Those Who Are Stronger Than Us Do Not Need Us
Published in Glavred
(Ukraine) on 19 December 2021
by Oleksandr Honcharov (link to original)
Only the Ukrainian authorities can believe that the U.S. will disconnect Russia from the SWIFT system.
Leading Western and Asian analysts are skeptical about the U.S. threats to disconnect Russia from the SWIFT system (an international interbank system of data transfer and payment processing services) and, moreover, to prohibit American businesses from using dollars for transactions with Russian companies and enterprises.
Why? To make a long story short:
Firstly, China will be among the major beneficiaries from such American sanctions, because it will immediately occupy all the empty niches in the Russian markets with settlements on deals concluded exclusively in yuan.
Secondly, Chinese companies and enterprises will be able to buy raw materials in Russia at prices below their market value.
Thirdly, manufacturers in the EU countries and the U.S. may get a price shock in the raw materials market, which will very quickly push up the already high inflation.
Fourthly, the rise in commodity prices for U.S. manufacturers will force the Federal Reserve to further tighten its monetary policy and raise its key rate, which in turn will push the credit-ridden U.S. economy into recession. As a result, China will win and gain a net benefit, while the EU countries, the U.S. and Russia will inevitably suffer, albeit to a variable extent.
Does the West need this?
It seems that only the Ukrainian authorities do not know the main rule of international politics: Those who are stronger than us do not need us; we do not need those who are weaker than we are.
The author, Oleksandr Honcharov, is the director of the Institute for Economic Development of Ukraine.
Leading Western and Asian analysts are skeptical about the U.S. threats to disconnect Russia from the SWIFT system (an international interbank system of data transfer and payment processing services) and, moreover, to prohibit American businesses from using dollars for transactions with Russian companies and enterprises.
Why? To make a long story short:
Firstly, China will be among the major beneficiaries from such American sanctions, because it will immediately occupy all the empty niches in the Russian markets with settlements on deals concluded exclusively in yuan.
Secondly, Chinese companies and enterprises will be able to buy raw materials in Russia at prices below their market value.
Thirdly, manufacturers in the EU countries and the U.S. may get a price shock in the raw materials market, which will very quickly push up the already high inflation.
Fourthly, the rise in commodity prices for U.S. manufacturers will force the Federal Reserve to further tighten its monetary policy and raise its key rate, which in turn will push the credit-ridden U.S. economy into recession. As a result, China will win and gain a net benefit, while the EU countries, the U.S. and Russia will inevitably suffer, albeit to a variable extent.
Does the West need this?
It seems that only the Ukrainian authorities do not know the main rule of international politics: Those who are stronger than us do not need us; we do not need those who are weaker than we are.
The author, Oleksandr Honcharov, is the director of the Institute for Economic Development of Ukraine.
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