By Tim Nailsea
The British media have hailed the scale of sanctions being imposed upon Russia for its invasion of Ukraine. Scarcely a day goes by without new measures aimed at isolating Russia from the world economy, revealing in the process the enormous power of the Western banks, corporations and international financial institutions.
Particular glee accompanies each report of an oligarch’s yacht or luxury mansion being seized and their assets frozen. But when the Belgravia mansion of Oleg Deripaska, worth £50 million, was ‘liberated’ by squatters with the intention of housing Ukrainian refugees, riot police evicted them. The British government does not want to see ‘sanctions from below’.
Of course, nothing is said about Saudi princes, whose country is waging a war in Yemen as merciless as that in Ukraine, who have similarly fine properties. Indeed, Boris Johnson just went cap in hand to Crown Prince Mohammed bin Salman, to beg for increased oil production to combat soaring prices, only to be turned away empty handed.
Sanctions, like war, are the ‘continuation of politics by other means’. Although presented as Russia’s ‘punishment’ for invading Ukraine, imposed by the world’s self-appointed policeman, their real purpose is to exploit justified revulsion at Russia’s actions to advance US economic interests by destabilising the Russian Federation. At the same time they force the EU states to draw back from any attempts at pursuing policies independent of Washington.
They are also a warning shot across the bows of the billionaires and ‘Communist’ party chiefs in China; this is what you can expect if you follow Putin’s path. In the sanctions war the working class has nothing to gain and should support neither side, despite its solidarity with the suffering and courageously resisting workers and farmers of Ukraine.
Russia is now the most sanctioned country in the world. The US and Canada have banned all Russian oil imports. The UK aims to end all imports by the end of 2022 (the EU deadline is 2027). Japan has banned exports of refinery equipment to Russia. Most significantly, Germany has suspended certification of the Nord Stream 2 pipeline, which was planned to supply Russian natural gas directly to Germany.
The UK, Canada and New Zealand have banned Russian ships from their ports and the US and EU are considering doing the same. The US, Canada and EU have banned Russian planes from their airspace.
The US, EU and UK have banned transactions with Russia’s central bank, Ministry of Finance and national wealth fund. The UK has frozen all the national wealth fund’s assets. Singapore has banned four Russian banks from doing business there. The EU, Switzerland, South Korea and Japan all agreed plans to bar Russia from SWIFT, a secure messaging system used for banking transactions. This has left thousands of Russian students penniless here and around the world.
The EU has also taken the step of banning the Russia Today and Sputnik news organisations, and there are calls for similar measures to be taken in Britain. The pride of the globalisation period, the Internet, is also breaking up into ‘camps’ as West and East block each other’s ‘fake news’.
BP, Shell, Equinor and Exxon Mobil have all announced plans to withdraw from shareholdings or joint projects in Russia. Visa and Mastercard are withdrawing their services. Apple, Airbnb, Boeing, Google, Microsoft, Netflix, PayPal, PwC, Spotify and even Chinese-owned TikTok are doing similar. McDonalds is closing all its Russian branches.
The impact of these sanctions is already being felt in Russia. The Russian economy is predicted to shrink by between 7% and 15% this year and the Russian stock market has gone into free-fall.
The Russian currency has fallen by over 10% since the invasion. A boycott on Russian exports will mean that demand for the rouble collapses, leading to a debasement of the currency. This increases both the cost of borrowing and the price of imported goods.
The West’s attacks on Russian assets abroad have meant that Russian reserves of foreign currency (in part built up to insulate Russia from such attacks on its currency) have prevented it from engineering demand by buying roubles with stockpiled dollars and Euros.
In Russia, there has been a run on the banks, as ordinary people fear the loss of their savings, which are being eroded. The central bank has doubled interest rates, and there are currently no dollars or euros available from ATMs. As credit card companies halt their services, ordinary Russians’ cards can no longer be used for necessary transactions.
Prices are rocketing with imported products, with technology and medicine particularly affected. Cars and auto parts are likely to be harder to come by as Western companies halt sales.
Some liberal supporters of sanctions argue that economic restrictions are a ‘non-violent’ way of punishing Russia for its invasion of Ukraine. Some even suggest that sanctions can be ‘targeted’ or ‘smart’ and only affect Putin and his supporters. Others suggest that the impact of sanctions could increase discontent against Putin’s regime, even leading to his overthrow.
This is neither the reality nor the intention of these sanctions, which are economic warfare against the people of Russia as a whole. The aim is to put Russia under siege by crippling its economy and curtailing its power and influence internationally. This is done by sweeping economic measures directed at the entire population.
The other intended consequence is to muscle Russian money and products out of the international economy, replacing them with the money and goods of Western capitalists.
The clearest example is energy. Before the invasion Russia supplied around 20% of Europe’s natural gas and the US supplied 26%. The Nord Stream 2 pipeline would likely have changed this. With the pipeline’s certification suspended, and import restrictions put in place, the main beneficiaries are likely to be US energy companies, which will fill the gap in the market.
Suggestions that sanctions can be ‘targeted’ therefore ignore the reality of the situation. Western imperialism’s main aim is to attack Russian energy and finance capital and this cannot be achieved without tanking the Russian economy. As any worker can tell you, during an economic crisis it is never the rich who pay, only the working class.
Gilbert Achcar, a prominent militant of the Fourth International and SOAS academic, has written the following about sanctions.
‘We have no general attitude on sanctions in principle. We were in favour of sanctions targeting the South African Apartheid state and we are in favour of sanctions targeting the Israeli settler-colonial occupation. We were against the sanctions imposed on the Iraqi state after it had been destroyed by war in 1991, for they were murderous sanctions serving no just cause but only the subjugation of a state to US imperialism at a quasi-genocidal cost for its population…
‘Our opposition to the Russian aggression combined with our mistrust of Western imperialist governments means that we should neither support the latter’s sanctions, nor demand that they be lifted.’
This is a totally confused response. We must start from the position that the USA and the other Nato powers are imperialist states; when they impose sanctions, just as when they wage war, they do so to advance their own economic and political world domination, not for the rights of oppressed nations, human rights or democracy.
The ‘principle’ that Achcar thinks can be applied or ignored according to taste is eclectic nonsense. Our duty is to expose the fraudulent nature of ‘Western’ sanctions, to warn against any confidence that they can be an instrument of freedom or liberation. Rather, Ukrainians should appeal to the international working class for solidarity, just as it is the latter’s duty to come to their aid.
There has been a wave of protests in Russia against Putin’s brutal war in Ukraine, where brave anti-war Russians have faced imprisonment or worse for standing up for their fellow workers in Ukraine. To support sanctions which would harm them more than they would Putin and would even cement his hold over the Russian people further would be cruel and immoral.
The invasion of Ukraine is the latest stage in the competition between imperial powers like Russia, the US and China to redivide the world. The working class in those countries has no interest in that conflict and, whether through direct military confrontation or economic warfare in the form of sanctions, are always going to be the worst hit.
This is apparent even now in Britain, where the cost of living increase that we were already facing because of recession, Covid and Brexit is now being sold to us as part of the ‘war effort’ against Russia.
Workers across the world need to stand together in solidarity, in opposing imperialism and any policies or tactics aimed at making us pay for their wars. But this must put in the foreground solidarity with Ukrainian workers’ resistance and utter condemnation Putin’s bombing of the country’s cities.
The idea that economic hardship inflicted on ordinary Russians will galvanise the population to overthrow Putin is delusional. After Russia the three most sanctioned countries in the world are Iran, Syria and North Korea, all of whose regimes have stayed in power for decades. The lesson is that, as well as causing misery to the victims of dictatorial regimes, sanctions can entrench their ruling elites in power.
Cutting off Russia from international communications likewise makes it more difficult to establish links with those opposed to Putin. For, in the end, it will not be Nato or the European Union that can bring him down but the Russian and Ukrainian working classes. And for certain the governments in Washington, London, Paris and Berlin will be no friends of this revolution.
That is why maintaining and deepening links between socialists in Russia, Ukraine, and across the world is more important than ever. We need a movement of working class solidarity to bring an end to the Ukraine war, against the Nato-led new Cold War and the threat of a third world war these represent.