Measures against Moscow.

Are sanctions really good for the West?

Preamble.

A recent article looked at the use of sanctions by the US, yet with the situation between Moscow and Washington being both as tense and dynamic as it is, another article is needed to broadly examine how Biden’s ‘sanctions from hell’ will affect matters as time goes forward.

Today we learnt that even in the absence of Russia’s phantom invasion (which has, according to CNN et al lasted over seven years now), the White House is planning to impose the promised measures. As was stated in the aforementioned article, rather than the publicized sanctions being a deterrent against Moscow, it was always the plan to impose them irrespective of happenings in Eastern Europe. In light of this news, we need to look at how this may affect matters on both sides of the Atlantic.

Bears throwing Boomerangs.

For all the countermeasures that Moscow has taken to protect itself from maverick politics, any measures that Washington (and subsequently Brussels) take will have an adverse effect on Russia. That said, sanctions follow the rules of diminishing return, meaning that whilst a lot of pain was caused in 2014, a similar situation would not be repeated today. For all that, the efforts to bring Russia to its knees have previously adversely affected businesses in the West, most of all in Europe. Looking at things today, with Russia as strong as ever and a post-Covid Washington desperate to pull a political ace out of the pack, the sanctions presented will need to be draconian. The fly in the ointment here is that should the Kremlin reciprocate, the initial aggression on the West’s part might bounce right back at it.

Burning others’ Bridges.

Many companies in Europe paid dearly for Brussels’ subservience to Washington in 2014-15, yet should the ruthless measures that the White House is planning be played back by Moscow, this is going to affect Europe to a far greater degree. Washington wants Europe to remain weak in order that the US can remain competitive, yet should the American wrecking ball be thrown back by the Kremlin, this is going to see a rise in hostility towards DC from Europe. The public are aware that Uncle Sam is trying to start another war, yet should the European people start to feel the chill from a new Cold War, they might want to leave the Americans out in the cold. Not only that, but with blatant interference in European energy matters, an increasing number of countries will object to Washington’s attempts to stymie gas supplies. As much as Biden wants a new war in Europe, he needs its people on his side, yet more sanctions may result in them being on his back.

Standing on the Brink.

Aside from the concerns regarding reactions from Moscow, America needs action in New York even more. For all the headlines regarding Wall St, the fact is that US stock markets today present a very over-inflated bubble, and the further we move forward, the greater the risk that it will burst. Not only that, but the longer we wait for the explosion, the more destruction it will wreak on the markets, both in the West as well as those overseas with the greatest exposure to the dollar. It was only the Second World War that rescued America from the Great Depression, but even before any crash happens, we have to recognize that the economy is in a much worse state than it was in the 1930s prior to the depression proper. The previous two decades have seen record amounts of credit and speculation on Wall St, the Fed intervening and printing money like there’s no tomorrow in order to stave off the inevitable. Again, the drawback with this is that the longer the impending collapse is offset, the greater the collapse will be. A record disparity of wealth coupled with a record number of people living in poverty does not augur well for a country that claims to lead the world.

No Bear, no Bull.

Some still claim that it leads the world, yet against an ever-more resilient East, Washington is reaching the limits of its power. For all the talk of American attempts to suspend Moscow from the SWIFT system, with a rising Russia and the US in the doldrums, today’s new world does not allow the West to manipulate others as was the case only a few years ago.

With the importance that the money markets play in the US economy, bearish markets are invariably bad news, yet the American administration is today attempting to use the Bear to make things bullish again. With an imagined phantom menace lurking on the borders of a vassal state, Washington is attempting to further leverage its own economy in the full knowledge that should Russia not be cowed and the play the waiting game, western money markets are going to explode just as badly as any bombs that Russia might have. The importance that sanctions play in Washington’s game may appear to merely be an American attack on those who oppose it, but looking at things objectively, they are an increasingly desperate endeavor to defuse the economic timebomb that Wall St has become.

Bearing up to Pressure.

Some would say that the final phase before a war in Eastern Europe is also the last-chance-saloon for the US in a number of incredibly important ways. Many of those saying this are in Moscow, and for all the assessments that have been made of Russian weakness, the Kremlin knows that if it plays a waiting game, there is going to be at least one loser. With seven years of sanctions experience and a number of plans to counter future measures, Moscow appears not to be unduly fluttered by Washington’s expected moves. There may be other losers in this game as well, yet that depends on whether Brussels is willing to stake its everything on the nothingburger of someone else’s economy.

Summary.

Far from being deterrent against alleged Russian aggression, the measures prepared by Washington were always a matter of when and not if. The original intention from the White House was that Russia should suffer as the West gave its lesson, yet seven years of experience have taught us that oftentimes it is not the East that has borne all the consequences of western aggression. Recent rumors point to Washington having second thoughts about banning Russia from the SWIFT payments system, this damaging America’s reputation rather than Russia’s trade. With gas also proving a tricky matter to stop, the US is attempting to rinse and repeat with sanctions, but with Moscow threatening to sever relations completely should it feel that these new measures go too far, perhaps burning bridges with the East really will be a bridge too far for the White House. Russia however just plays the waiting game; Washington seeing tanks on the Ukrainian border and Russia seeing America slowly tanking…