With the recent invasion of Ukraine by Russia many of the NATO members, including the United States have decided to support Ukraine through economic sanctions to avoid any physical implications as much as possible. tithe United States targeted the Russian central bank, mostly through freezing their assets. This caused the ruble to drop 30% relative to the United States dollar. In an effort to mitigate the damage of these sanctions the Russian central bank doubles interest rate to bring in more investment. Russia has a $640 billion stock pile of cash and at least half of that was frozen. This is causing a lot of unrest in the Russian public leading everyone to try to withdraw their money all at once which could have even worse impacts on the economy in Russia. One of the major implications is the price of imports in Russia is soaring which will lower the standard of living. Russia has been preparing for instances such as this by making a lot of their food production domestic, but the farmers that produce this food most likely won’t be able to get new equipment or fix old equipment which could make the measures taken by Russia virtually useless. China could offer support to Russia by letting Russia sell all of their exports to them but they haven’t done so showing that maybe the alliance isn’t very strong.
https://www.cbsnews.com/news/ukraine-russia-economy-ruble/
ReplyDeleteI think that the reason why China is not willing to buy Russian oil, products, and gold is that China would face many sanctions. The US and EU can impose sanctions on Chinese goods, which will damage China's economy as well. Even though Russia and China are allies, China is not willing to risk its economy that much.
ReplyDeleteIt has almost been a month since the start of the invasion and China still hasn't taken a stance on the conflict. I wonder if Chinas lack of action will cause a rift in the old alliance.
ReplyDeleteIt would be interesting to study the nature of sanctions in a game theoretic approach, and how they are perceived by recipient nations. This can provide us with greater insight about the mechanisms of sanctions, and if they try to stop conflicts, or instead aggravate them.
ReplyDeleteIt would be interesting to see what Russia would do if China did not support them. The sanctions already have so much impact on the Russian economy. Without China's help, Russia could go into an economic depression. Will Russia's thought about the war be influenced by all of these sanctions?
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