Raging commodity prices, economic crises and unexpected winners. These are some of the possible effects of economic sanctions against Russia, but far from all countries choose to support the sanctions. Whatever the purpose, sanctions risk being more globally destabilizing than many realize.
Following Russia's invasion of Ukraine in February, parts of the world have turned to Russian President Vladimir Putin. But despite the fact that Russia now has gone about Iran to become the world's most sanctioned country, far from all the countries in the world have backed the economic sanctions, as Sweden has done. In fact, the majority of countries on the three largest continents - Asia, Africa and South America - have not imposed economic sanctions on Russia and either continue to cooperate with the country or maintain a neutral position. This is because of financial sanctions, even though they are aimed at one certain country, in fact, can have far-reaching effects on the economies and population of many other countries.
Rising global commodity prices
Sanctions against Russia, which is the world's largest wheat exporter, can, for example strike hard at wheat importers. Countries such as Egypt and Tunisia, where the price of bread is subsidized by the government to satiate the population, will find it difficult to cope with higher wheat prices. Egypt produces only half of its wheat needs and Russia also accounts for almost 60 percent of the country's wheat imports. Rising grain prices are also expected to hit other countries where wheat accounts for a large share of food, such as Ghana, Nigeria and Kenya.
Although oil importers are at risk of rising prices as a result of sanctions against Russia. In sub-Saharan Africa, where 38 out of 45 countries import more oil than they export, the effects are expected to be severe as many countries are already struggling to export enough to afford their oil needs. In many of these countries, the cost of imports is now expected to exceed the value of exports and inflation to increase. Countries in Central Asia, flanked on all sides by countries sanctioned by the West, will also be have to fight to cope with the effects of sanctions against Moscow. Kazakhstan, which exports two-thirds of its oil sales through Russian ports, is under heavy pressure as a result of the international sanctions regime and is burning through important foreign exchange reserves to support its faltering currency.
Exclusion of Russian banks from SWIFT
Many countries that have chosen not to impose economic sanctions on Russia are themselves no strangers to economic sanctions. In South America, Cuba, Venezuela and Nicaragua are currently facing sanctions from the United States - which has led them to turn to Russia, both as a trading partner but also to work around the sanctions from Washington. When Donald Trump's presidency issued a number of new sanctions against Venezuela, the country turned to the Russian financial system to avoid the measures and continue to sell its oil through intermediaries. Following the EU's decision to exclude Russian banks from the international payment system SWIFT risks Venezuelan oil companies now unable to transfer or access money from oil sales. This could prove devastating as oil accounts for 99% of Venezuela's export revenues and the country is already in a serious economic crisis.
Winners and unexpected relationships
On the other hand, some countries are expected to benefit from rising prices and distorted global relations. Oil exporters, primarily in the Middle East but also countries such as Nigeria and Angola, are expected to benefit from rising oil prices and demand. But changing economic relations and sky-high petrol prices have also provoked unexpected meetings. For example, a US delegation traveled to Venezuela to discuss the above-mentioned energy sanctions that the US imposed on the country several years ago - something that has been accused of only meaning exchange of a tyrant for a dictator.
The pros and cons of financial sanctions are undeniably difficult to predict, but one thing is certain. Although sanctions may be a fair response to Putin's aggression in Europe, in a world of economic interdependence they may result in unpredictable consequences and be more globally destabilizing than we realize - something that has also been debaters to urge the international community to work to mitigate the following indirect damages.