It was only two months ago when Joe Biden said his sanctions on Russia would “reduce the ruble to rubble.” But the exchange rate tells us otherwise.
Here’s what I mean:
His prediction didn’t age well as the ruble soars to the levels not seen since years ago in spite of sanctions. The ruble has been strongest versus the Euro and the dollar since 2016 and 2018.
As you can see in the graph the sanctions did succeed in tanking the ruble’s value in the first few weeks but following Russia’s countermeasures like demanding payments in ruble for Russian gas, raising interest rates, and other capital controls, the ruble has skyrocketed, which is not what the West would have expected.
You may argue that the ruble exchange rate is not the only thing to look at in order to know whether the sanctions are working or not. And that’s true. Let’s look at how the Russian energy sector is doing.
It is expected that Russia will earn nearly $100 billion in gas sales this year, which will be almost double the revenue the country earned in 2021. $100 billion are from the gas sales ONLY. It doesn’t take into account the other resources such as oil, fertilizers, coal, etc. that Russia exports.
In case of total energy sales, Russia will expectedly earn $320 billion this year, which is up almost 33% from the last year. “The projections fly in the face of massive sanctions imposed last month by the West,” reports Insider.
These record earnings are made possible by the new demand for Russian energy from countries like India, which has already bought 13 million barrels of oil since Feb 24 as compared to 16 million barrels during 2021, and the high gas prices in the West, which, to some extent, are caused by their own decision to sanction Russia.
It’s not to say that Russia is completely insulated from the effects of sanctions. Every other country that the US sanctioned in the past has its economy devastated, currency collapsed. Everyone expected the same to happen with Russia, but Russia is not just a random country on the planet. It is a major exporter of energy and other commodities that the world rely on and you can’t sanction such a country without having consequences on the economy of other nations.
It also doesn’t mean that sanctions are good in any way. Sanctions are deadly. Sanctions kill people. They are no better than bombs and missiles. It just means that Russia has proved that the West, particularly the US, can no longer bully any country by placing sanctions on it and force them to submit to the US agendas.
The multipolar world is emerging and the US is losing it global hegemony in real time. The US can’t let the multipolar world to become a reality without offering some resistance and imposing sanctions on the emerging economies is one of the many ways to resist the fall of the US empire.
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