So for those living in a hole for the last week, Russian forces have invaded the Crimean Peninsula in the Ukraine. Russian justifications were to protect the Crimean population from some unknown enemy (there was no violence on the level experienced in Kiev prior to the Russian invasion). While the US and her allies are very unlikely to resort to military means, they will use economic threats to get Russia to pull out. Seemingly as a result of the likelihood of economic pressures, the Russian ruble fell to historic lows when compared to the dollar. Furthermore, four countries have suspended preparations to attend the G8 meeting in Sochi this year. There have also been threats to expel Russia from the G8 and the World Trade Organization. Things have slightly calmed down without a gun being fired. For a country like Russia, economic sanctions will work, yet it is not going to be American sanctions that will bring Russia to its knees; the European countries must step up to the plate and put economic sanctions on Russia. Russia has been more dependent on the EU for selling oil and gas, EU not so much. They got by without Russian gas for almost half a century. Only European sanctions can create the desired effect and force Russia to pull out of the Ukraine.
http://www.reuters.com/article/2014/03/03/us-ukraine-crisis-idUSBREA1Q1E820140303
1 comment:
This is a very interesting analysis. The threat of sanctions is only the first step by the US and EU authorities to put economic pressure on Russia. Russian markets and currency responded immediately to the threat and plunged down dramatically. This gives a hope that the threat of actual sanctions will force Russia to withdraw. Then again it is difficult to predict what Putin's actions will be. So far we have seen that economic sanctions had no impact on his decision making.
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