Staunton, March 23 – In the last few weeks, Russian officials have been threatening draconian steps in response to any new sanctions; but most of these are either technically impossible or will inflict more harm on the Russian Federation than any new sanctions the West is likely to inflict, Igor Nikolayev says.
The steps some in the Russian government have proposed like shifting from the dollar to the yuan as an international trading currency or blocking foreign credit card companies or not importing Western high technology equipment might be possible, but they will be self-destructive, the economist says (rosbalt.ru/russia/2021/03/22/1893232.html).
Europe and the US aren’t going to shift to the yuan anytime soon; and if Russia insisted, its trade would tumble by perhaps 75 percent. Russia’s share of the Western credit card company market is miniscule: it would hurt itself rather than them. And not importing high tech equipment when one can’t produce it is a path to economic decay, Nikolayev says.
These things don’t make sense from the point of view of Russian self-interest, but the regime appears to be moving in this direction nevertheless. And the things it says it is most afraid of like being taken off of the SWIFT system are unlikely to happen. The West has experience with doing that to Iran, and it didn’t work.
The worst thing that Moscow is talking about and even appears likely to inflict on itself is to restrict high technology imports in the name of forcing the development of domestic substitutes. That may sound fine at the level of grand logic, but in the short term, it will be extremely destructive, the economist continues.
Russia today is primarily a raw materials exporter that buys high tech equipment from abroad in exchange. “One needs to pose the question: can we replace this class of items with Russian goods? If not, then why are we talking about import substitution?” If Russia can’t do that quickly, and there is clear evidence it can’t, taking that step will block Russian development.