Could new international sanctions against Russia prompt the country to further deepen its trade ties with China?
The United States is readying the unleashing of a wider array of sanctions against Russia if it escalates the ongoing conflict in Ukraine. The sanctions would deny key Russian financial institutions and companies access to U.S. dollar transactions and block the global market for trade, financing, and energy exports.
But what the West has never done before is cut a $1.5 trillion economy out of global commerce. Experts say it remains unclear how much pressure the West, no matter how unified, can exert on Moscow through sanctions.
Reviews of United Nations and World Bank trade data show that the lesser sanctions imposed against Russia in 2014 after it annexed Crimea from Ukraine, China shone through as the biggest export destination.
Therefore, new sanctions could lead Russia to deepen its ties with China and skirt the U.S. and allies’ restrictions.
Experts said that the problem with sanctions is that there will be a leakage in the system, especially when the sanctions are involving an oil producer like Russia. China could easily turn to Russia to buy oil on the open market, and not care if it’s Russian oil.
President Joe Biden signed an executive order Monday saying that any institution in Russia’s financial services sector is a potential target for further sanctions. The White House said that more than 80 percent of Russia’s daily foreign exchange transactions and half of the country’s trade is conducted in dollars.
Biden has called for “robust action” to ensure the pain of sanctions is targeted at the Russian economy, not the American economy. But with Russia’s position as a top oil exporter, as well as a top exporter of natural gas, aluminum, copper, palladium, and other commodities, that may be difficult.
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