Financial War: How Russia Has Been Separated from the Global Economy

In the wake of the conflict in Ukraine, the United States and its allies have enacted sanctions against Russia.  Sanctions are economic penalties enacted upon a country that are often used to punish or disincentivize specific actions.  They are a non-violent alternative to influence global politics that are more easily enforceable across national borders.  In Russia’s case, the sanctions included Western countries removing Russian banks from SWIFT, a system that banks use for cross-border payments.  The U.S. also banned certain technology exports to Russia, in addition to banning imports of Russian oil and gas. 

Certain U.S. companies have also halted all operations in Russia, including names such as Coca-Cola, Google, and Disney.  Sanctions imposed by the United States are especially impactful considering 90% of all currency trades involve U.S. currency, and half of all international trade is done with U.S. dollars.  If these sanctions continue, projections estimate that Russia’s economy will contract up to 15% by 2022.  

Russian citizens have turned to gold and other precious metals in the face of their nation’s downtrodden economy, which increased the price of gold across the globe. Other worldwide impacts of these sanctions include a heightened cost of gasoline and grain, in addition to dips in the stock market and increased volatility of cryptocurrencies.