Recently, Russia declared war on Ukraine and has been subject to economic sanctions by numerous countries. This is not only a plunge in the ruble but also isolates Russia itself by excluding Russia from the Society for Worldwide Interbank Financial Telecommunications approval network and withdrawing multinational corporations. For now, Russia paid $117 billion in government bond interest, which was scheduled to be paid on March 16, overcoming the default crisis (Shin). On the other hand, these sanctions have caused problems with Russian crude oil and gold exports, causing international oil prices an international gold prices to soar, and countries that impose sanctions are also suffering damage.
Russia invaded Ukraine on February 24 and thought it could end the war quickly. However, this was a serious calculation error. Until now, the Russian regular army had been in a state of triumph, abandoning fighting with sloppy rebels, not the regular army of a country, which soon led to pride. On the other hand, Ukraine has been actively strengthening its military after the Euromaidan crisis and the battle with Donetsk and Lugansk rebels. In addition, Ukraine’s president, Volodymyr Zelensky, expressed his intention to continue the war of resistance, promoting a decisive battle among the Ukrainian people. Eventually, even in the current situation of nearly a month, the war rarely progressed and entered a war of attrition.
Russia’s move led to a situation in which not only NATO member states but also the Swiss government considered freezing Russian high-ranking officials’ assets, and leading multinational corporations began to withdraw from Russia. McDonald’s, which was called a symbol of the resolution of the Cold War, also eventually withdrew. This was a fatal blow to the Russian people. The Russian central bank has raised interest rates sharply from 9.5 percent to 20 percent in order to deal with the plunge in the value of the ruble, which was hit by sanctions. The price of government bonds in Russia plunged to less than 10 percent of the face value. I don’t know if it’s a relief, but for now, Russia has escaped the default situation. However, if the sanctions are prolonged, there is a strong possibility of national bankruptcy, and a rather bleak future awaits Vladimir Putin, who wants to secure support for war and victory and solidify his kingdom.
Currently, the world is facing many difficulties in the face of a new Cold War at a time when the COVID-19 pandemic is not yet over. In particular, Russia is facing a harsh spring, sanctioned by many countries for the start of a war to strengthen the government of dictator Putin. However, other countries are also facing major disadvantages such as rising national oil prices and rising sugar prices due to Russia’s retaliation. In this situation, we don’t know which faction will raise the white flag first, but one thing is certain: the outcome will never be good for anyone.
Works Cited
“ECB Euro Reference Exchange Rate: Russian Rouble (RUB).” European Central Bank, 1 Mar. 2022, www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates /html/eurofxref-graph-rub.en.html. Accessed 20 Mar. 2022.
Kim, Suhyeon. “[속보] 러시아 중앙은행, 기준금리 9.5%→20% 대폭 인상.” Hankyung.com, 28 Feb. 2022, www.hankyung.com/international/article/2022022847767. Accessed 20 Mar. 2022. Shin, Giseop. “국제 유가 다시 100달러 넘어…러시아 공급 감소 우려.” 한겨레, 18 Mar. 2022, www.hani.co.kr/arti/international/international_general/1035371.html.
By. Junhong Park