From my article published in City Journal:

Since Vladimir Putin ordered the Russian Armed Forces to launch a full-scale invasion of Ukraine on February 24, Western countries and their close allies have hit Russia with a raft of sweeping and unprecedented sanctions. Several major Russian banks were cut off from the Belgium-based SWIFT international financial messaging system. Transactions with Russia’s central bank were banned by the United States, United Kingdom, and European Union, effectively preventing Russia from utilizing much of its $640 billion of foreign exchange reserves. Targeted asset freezes and seizures were carried out against high-level members of Russia’s political and economic elite, Russian planes were denied access to essentially all European and North American airspace, and an unofficial boycott of Russia has seen over 300 international businesses suspend operations in or with the country, including major brands such as Apple, Disney, Zara, Visa, IKEA, and Coca-Cola. The Russian ruble has lost about 40 percent of its value against the U.S. dollar in a matter of weeks.

This kind of economic warfare is designed to isolate Putin’s government and bring an end to the invasion. But Russia’s vast exports of oil, coal, and natural gas to Europe have been notably exempt from the sanctions so far. Europe heavily relies on Russia to meet its energy needs: Russia alone supplies 40 percent of the European Union’s natural gas imports, 46 percent of EU coal imports, and 27 percent of EU oil imports. Russia is also the world’s largest wheat exporter, a leading producer of fertilizer, and possesses vast mineral reserves. The sanctions and boycotts against Russia are thus perhaps better termed financial warfare. Despite the belief that financial pain for the Russian populace will translate into political change, the nature of the Russian government remains the same. And while such bureaucratic and accounting moves can certainly cause significant pain in the short and medium term, they cannot change the fact that Russia possesses valuable and useful natural resources.

Read the rest here.

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