James Galbraith (pictured), economist and prof. at the University of Texas in Austin, in a penetrating analysis questions the dominant views on Western sanctions and their alleged influence on Russia.
Galbraith analyses the results of the Russian and European economies that contradict popular belief. Below is simply a summary of his lecture:
The main targets of sanctions were multifaceted, says Galbraith. Firstly, the West attempted to deprive the Russians of the foundation for financing the war, depriving Russia of export income. Secondly, Russia was tried to cut off access to critical technologies. The strategy assumed that the civilian population and the oligarchs would yet put force on the Russian regime. ‘The overarching nonsubjective was to weaken Russian military capabilities“ This is Galbraith.
The sanctions did not meet their expectations. Despite the claims of supporters that sanctions will permanently weaken Russia militarily and economically. Galbraith asks whether misleading statements are not based on factual inaccuracies, misinterpretations or misanalyses.
"A crucial aspect of sanctions policy was the simplification of Russian oil, gas and metals flows. Contrary to expectations, this had no crucial impact on Russia's global purchasing power. Even with a smaller amount of oil and gas sold, Russia managed to sale them at higher prices, so export revenues rose alternatively than fell," said Galbraith.
In addition, sanctions which besides reduced imports from the West led to a simplification in Russian consumption expenditure, which contributed to an increase in Russia's current account surplus.
The sanctions were intended to make Russia run out of components and equipment considered essential for the conduct of war. "But a prudent war plan of the Russians predicted the creation of supplies of components specified as semiconductors. There is so no evidence that the Russians lacked crucial components."
The penalties distorted the production of certain goods, specified as cars and household appliances, resulting in a sharp fall in production rates in 2022. However, the production capacity of these goods remained intact. "The ability to produce these products did not simply vanish – factories, employees, engineers and managers are inactive there. any constructions and equipment had to be replaced with the aid of the Chinese so that production lines could be restarted.” The Russians may not have restored their erstwhile production volume, but this will come in time, as Galbraith claims. It will be an manufacture that is no longer dependent on the West.
"Before sanctions, the Russian economy was powerfully dominated by western companies, especially in sectors specified as automotive, aviation and fast food. The withdrawal of these companies, whether under force or voluntarily, led to the transfer of erstwhile western assets to Russian property," continued Galbraith.
Contrary to expectations, the Russian economy, driven by low natural materials costs, continues to make without western companies. Galbraith stressed: "Sanctions created marketplace opportunities for capable Russian companies in an area that had previously been dominated by Western companies".
The advantage over Europe is that the Russian economy goes to low natural materials prices due to the fact that Russia is simply a immense maker of natural materials. Europeans themselves would have paid almost twice as much for energy supplies as before.
Galbraith stresses that this economical transformation of Russia would not have taken place without sanctions. In 2022 the Russian authorities failed to force the Western companies and oligarchs to leave. "The possibilities of sanctions favour the long-term independent improvement of the Russian economy“ Galbraith concluded.
He claims that the targets of sanctions are unattainable. "Unlike island countries specified as Cuba, or resource-oriented countries specified as Venezuela, Russia, with its vast area, abundant resources, awesome technological and technological cognition and global trading partners specified as China, Brazil, Mexico, BRICS and African countries, was well prepared to adapt and overcome the challenges posed by Western sanctions."
The unexpected turn of Western sanctions to isolate and weaken Russia was to make conditions for the independent improvement of the Russian economy. Galbraith's conclusion: "The sanctions became an unintended gift to Russia. The sanctions imposed by the West have cut Europe off from the resources it needs, while at the same time cutting Russia off from the goods it does not request and without which it can do so.
Die Weltwoche (Switzerland)
photo of wikipedia
James Kenneth Galbraith (born January 29, 1952 in fresh York City) is an American economist. He is presently a prof. at Lyndon B. Johnson School of Public Affairs and at the Texas University of Austin.
