The European Union approved a ban on Russian coal and the U.S. Congress passed a bill Thursday banning oil, coal and natural gas imports from Russia and prohibiting its energy sales in the American market.
These are the latest sanctions by the EU and the United States to punish Russia for its alleged "atrocities carried out in Ukraine." Previous sanctions have a long list including banning secondary trade in Russian government bonds, imposing full blocking sanctions on Sberbank, Russia's largest state-owned bank, and Alfa Bank, Russia's largest private bank, banning exports of critical technology to Russia, and freezing its assets and banning travel for elite Russians, including Russian President Vladimir Putin's two adult daughters.
"We will ratchet up the pain for Putin," Biden declared Thursday.
But who will feel the most pain?
The use of sanctions, which historian Nicholas Mulder calls "one of liberal internationalism's most enduring innovations" in his new book on the subject, "The Economic Weapon," has boomed over the past few decades.
While an actual war is cruel and destructive to a country and its people, the economic weapon is also damaging to that country and its people, sending repercussions to those whose governments are involved in the economic war.
The sanctions exacerbate inflation in Russia that is already high in the pandemic. According to Russian government statistics, inflation is the most worrisome statistic right now, up 8.9% in early 2022.
Consumers expect prices to rise 18% over the next year, according to a Russian central bank survey taken in March.
However, it's not just Russia that feels the pinch. The sanctions are also hurting European countries and other continents.
EU trade with Russia is strongly concentrated in energy. Russia accounts for 40% of EU gas imports, 25% of oil imports, and 47% of coal imports, according to the European Union's statistics office, making the country the most important supplier of the fuel. Banning coal imports could send energy prices soaring for European consumers, given the existing shortages in the bloc.
As Europe has been hard hit by an energy crunch this winter, severe sanctions and concerns about further punitive measures and supply disruptions to the global flow of energy are driving energy prices up as much as fivefold and dim prospects for better livelihoods.
According to The New York Times, in Britain the government’s price cap on energy bills was recently raised 54%, increasing annual charges to 1,971 pounds (US$2,568). That increase will affect 22 million households beginning in April. There is even a fear that sharply escalating heat and electricity bills, combined with food inflation, will push millions more into poverty.
Similar concerns can be found throughout the continent.
A German retiree facing sky-high energy bills is turning to a wood-burning stove, and the owner of a dry cleaning business in Spain adjusted her employees' work shifts to cut electric bills and installed solar panels, the New York Times report said.
The sanctions have also ramped up fears about grain supplies such as wheat and corn, and oilseeds, and surging food prices in countries like Libya, Yemen, and Lebanon, deepening the food crisis and even escalating the humanitarian crises in those countries. Russia and Ukraine together account for about 30% of global wheat exports, nearly a fifth of the corn trade, and about 80% of sunflower seed oil exports.
Sanction-induced inflation and surging energy prices are also forcing shutdowns or slowing production at manufacturers throughout Europe, causing more job losses. Almost two-thirds of the 28,000 companies surveyed by the Association of German Chambers of Commerce and Industry in March rated energy prices as one of their biggest business risks.
The sanctions have businesses halting sales and other operations in Russia. Exxon Mobil Corp. said it was halting operations at a multibillion-dollar oil and gas project in Russia and would make no further investments in the country.
According to The Wall Street Journal, the vast majority of Exxon's roughly 1000-person workforce in Russia is made up of Russian citizens, which means they will lose their jobs. Apple Inc., Ford Motor Co. and Dell Technologies Inc. joined the list of companies retreating from Russia.
The full blocking sanctions on Sberbank and Alfa Bank will prohibit transactions with any American financial institutions and freeze assets held by the banks in the U.S.
Sberbank holds nearly one-third of Russia's total banking sector assets, and the White House says that with the sanctions, more than two-thirds of the Russian banking sector is now blocked, so the sad reality is that the sanctions mean Russians' debit cards may not work.
Tatyana Androsova, a 35-year-old freelance graphic designer in the Moscow region, told The Wall Street Journal that an urgent concern was her access to the Adobe Inc. software that is necessary for her work.
She couldn't pay for it because her Russian-issued Mastercard no longer worked outside of the country due to the sanctions.
Politicians may feel good about the sanctions, but the pain is mostly inflicted upon and felt by ordinary people.
"Sanctions are aggravating existing tensions within globalization. That sanctions are intended to promote international stability is, unfortunately, no defense against this risk," Nicholas Mulder said.
(The author is the editor-in-chief of Shenzhen Daily.)