The author of the article in the Japanese edition of JP Press, Keiichi Kaya, is presented by the editors as an economic analyst. He heads a consulting company advising Japan’s central ministries and government financial institutions. He is also an author of many books on economics
Kaya devoted his article “Western economic sanctions are full of holes, they cannot drive Russia into a corner” to an analysis of how the Russian government can bypass the financial restrictions imposed on the Russian Federation.
He formulates the goals of the “collective West”:
“Having driven the Russian economy into a corner, to make it difficult for Moscow to increase military spending and increase public dissatisfaction with the Putin regime.”
That is, the strategic goals are to change the political leadership and throw our country back to the state of the 1990s. The events in Ukraine are just a convenient excuse, under the pretext of “universal condemnation for the invasion”, to bring the people of Russia to their knees.
The author of the article does not hide the fact that he himself shares the goal of turning Russia into something similar to a colony, but expresses doubt that this will be easily achieved. He writes:
“Of course, such a scenario is highly desirable, but it is overly optimistic to expect that if the current sanctions are maintained, the Russian side will automatically find itself in a distressed situation, or easily agree to an unfavorable agreement to end the special operation. In fact, there are many loopholes in the current restrictive measures that leave room for Russia to maintain normal economic activity (of course, with restrictions)”.
The author reduces Western sanctions to three main ones: 1) the freezing of Russian foreign exchange reserves, 2) the exclusion of Russia from the SWIFT international money transfer network, 3) the embargo on the import of Russian oil.
The Japanese analyst believes that if these three types of restrictions were implemented flawlessly, Moscow would lose almost all means of interaction with other countries and would not be able to maintain economic activity even if it was self-sufficient. However, he points out:
“In fact, there are many loopholes in these restrictive measures, and the country is by no means completely cornered. It is not clear whether many Western countries intentionally left these loopholes or not, but the reality is that at present the anti-Russian sanctions network is far from being 100% effective.”
Kaya goes on to discuss the impact of Western sanctions on the Russian economy.
He starts by blocking foreign exchange and assets held by the Russian government. This measure does not include foreign exchange in Russian private financial institutions. In order to prevent default, the government of the Russian Federation, according to the economist, will do its best to pay interest on issued government bonds.
It is noted that Russia’s foreign exchange reserves are unlikely to be confiscated while the country is making interest payments on its debt obligations.
“Perhaps Russia has made interest payments through other non-government accounts. One thing is clear: Moscow somehow managed to avoid the set networks of restrictions, not fall into default and pay interest on its debt obligations on time,” Kaya concludes.
The Japanese government, despite pressure from Washington, would like to avoid the arrest of $33 billion in Japan. Finance Minister Suzuki said that Japan cannot seize the foreign exchange reserves of the Central Bank of Russia, which are stored in the Bank of Japan, due to the absence of provisions in the legislation regulating such measures.
A Japanese analyst draws attention to the fact that Russia had about $600 billion in foreign exchange reserves in 2021. About half of them are dollars and euros. There is an opinion that the amount of $300 billion could become the threshold for default. If Moscow does not find so much free funds in the near future, its economy will allegedly collapse. However, this is not at all the case.
“Russia is the world’s third largest producer of crude oil and the second largest producer of natural gas, exporting massive amounts of energy every year. The country’s total energy exports in 2020 amounted to about $300 billion… In 2022, its energy revenues are planned at over $320 billion. If Moscow succeeds in reducing consumption and leaving these revenues largely untouched, then the whole policy of blocking the country’s foreign exchange resources becomes meaningless. Since Gazprom, which is practically integrated with the state, is engaged in the export of natural gas, all of its proceeds can be directed by the Russian government to eliminate the threat of freezing and rejection of its gold and foreign exchange reserves,” writes Keiichi Kaya.
As for the disconnection of Russian banks from SWIFT, such sanctions so far apply only to individual Russian banks. While Sberbank, the largest backbone Russian bank, and Gazprombank are not subject to sanctions.
“While the two leading banks can use SWIFT, Moscow can freely export oil and natural gas and receive huge amounts of foreign currency. At the same time, there is no point in limiting its foreign exchange reserves,” the Japanese economist believes.
And then he writes: “Russia is starting to seriously put pressure on the West, demanding that it pay for oil and gas in rubles. And at least some EU countries have either already agreed or are considering such a form of payment. So, in the short term, the Russian economy did not suffer fatally, and it must be admitted that the consequences of various Western sanctions against it turned out to be insufficient.”
The article ends with a warning that one should realistically assess the situation and not count on the fact that, under sanctions pressure, Moscow will “throw a white flag” almost tomorrow. Kaya writes:
“To confront such an adversary, one must be extremely realistic. And be aware of your own weaknesses. It must be admitted that the Western community is far from united in this regard.”
From ourselves, we note that the Japanese analyst does not at all touch upon the factor of disagreement of such largest economies in the world as China, India, as well as the countries of the Arab East with attempts to “drive Russia into a corner” and ruin it, forcing it to bow to the United States. Moreover, the states that take the position of rejecting the American dictate, pursuing their own interests, perceive Russia as a partner and ally in building a new world order that excludes the presence of a global hegemon and a world gendarme.
Anatoly Koshkin, FSK
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