As of: March 7, 2024, 6:01 p.m
By: Bona Hyun
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Western sanctions against Russia could stop Putin.
Because the President will have to realize that he cannot defy the measures.
Moscow - The Russian president is considered unpredictable - but there are apparently ways that could force Vladimir Putin to stop his aggression.
Western sanctions against Russia play a key role in this.
The war in Ukraine has long since become an economic war.
Signs of long-term economic damage are already visible.
Sanctions against Russia are having an effect – Putin has to spend more and more money
The war in Ukraine is becoming increasingly expensive for Putin.
Russia wants to massively increase military spending in 2024 - a sign that Putin could be preparing for a longer war.
The president wants to invest the equivalent of around 109 billion euros in his military next year.
That makes up almost a third of the total budget.
This would correspond to around six percent of Russia's gross domestic product (GDP).
The effects of the sanctions against Russia are increasingly causing problems for Putin.
© Alexander Zemlianichenko/dpa
High military spending drove up GDP.
But dependence on the Ukraine war will not pay off for the economy in the long term.
“If the Russian government spends hundreds of billions of dollars on making tanks and recruiting soldiers to send to Ukraine, this increases Russia’s GDP even if the quality of life does not change,” Russian economist Sergei Guriev argues in a guest article for the
Frankfurter Allgemeine Zeitung (FAZ).
Russian economy suffers from sanctions – high inflation and labor shortages
There is no doubt that other sectors of the Russian economy are suffering from the sanctions and the effects of the war in Ukraine.
All you need to do is look at the high inflation and the shortage of skilled workers.
The Russian central bank has raised its key interest rate again – for the fifth time since the summer.
For months, monetary authorities have been trying to combat high inflation and prevent another ruble collapse.
Despite the economic situation, Putin primarily wants to support families with large children, as he announced during the State of the Nation address.
But according to experts, these promises must also be viewed in the context of the upcoming presidential election.
It is entirely conceivable that Putin will not – or will not be able to – keep his promises to improve the economic situation because he is slowly running out of money.
Putin's allies are turning off the money supply - banks are leaving Russia hanging
Putin's allies are also in the process of closing Russian accounts and halting payment transactions.
Chinese central banks, including China's largest bank, want to stop doing business with Russia.
According to information from Russia, discussions are being held about China's lending in the Russian banking sector - but so far without success.
Banks from the United Arab Emirates and Turkish banks are also turning their backs on Putin out of concern about the effects of secondary sanctions.
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“You see that Turkish and Chinese banks want to distance themselves from Russia.
All of this causes enormous costs for the Russian economy and makes its development much more difficult,” said Janis Kluge from the Science and Politics Foundation (SWP) in an interview with
Euractiv
.
Sanctions against Russia affect oil trade – India reacts with concern
In the long term, Putin will lose important sources of money.
Since the start of Russia's war of aggression, the European Union has frozen around 200 billion euros in Russian assets.
EU countries are currently wrestling over the use of frozen assets.
However, due to high legal hurdles in Germany and other countries, they cannot simply be confiscated.
Also note the effects of the sanctions on the oil trade.
India recently announced that it would restrict trade with Russia after another US sanctions package was issued against Russia.
According to the
Reuters
news agency , Indian refiners are currently concerned about the new Western sanctions.
Ultimately, when looking for an optional oil supplier, India's choice could fall on the Middle East in the future.
This means: the sanctions will also affect profits from oil trading.
Tougher sanctions against Russia necessary?
Expert calls for more measures
Nevertheless, Guriev sees a need to tighten some of the Western sanctions - especially against Russia's trading partners.
This also applies to ensure that Putin cannot easily circumvent export restrictions on military or dual-use technology.
In the
FAZ
article, Guriev demands that the West therefore impose secondary sanctions against Putin's trading partners.
Then the willingness to support Putin could decrease even further.
(bohy)