Western Unity is Crippling the Russian Economy

In a time when Russian President Vladimir Putin expected division, western unity has emerged. Rather than remaining neutral, the US and other western countries have been active in condemning the Russian invasion. The US and other countries have banned Russian oil imports, certain Russian banks, and Visa and Mastercard have suspended operations. These sanctions have taken a toll on the Russian economy as we have seen a more than 30% drop in the Russian Ruble. Russia has been unable to wean itself off imported goods and the Russian economy is taking a hit because of it. According to Janis Kluige, a specialist in the Russian economy at the German Institute for International and Security affairs, “The Russian ambitions were unrealistic to start with because a small economy like Russia’s isn’t able to produce complex and high-tech goods by itself. It’s just simply not possible” (WSJ).While Russia has looked to reduce reliance on imports, it has actually worsened in recent years. In some industries, nonfood consumer goods, imports accounted for nearly 75% and in other sectors, the percentage is even higher.

Sanctions on imports to Russia affect the entire supply chain as a lack of production causes the idling of Russian employees. In Russia’s automaker industry, over 15,000 employees could be idled because of lack of production. Russian companies simply cannot produce the advanced computer chips imported from China and the US and these companies lack alternatives. In addition, as the Ruble decreases in value, the price of goods that can be imported increases dramatically. According to experts, it may take years for Russian companies to produce advanced goods needed for these fields and for now, they rely heavily on Western technology.


As Russia continues to suffer unsustainable losses in Ukraine, President Joe Biden and other western leaders are planning emergency in-person summits to plan for the future of the war. It is expected that the NATO leaders will roll out another set of sanctions on Russia that could add additional measures on Russian oligarchs, finances, and energy imports. Increasing support to Ukraine has also been discussed but no decisions have been made. The war has brought forth unity throughout western countries with Britain in the process of buying a 500 million dollar defense system from the US. Biden also plans to offer military support for NATO countries in eastern Europe, but not directly in conflict. The US has not used any military action when it comes to the war. In a study conducted by Pew Research Center on March 15, 2022, 85% of Americans believe that the US should keep strict economic sanctions on Russia. In addition, 35% of Americans favored U.S. military action even if it risks nuclear conflict with Russia. Even with a large percentage of people interested in military action, Biden has stated that “our forces are not — and will not — be engaged in the conflict with Russia in Ukraine.” There is no certain outcome in this war but it is clear that western countries have taken a strong stand against Russia.

Personally, I think it is important that Western countries are taking a hard stand against the Russian oil exports. Having Western Europe rely on Russian oil gives Russia a significant amount of power over other countries and could potentially allow for Putin to go unpunished. In addition, because countries have been unable to rely on Russian oil, they are finding other sources of oil. While gas prices have risen significantly, not relying on Russia while they are on the other side of the war is a fair tradeoff in my opinion.

Questions:

How do you think this war will influence the world economy in 10 years?

Do you support US intervention in the Russia Ukraine War? Why/Why not?

How should Russian businesses adapt to the changing economic situation?

Sources:

https://www.cnn.com/2022/03/20/politics/joe-biden-europe-trip-vladimir-putin/index.html

https://www.pewresearch.org/politics/2022/03/15/public-expresses-mixed-views-of-u-s-response-to-russias-invasion-of-ukraine/

https://www.vox.com/policy-and-politics/2022/2/25/22949351/ukraine-russia-us-troops-no-fly-zone-nuclear-weapons

https://www.nato.int/cps/en/natohq/official_texts_192489.htm