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The West has declared an all-out financial war on Russia. What does it mean? asks David Edgerton, Hans Rausing Professor of History of Science and Technology and Professor of Modern British History at King’s College London.
War is never just about soldiers and weapons. Indeed, economic warfare has been a central overt aspect of warfare, particularly evident since the turn of the 20th century. It still is today, but we call it “sanctions”. But sanctions are a form of war, not an alternative to it, and like war they are dangerous, damaging and unpredictable in their impact.
On Sunday evening and Monday morning, the United States and Europe imposed the most crippling and severe sanctions ever imposed on a G20 country. Russia was treated like Iran, North Korea, Venezuela. Russian money, until recently so ardently sought after, so politically effective, especially in London, has been sterilized.
The economic war that EU and NATO members have launched against Russia is primarily financial and technological, cutting off the Russian state from its now unusable overseas assets and preventing it from buying all kinds of critical equipment. Foreign operations of Russian financial institutions have been hampered and Russian financial institutions have been expelled from the technical mechanisms of global capitalism. The consequences were clear, a huge devaluation of the ruble, a doubling of ruble interest rates, potential panics on national banks and the possibility of inflation. The Russian state was financially disarmed, at least externally.
The attack is not total, deliberately. Russia can still sell its two main export commodities for cash, energy and grain, but that’s a measure of the West’s strength. It does not want to deprive the global economy of supplies at a time when commodity prices are rising. But who is in charge is quite clear, and also what are the expectations. Foreign investors in Russia are pulling out as best they can, like BP and Shell, and cultural and sports bodies are acting to ban Russia. Social networks impose controls, lying broadcasters banned.