HOW DO SANCTIONS WORK? AND WHAT IS THE ECONOMIC COERCION TO PEACE

The sanctions against Russia are working perfectly and are done extremely competently. That’s why China eyes Russian resources and working out various scenarios for defense against Western economic sanctions in the event of an attack on Taiwan.

Money Flows and Exporters

The sanctions have effectively kept Russian exporters’ money outside the country. There are no significant inflows of foreign currency. Kremlin funds are stashed abroad in various currencies. Exporters sell their foreign exchange earnings to importers, often through channels like Threema and Signal chats. Currently, the Russian Central Bank (CBR) mainly controls the ruble and partially the yuan.

Sanctions and Supply Chains

The goal of sanctions is to blur control and introduce intermediaries into supply chains. This increases transaction costs and prevents the CBR from tightly controlling financial flows.

Parallel imports, cryptocurrencies, and outright smuggling create managerial chaos that defies systematic control.

FSB and Financial Freedom

Russian intelligence agencies, FSB (security service of Russia) are delighted. Moving money out of Russia has never been easier—through convoluted routes involving multiple jurisdictions and foreign entities.

However, this financial maneuvering remains unverifiable for Kremlin authorities. In contrast, the U.S. is aware of every Russian dollar abroad.

Strategic Intent and Outcomes

The goal wasn’t to completely isolate Russia’s economy. Instead, it was about profit. Sanctions achieved several outcomes: Squeezing the European energy market. Disrupting trade and financial flows, preventing a full-scale shift to a war economy. Strengthening neighboring economies (Kazakhstan, Kyrgyzstan, Armenia, UAE, and even the Baltics). Sending a message to China about potential consequences. Granting Russian businesses more autonomy by undermining total financial control.

The West’s Approach

The West didn’t aim for Russia’s abrupt economic collapse. Instead, they opted for erosion. A full blockade or complete ban on transactions with Russia would harm its neighbors significantly. The West’s real interest lies in dividing Russia—a geopolitical pole that doesn’t fit its desired role. Russia lacks anything essential for the U.S. except the legacy of the Soviet European market. China, on the other hand, finds Russia intriguing.

In summary, the strategy has been to erode rather than obliterate Russia economically. This approach aligns with the interests of both the U.S. and China.

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