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Sanctions hardly ever do; they are simply not the economic equivalent of the bombs that Russia is presently dropping on Ukraine.Moreover, Russia is better prepared than the majority of countries to weather sanctions. And while Russia is reliant on revenue from Europe, Europeans are reliant on Russias oil and gas– which may be even harder to replace in the brief run.But, in the longer term, Russia will likely be the most significant financial loser from the conflict (after Ukraine, whose losses will go well beyond what can be measured in the national accounts). To the extent that sanctions and counter-responses intensify, the expenses will be larger– primary and first for Russia, however also to some degree for the rest of the global economy.Global financial relations are positive-sum, and Russias growing isolation will eliminate a small favorable.
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CAMBRIDGE, Massachusetts– Russias invasion of Ukraine has actually been quick and dramatic, however the economic effects will be much slower to emerge and less spectacular.The war itself is immensely awful, first and primary for the Ukrainian individuals, but also for the Russian individuals and the worldwide order more normally. Sanctions hardly ever do; they are simply not the financial equivalent of the bombs that Russia is currently dropping on Ukraine.Moreover, Russia is much better prepared than most countries to weather sanctions. And while Russia is reliant on income from Europe, Europeans are reliant on Russias oil and gas– which might be even more difficult to replace in the brief run.But, in the longer term, Russia will likely be the most significant economic loser from the dispute (after Ukraine, whose losses will go well beyond what can be measured in the nationwide accounts). In addition, Europe can be anticipated to minimize its fossil-fuel dependence on Russia.The longer-term financial repercussions for the rest of the world will be far less severe than they are for Russia, but they will still be a relentless challenge for policymakers. To the extent that counter-responses and sanctions escalate, the costs will be bigger– primary and very first for Russia, however also to some degree for the rest of the global economy.Global financial relations are positive-sum, and Russias growing isolation will remove a small positive.
