Vladimir Putin (Wikipedia photo, freepik)
The chief economist of Bank Leumi, Gil Befman, one of the top economists in Israel and one of the most accurate they are today analyzing the West’s ability to harm Russia through economic sanctions. According to Befman, an attempt to wean Europe off Russian energy is an impossible attempt. Befman further warns that heavy sanctions on the Russian economy will harm it but will also harm the global economy.
“The situation in Eastern Europe, with an emphasis on Russia-Ukraine-Belarus, is very fragile. From a macroeconomic point of view, the main question now is how far Western countries will go in sanctions and how Russia will react.” Americans, and this is mostly a symbolic side for now. The US, EU and UK have said they will announce more sanctions soon.
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“These measures are expected to include specific restrictions on economic activities considered close to President Putin, in an effort to influence the direction of Russian policy. These were among the sanctions imposed after the annexation of the Crimean peninsula in 2014. In 2018, when sanctions were targeted at specific companies, mainly Rusal “Aluminum, this has hurt Russia’s financial markets and raised world aluminum prices,” says Befman.
“The US Treasury Department has already imposed sanctions on two Russian government-linked banks and their subsidiaries: VBA – a bank used to raise capital for the government (a Russian state-owned investment corporation); PSB – a bank used by Russia’s defense sector. And it assists the administration in providing entrepreneurial loans to the defense industry and providing financial support to the defense industry.
“VBA Bank was included in the sanctions imposed by the United States on Russia in 2014, after the Russian invasion of the Crimea and the bank managed to last until 2017, thanks to government assistance it received, but still about 40% of the bank’s debts in 2017 were in danger of ceasing. Repayment. It is likely that the administration will provide support this time as well, if there is concern about the stability of the bank, which means that the impact of the sanctions on the Russian economy will not be immediate.
“Among the measures that could significantly hurt Russia’s economy are sanctions on companies in Russia’s energy sector and especially damage to Russia’s financial system by disconnecting from the international SWIFT system. Although Russia has developed an independent system for interbank transfers (MIR), it has yet to catch up. Significant market share The countries that implemented the MIR payment system include: the United Arab Emirates, Uzbekistan, Bulgaria, Turkey and Thailand.
“Therefore, the impact of sanctions on specific banks may be large, prohibiting US banks from operating with / for Russian banks, and even extending the restrictions to any financial activity between the US private sector and any Russian entity. Such measures may impair capacity. Of Russian banks converting rubles to dollars and also hurting its foreign trade.It is expected to have an impact on Russian areas of activity that are particularly dependent on Western goods and services, such as software, machinery and equipment.
“No extensive sanctions have yet been imposed on the Russian energy sector, with the exception of two oil tankers (ships), which are subsidiaries of PSB. Europe’s ability to” avoid “Russian energy consumption is impossible, making it difficult to impose full sanctions on the market. Russian energy.However, the most likely sanction is likely to be in the way of real restrictions on the operation of the new NORD-STREAM2 submarine gas pipeline and further measures against Russian banks.
“The move of a sanction against Nord Stream 2 is intended to convey a message of intent to prevent Russia’s attempt to reduce its dependence on Ukraine for gas supplies to Europe.
“It is also possible to ban the purchase of certain technologies from Russia and restrictions on transactions in Russian government debt, and in particular Russian government bonds, where the volume of foreign holdings is relatively small. Overall, Russia’s economy is expected to suffer, while entering a recession, a sharp devaluation of the Russian ruble, an acceleration in inflation, which is already high in Russia, and the raising of interest rates by the Central Bank of Russia to double-digit levels. However, as the West imposes tougher sanctions on the Russian economy, the West will have to suffer economic damage as a result, so that in the economic sphere too there is a “balance of terror” “concludes Befman.
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