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The United States, Sanctions, and Russia

Russian sanctions
Written by Brian Wallace

The war on Ukraine has prompted the strongest economic United States action against Russia since the Cold War. This consists of sanctions that completely block any oil exportation, restrict the purchase of Russian bonds, restrict exports that could help in Russia’s war, and, along with other western countries, restrict Russia’s foreign reserves and international banking. 

 

This is no small set of actions coming from the U.S. This is especially true considering that half of international trade is done with USD and half of the existing bonds and loans must be paid in USD. These are strong actions that are predicted to contract Russia’s economy by 15% if they continue throughout 2022. Russia, in response to these sanctions, had a drop of their currency, the ruble, by 30%.

 

In response, Russia has put in measures to secure their currency and to move away from the USD. Russia has removed intellectual property rights from all US companies, instituted greater interest rates, forced the transfer of USD to rubles in Russian firms, and stopped the transfer of money abroad by citizens. 

 

These efforts may not be sustainable but have effectively returned the ruble to its average value. Meanwhile, in the U.S, negative effects are arising. The refusal of oil from Russia has produced the highest average gas prices, the stock market is at several decade long lows, and cryptocurrency is in high fluctuation.

 

These effects are not as dramatic as Russia’s economic downturn, but are worrisome to average citizens. The sustained effects of the war and sanctions are yet to be seen, but the U.S seems to be the most affected and influential outside of the immediate two battling countries.

financial war
Source: USGoldBureau.com

About the author

Brian Wallace