“We’re witnessing Putin’s soldiers set their eyes on Ukraine’s east and south, with the same callous disdain for human life and nationhood.”
The United Kingdom and other Western countries hope that sanctions would force Russia to back down in Ukraine.
Maximillian Hess, a Central Asia fellow in the Eurasia programme at the non-profit Foreign Policy Research Institute, warned CNBC last month that the measures might cause the Russian currency to collapse completely.
“The difficulty you have today is that we’re basically in a spiral where we don’t know how many unrealized losses there are remaining to realise,” he explained.
“So we still can’t rule out that the ruble could collapse. Collapse.”
The Barings Investment Institute’s chief global strategist, Christopher Smart, detailed how the sanctions will affect regular Russians.
“There was a growing middle class [in Russia] that is now being knocked back,” he remarked.
“It will be isolated.” It will have a currency that has little worth outside of the country.”
Everyday transactions in Russia have been greatly hampered since the sanctions were imposed.
Using Apple Pay to purchase a metro ticket in Moscow, which is restricted by US sanctions, is no longer feasible.
Neither is swapping rubles for dollars at a bank, which the Kremlin forbids.
Since the beginning of the invasion of Ukraine, more than 300 of the world’s most renowned businesses have voluntarily ceased or reduced their operations.
Global banks such as Goldman Sachs, all of the Big Four accountancy companies, and consumer brands such as Starbucks and Ford are among them.
“A lot of these corporations pulling out of Russia aren’t doing it for reputational reasons,” Mr Hess noted.
“It’s because they know they won’t be able to process payments or move money in and out of the nation for the foreseeable future,” says one source.
The European Bank for Reconstruction and Development (EBRD) recently forecast that Russia’s and Ukraine’s economies will contract by 10% and 20%, respectively, in 2022.
The London-based lender said on Thursday that the war has caused “the worst supply shock since at least the early 1970s” and will have a significant impact on economies far beyond the conflict’s immediate vicinity.
“Sanctions on Russia are projected to stay in place for the foreseeable future, sentencing the Russian economy to stagnation in 2023, with negative spillovers for a number of neighbouring countries in eastern Europe, the Caucasus, and Central Asia,” the EBRD stated.
“With so much uncertainty, the bank aims to provide a new prediction in the coming months, taking into account new events.”
