CN LIVE! S4E5- UKRAINE - The Economic Fallout - Wolff & Hudson

Consortium News

The West, led by the United States, declared economic war against Russia last month in response to the invasion of Ukraine, imposing perhaps the harshest sanctions against any nation in history. President Joe Biden has said that the aim of this economic warfare is to turn the Russian people against its government. Sanctions against Russia’s Central Bank were intended to destroy the value of the ruble. One U.S. dollar was worth 85 rubles on Feb. 24, the day of the invasion and soared to 154 per dollar on March 7. However the Russian currency strengthened to 101 this morning.

Putin and other Russian leaders were personally sanctioned, as were Russia’s largest banks. Most Russian transactions are no longer allowed to be settled through the SWIFT international payment system. The German-Russian Nord Stream 2 gas pipeline was closed down and become bankrupt.

The U.S. blocked imports of Russian oil, which was about 5 percent of U.S. supply. BP and Shell pulled out of Russian partnerships. European and U.S. airspace for Russian commercial liners was closed. Europe, which depends on Russia gas, is still importing it, and is so far rebuffing U.S. pressure to stop buying Russian oil. Other Russian commodities, such as wheat, fertilizer and metals have been cut off.

A raft of voluntary sanctions followed: PayPal, Facebook, Twitter, Netflix and McDonalds have been shut down in Russia. Coca-cola has stopped sales to the country. U.S. news organizations have left, Russian artists in the West have been fired and even Russian cats are banned. It also gave an opportunity for U.S. cable providers to get RT America shut down. Other Russia media have been de-platformed and Russian government websites hacked. A Yale University professor has drawn up a list to shame U.S. companies that are still operating in Russia.

The West's economic war and lethal aid to Ukraine are in lieu of a direct military confrontation with Russia, with all of the unimaginable consequences that could bring. But so far the sanctions do not seem to be working as planned.

China has come to Moscow's rescue, buying more oil and other commodities from Russia. Beijing has allowed Russia to use its Union Pay banking system, replaced Russia’s use of SWIFT with China’s Interbank System (CIPS), and China and the Eurasia Economic Union (EAEU), which Russia is a part of, are designing a new monetary and financial system that would bypass the U.S. dollar, threatening it as the world’s reserve currency.

That has led the U.S. to try to tie China to the war in Ukraine so that it can impose new sanctions on Beijing , perhaps similar to those on Russia.

The United States is acting as though the whole world is the West and that this is the China of 30 years ago. In its effort to impose its unilateral rule on the world, while its domestic social problems mount, the U.S. has not only driven Russia and China closer together than ever, but it has now brought in India, Latin America, Africa and the Middle East into a new bloc with an economic power that exceeds the West. All of those regions have refused to sanction Russia and continue to trade with it. The U.S. has turned the majority of the world’s population against it. We might be witnessing the end of Western-dominated globalization and the birth of a divided world of two separate economic, financial and commercial systems.

Cutting off trade and finance to Russia has already boomeranged on Western countries, driving up prices, especially at the pump and at the supermarket. Instead of prompting a popular uprising in Russia as a result of its sanctions, Russian President Vladimir Putin’s popularity has actually risen since the invasion. Adding China as a target of its economic war could drive the populations of the U.S. and Europe against their own governments instead.

Joining us to discuss these issue are two leading economists, Prof. Michael Hudson, Professor of Economics at the University of Missouri–Kansas City and a researcher at the Levy Economics Institute at Bard College, and Prof. Richard Wolff, Emeritus Prof. of Economics at the MassAmherst and a visiting Prof. at The NewSchool in New York.