intended purpose, it is poor countries that are already feeling the burden of the war, sanctions and geopolitical tussle between great powers. As the west is busy dealing with its own economic woes, little heed is being paid to those suffering most. And as the world is forced to transition to a new global economic order, it will take years for small economies to successfully make that adjustment.

While it is important that we acknowledge the vast changes to the world’s geopolitical map, let us not forget that millions of people are going hungry, paying the price for a global conflict of which they are not part.
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TreySav

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people don’t realize Russians lost million of troops in ww2 and went on

Lost mad troops in Afghanistan and were ther for almost a decade

Survived being cold mother russia cut off from the world before and can do it again

They ain’t just going to close up shop
The media believes war lasts as long as the attention span of their viewership or Hollywood movies
 

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Russia hasn't kept their soldiers battle ready like Uncle Sam by creating conflicts around the world
 

loyola llothta

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Name of these cards , is it Union pay ?
“Russia and China are working on linking together, through China’s UnionPay system, and Russia is seeking to implement the Mir system in Iran.

Novak and his Iranian counterparts furthered this discussion of the possibility of linking the Mir payment system with the card payment system of the Islamic Republic.

Additionally, the Russian deputy prime minister met with Iranian Oil Minister Javad Owji to sign the cooperation agreements and cooperation in the energy sector.

“We agreed to accelerate the preparation of agreements on a free trade zone, and discussed cooperation in the nuclear area in detail,” Novak stated.

An analysis from The Cradle columnist Pepe Escobar highlighted how western sanctions against Russia are backfiring in the wake of Moscow’s various countermeasures, including the transformation of the Russian ruble into a resource-based reserve currency.”
 

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“Russia and China are working on linking together, through China’s UnionPay system, and Russia is seeking to implement the Mir system in Iran.

Novak and his Iranian counterparts furthered this discussion of the possibility of linking the Mir payment system with the card payment system of the Islamic Republic.

Additionally, the Russian deputy prime minister met with Iranian Oil Minister Javad Owji to sign the cooperation agreements and cooperation in the energy sector.

“We agreed to accelerate the preparation of agreements on a free trade zone, and discussed cooperation in the nuclear area in detail,” Novak stated.

An analysis from The Cradle columnist Pepe Escobar highlighted how western sanctions against Russia are backfiring in the wake of Moscow’s various countermeasures, including the transformation of the Russian ruble into a resource-based reserve currency.”
Will Venezuela link up with these payment systems ?
 
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