The Western sanctions introduced due to the criminal war launched by Russia against Ukraine have already created many problems for the economy and business of the aggressor country.
Points of attention
- Western sanctions are creating significant challenges for the Russian economy, particularly in conducting trade transactions and financial settlements with partner countries like China and Turkey.
- Cryptocurrency is emerging as an alternative for Russian companies to bypass threatening financial restrictions and simplify currency transfers abroad.
- Delays in cross-border payments, import restrictions, and deteriorating consumer market conditions are key consequences of Western sanctions on the Russian economy.
- The use of agents and intermediaries from the countries of the former USSR, as well as cryptocurrency payments through Hong Kong, are becoming popular methods to overcome financial settlement obstacles.
- The absence of 'normal payments' for goods, as highlighted by a Central Bank official, poses a serious threat to a country like Russia that heavily relies on exports and imports for its economy.
What is known about the effects of Western sanctions on the Russian economy
The publication notes that after the sanctions imposed by Western countries, one of the main problems for it is making payments during trade transactions.
In particular, problems with Russia's settlements with the banks of partner countries, such as Turkey and China, could eventually destroy the economy of the aggressor country.
Journalists emphasize that in 2023, the volume of trade between Russia and China will reach a record 240 billion dollars.
However, most trade agreements with China are possible only with the involvement of agents and intermediaries from the countries of the former USSR.
This prevents Chinese yuan from entering Russia.
At the same time, banks in Uzbekistan, Kazakhstan and other Central Asian countries are delaying the processing of payments for logistics companies and are increasingly refusing to do so altogether.
Cryptocurrency payments through Hong Kong are gaining popularity, but even in this case, you have to use intermediaries from Uzbekistan and Kazakhstan.
Russian companies even tried to enter into barter agreements and currency swaps with importers in the same banks.
Currently, Russia has significant problems in financial settlements with China and Turkey.
Trade with Turkey is also conducted mainly in rubles, and the share of Turkish exports increased by 50% in the first half of the year.
Trade with India is done in rupees and the influence on Indian banks from Western countries is quite limited because the rupee is not a fully convertible currency.
After the start of the criminal invasion of the Russian army into Ukraine, the aggressor country accumulated billions of dollars in an account in Indian banks.
At the same time, the Reserve Bank of India in July 2022 developed special policies that allowed Russia to use this money.
According to these rules, funds can be invested in projects or local securities, as well as adjust purchases of goods and services for a future date.
Russia buys smartphones and other electrical goods, chemicals and pharmaceuticals, food products, agricultural tools and textiles from India in large quantities.
At the same time, investments are subject to blocking periods, and they are not transferable, which complicates their liquidation by Russia.
At the same time, oil, Russia's main export to India, is mainly paid for in UAE dirhams, but dollars and euros are also used, and some private oil refining companies use yuan.
How problems with calculations and import restrictions affect the Russian economy
It is noted that currently delays in making cross-border payments are on average 10-16 days.
According to Finam analyst Oleksandr Potavin, the central bank of the aggressor country encourages the use of cryptocurrency to bypass Western sanctions and facilitate the transfer of currency abroad.
Difficulties with payments between countries worsen the situation, primarily with imports. The consumer market in Russia is becoming and will become worse, and the import of components will gradually deteriorate, predicts Natalya Zubarevich, an expert on Russian regions.
First Deputy Chairman of the Central Bank of the Russian Federation, Volodymyr Chistyuhin, said that the absence of "normal payments" for goods "will mean death for a country that depends on exports and imports."
