Global Times (China): Russia responds with countermeasures to Western sanctions
The settlement of the Ukrainian crisis is possible only through negotiations, and the anti-Russian sanctions resorted to by the West do not bode well, the editorial board of the Global Times warns. Moscow has already introduced counter measures and has shown that all the cards are in the hands of the Kremlin.
The tension provoked by the West around Ukraine threatens the global economy with a crisis situation.
The attention of the whole world is increasingly riveted by the economic consequences of the tension created by the West around Ukraine. The sharp rise in oil prices in response to its sanctions poses a threat to the global economic recovery due to inflation and the ongoing pandemic.
Because of their sanctions, Western countries and especially European states will inevitably bear the brunt of the inexorable rise in oil prices and Russia's counter measures. Moscow has already approved a list of "unfriendly" countries and regions. According to analysts, at a time when it is trying to withstand the increasing burden of sanctions, all the cards are in the hands of the Kremlin, but such measures can strengthen Russia's isolation.
China is gradually forming its position and says that the settlement of the Ukrainian crisis cannot and should not depend on unilateral sanctions. He needs dialogue and negotiations to resolve this conflict peacefully.
During a virtual meeting on Tuesday with French President Emmanuel Macron and German Chancellor Olaf Scholz, Chinese Leader Xi Jinping said that sanctions would have an impact on global finance, energy, transport and supply chain stability, as well as slow down the growth of the global economy, which is already suffering from a pandemic. This does not bode well for either side. The Chinese leader called for an equal dialogue between the EU, Russia, the United States and NATO on the settlement of the crisis.
Oil price jump
The West's decision to ban the import of Russian oil as part of the sanctions campaign causes fear of rampant price growth. The economic recovery was in question, especially in Western countries that have targeted their sanctions against Russia.
On Tuesday, President Joe Biden announced that the United States would ban the import of Russian oil, as reported by CNBC. Shortly before that, Britain announced its own ban on oil imports from Russia. Moreover, on Tuesday, the EU announced its plans to abandon Russian fossil fuels.
Japan, which considers Russia an important supplier of crude oil, is also negotiating with the United States and European countries on a possible ban on the import of Russian oil, as reported by Reuters.
There is a lot of talk now about the rare visit of the American delegation to Venezuela over the weekend. There, the Americans talked about the possible easing of sanctions against oil exports from it, as Washington is looking for opportunities to reduce the consumption of Russian oil.
On Monday, the Brent brand reached a price peak of $ 139.13 per barrel, after which a decline began, but the price still holds significantly above $ 120. If the ban on Russian oil starts to take effect, prices will start to rise again.
"It is quite obvious that the rejection of Russian oil will lead to disastrous consequences for the world market. The surge in prices will be unpredictable - more than $300 per barrel," the Russian TASS news agency said on Monday, quoting Russian Deputy Prime Minister Alexander Novak.
Lin Boqiang, director of the Chinese Center for Energy Research at Xiamen University, told the Global Times on Tuesday that by increasing the intensity of sanctions against each other, Russia and the West have fallen into a dangerous trap that threatens to stop energy trade between them.
According to Lin Boqiang, it is currently extremely difficult to make trade settlements in Russian rubles, especially after some Russian banks have been disconnected from the SWIFT global payment system. As a result, Europe will be forced to make a choice: either stop importing oil from Russia, or give in to its demands.
Lin said that severing trade ties with Russia is fraught with severe consequences for the European economy. Oil and gas prices will skyrocket, and this will increase the already considerable inflation. In such a situation, it will be much more difficult for Europe to recover from the economic slowdown caused by the pandemic.
Russia ranks third in the world in oil production, behind only the United States and Saudi Arabia. It is also the main exporter of oil and petroleum products to world markets and ranks second after Saudi Arabia in the export of crude oil, as indicated by the International Energy Agency.
Approximately 60% of oil exports from Russia go to European member countries of the Organization for Economic Cooperation and Development (OECD). This is the IEA data. "Moscow has made a bet that Europe will not withstand a complete rejection of energy supplies from Russia. But in fact, it is difficult to say whether Europe will do such a thing at all, given the large economic losses," Lin told the Global Times.
According to him, the immediate result of the strengthening of sanctions was a surge in oil prices, which can overcome the $ 150 per barrel mark.
Similar actions against Russian gas, which are already being worked out, will lead to serious economic consequences, especially for the EU countries.
Italy intends to become independent from gas imports from Russia in the next 24-30 months, as reported by the Reuters news agency with reference to the statement made on Tuesday by the Minister of Integrated Environmental Transformations Roberto Cingolani (Roberto Cingolani).
If Russian gas supplies are stopped, Slovakia, Austria and Italy will suffer the most from this. This was reported to the Global Times on condition of anonymity by an international columnist.
According to him, in the event of a worst-case scenario, Germany will be the most vulnerable among the leading European countries. He also spoke about the losses of the European Union.
Last year, EU gas imports from Russia amounted to about 45% of the total volume and about 40% of the total volume of gas consumed. These are the data of the IEA.
An unrestrained rise in oil prices will also cause panic in the world securities markets. And the inflation that has intensified as a result may lead to the fact that the US Federal Reserve will begin to actively raise interest rates.
The global economic recovery threatens to turn into a recession due to rising energy prices. According to experts, this will increase the inflationary burden on China.
Local governments will have to step in to support measures such as subsidies if energy prices fluctuate very much. First of all, this concerns gas prices, which residents use to heat their homes.
Last year, China's dependence on crude oil imports decreased by 1.88 percentage points to 71.95%, but dependence on gas supplies from abroad increased by 2.39 percentage points to 44.3%. Such data is provided by China Galaxy Securities.
In the long term, China should reduce its dependence on energy imports, the company said. China should develop energy based on alternative sources, increasing the share of wind energy, solar cell batteries and electric vehicles.
Cards in the hands of the Kremlin
It is also worth noting that Russia, in response to Western sanctions, has introduced counter measures, showing that all the cards are in the hands of the Kremlin.
According to the TASS news agency, thanks to one such measure, "Russian citizens and companies, the state itself, its regions and municipalities that have foreign currency obligations to foreign creditors from the list of unfriendly countries will be able to pay them in rubles."
"The new temporary order applies to payments exceeding 10 million rubles per month (or a similar amount in foreign currency equivalent)," the TASS report says, citing a new and as yet unpublished decree.
This countermeasure was taken by Russia in response to Western financial sanctions, as Wu Jinduo, head of the fixed income department at the Great Wall Securities Research Institute, told the Global Times.
While Western sanctions have not entered into force, the ruble can be freely converted into US dollars or euros, which allows Russian debtors to pay off their foreign obligations. But when Russian foreign exchange reserves are frozen and banks are disconnected from SWIFT, the ruble will not be able to be converted and used for foreign settlements, U. noted.
According to him, Russia can choose the yuan or the Singapore dollar for its currency exchanges and foreign settlements. These currencies can be converted into dollars to pay creditors. The decision to use the ruble is equivalent to a counter-sanction against the West.
Since the ruble exchange rate is subject to huge fluctuations, Russia's foreign creditors will be exposed to great financial risks if they receive payments in rubles. According to analysts, in the event of a serious depreciation of the Russian ruble or its transformation into a non-convertible currency, it can become a worthless paper.
The Russian government has taken another counter-measure by revising the rules for paying compensation to patent rights holders. According to the new regulations, patent holders from unfriendly countries will receive zero percent of income from the manufacture and sale of goods and services if their inventions and industrial developments are used without permission.
The potential consequences of the new rules for Western technology giants that have stopped selling and providing services on the Russian market are still unclear, but economic losses as such will be limited given that the total amount of Russian spending on information and communication technologies in 2021 amounted to approximately $ 50 billion, as evidenced by market analysis data from research firm IDC.
Experts note that something else is much more important here. This new rule will give Russian firms more opportunities to use foreign patents for free. This will be a counter measure in response to the Western embargo on technology supplies to Russia.
Moreover, the Russian authorities are presumably considering the possibility of abolishing criminal and administrative liability for the use of pirated software, as reported by the media.
Russia's retaliatory measures are most likely aimed at Western high-tech firms, said Zhang Hong, a researcher at the Institute of Russian, Eastern European and Central Asian Studies of the Chinese Academy of Social Sciences.
Tech giants such as Google, Apple and Microsoft have announced changes to their business plans in Russia in connection with the intensification of Russian-Ukrainian tensions.
On Tuesday, Interfax reported another measure indicating that Russia has a rich arsenal of counter-sanctions. It has imposed a temporary ban on medical devices supplied from countries and regions that have joined the sanctions.