Economic sanctions against Russia

 

Economic sanctions against Russia 

❖Economic sanctions are penalties or bans that are levied 

against a country to push it to modify its strategic 

decisions.

❖Sanctions could result in cutting economic ties in every 

respect such as terms of trade, financial assistance, transit 

support, travel bans, asset freezes, and trade restrictions.

❖The curbs could also be targeted, thus restricting 

transactions with certain businesses, groups, or 

individuals.

❖Amid increased global and economic interdependence, 

they could prove to be detrimental for the targeted 

country.

• How do sanctions impact an economy?

• No country can afford to be a closed economy.

• The affected country’s supply chain gets disrupted in terms 

of the inflow of goods and services and for reaching out to 

the export markets.

• In the former, there is a risk of the internal economy being 

crippled, especially if it depends on imports of critical raw 

materials.

• The domestic economy could also be deprived of external 

market support.

• The risk element is high especially in case of economic 

curbs being imposed collectively, such as by the 

Organisation for Economic Co-operation and Development 

(OECD) or the North Atlantic Treaty Organization (NATO).

•What are the economic sanctions 

against Russia?

• Major Russian banks have been banned from 

the SWIFT financial messaging service and their 

assets have been frozen.

• Sanctions have been levied on the Russian Direct 

Investment Fund and against some of Russia’s 

wealthiest people.

• Access to air-space has been denied and export 

controls introduced.

• The countries imposing curbs on Russia account for 

34% of world GDP.

•What is the cost of such 

restrictions?

• This depends on the economic strength of the country 

being targeted.

• Russia cannot be brushed aside as an ordinary 

economy.

• The country is important to the global economy 

because of its oil reserves and access to nuclear power.

• Russia is also a supplier of sophisticated defence

products and is an important supplier of crucial defence

products to India.

• Given the long-term strategic nature of the 

relationship, India is abstaining from voting on 

resolutions to condemn Russia.