“Sanctions”. A word that you have probably heard in the local news lately. But just what are sanctions, what do they do, and how do they impact a large scale economy? To address these questions, one must first acquire a basic understanding of the definition of the word. Sanction: “A punitive act taken by one nation against another nation that has violated a treaty or International Law.” provided by the Oxford languages dictionary. This is a rather straightforward definition, but one necessary to move forward in this article.
Sanctions are meant to be a last resort when it comes to addressing massive human rights violations, curbing illegal smuggling, or stopping extremism groups. Increasingly, sanctions are also being used to support peace efforts, to ensure that elections are held, or to demobilize armed groups. Sanctions in general are limitations, or, as described in the definition, penalties. These can fluctuate widely depending on the severity of said offense, from financial restrictions, to a ban on arms-related exports. Some examples of these include economic sanctions against apartheid-era South Africa during the Comprehensive Anti-Apartheid Act of 1986, which were often credited as a contributing factor in the peaceful transition to majority rule there.
On February 24, 2022, President Biden announced additional sanctions against Russia, specifically aimed at its financial sector. US Secretary of State Anthony Blinken announced further actions against Russia on Monday, including barring Russian financial institutions. such as the Russian Central Bank, from making transactions in American dollars. These are not to be confused with the anti-Russian actions taken by privately owned companies and businesses such as Apple, Disney, and Ford. These are individual decisions, and unrelated to the official sanctions implemented by Congress, although they follow NATO and US steps toward deterring the Russian invasion of Ukraine.
How will the Russian economy continue to be impacted by this?
The Russian economy is plummeting as the ruble hits a record low. Because the UN and the United States are no longer exchanging currency (swapping rubles for USD), it has no value outside of Russian borders. NATO and the US wanted to make it clear that the invasion of a foriegn nation would not be tolerated. They have nearly halved the assets of the Bank of Russia, raising inflation by nearly 20%. An IMF report on the Russian economy indicates that the sanctions may lead Russia to experience a reduction in GDP of 1.0%–1.5% immediately, although the accumulated loss may reach 9.0% of GDP over the medium term.
This will most likely result in a regional depression, crippling the Russian economy. It is clear that these conditions are not sustainable for the 144.48 million civilians living there without committing any war crimes. The Russian GDP will not be able to keep up with the demands of the masses. Already thousands are flocking to the streets to protest the war, and the countless lives lost trying to achieve Putin’s vague, and likely unachievable, end goal. To quote Karl Marx, “Necessity is blind until it becomes conscious. Freedom is the consciousness of necessity.”