It’s all over for Russia and Ikea after 20 years in which the self-assembled Swedish giant became a symbol of the emergence of a post-Soviet middle class that would transform their country into a social democracy ‘just like us’.
In 2000, when Muslims had their first Ikea store, I, like most journalists and economists who followed Russia, declared this a turning point for a country that had defaulted on debt amid the tenure Boris Yeltsin’s presidency is in turmoil.
In a meatball version and Billy’s bookshelf New York Times pillar Thomas Friedman’s ninth maxim that “no two countries with McDonald’s have ever gone to war”, we can all confidently predict that Russia is now part of the West.
Yes, Russia – 14 Ikea stores – has now invaded Ukraine – one Ikea store – and the speed at which sanctions are imposed is a lesson learned, and not just for Moscow.
Prior to the invasion of Ukraine, the scale of the sanctions we had seen imposed on Russia at the state level would have been unimaginable. Hundreds of billions of dollars in one country’s foreign exchange reserves have been effectively isolated and Russia has been frozen out of the global banking system.
American defense experts say the Center for a New American Security calls the harsh measures “a direct attack on the Russian Fortress” while Harvard Russia expert Alexandra Vacroux calls them “options.” nuclear choice”.
Emboldened by government action with governments across the European Union, the United States and Canada and the United Kingdom, private-sector companies have responded with shrewdness.
Kerryman Bernard Looney is set to take BP away from its €13 billion stake in Russian oil giant Rosneft. Mastercard has pulled out, Renault is gone and the list goes on and on.
Those sanctions could be extended and it is clear that top Russian officials not only overestimate their military capabilities but also underestimate the West’s resolve after the Crimean invasion 2014 introduced only relatively mild targeted sanctions.
What Russian officials seem to have forgotten is that the United States has been weaponizing its financial system for decades — especially against Iran.
In 2021 alone, the US Treasury Department issued 765 new designations, most of which follow from actions against Belarus, Burma, China and yes, you guessed it, Russia.
In the last two years of the Trump administration alone, the US has imposed more than 1,560 punitive actions.
As Jim O’Neill, a former head of Goldman Sachs Asset Management, wrote last week: “It doesn’t take a deep thinker to appreciate that China has to be wary and disgruntled at the boldness of its game. both Russia’s war and the West’s reaction to it.”
The question is what will China do? Some commentators believe that what has happened to Russia is a warning shot that Beijing will now lead the development of an ‘autocratic arc’ against the West.
It would be natural for China to worry about the fate of the 1 million euros in US Treasuries it holds and the 3 million euros in foreign exchange reserves after what happened to Russia.
China and some of its top companies such as Huawei, WeChat and TikTok have been affected by US sanctions.
Last year, the US, EU, UK and Canada worked together to punish Chinese officials for what they said were human rights abuses in Xinjiang, an unprecedented joint action.
Both China and the United States seek to use their economic leverage – catching companies in the middle.
If the West is willing to engage in economic warfare to help the Ukrainians, will the Uighurs do the same. One lesson from sanctions is that they are difficult to return to the box once used.
First of all, both the US and China know that if sanctions of the kind imposed on Russia are deployed against Beijing, the result will be economic Armageddon. That calculation also implies that China wouldn’t go too far to pose a sanctions threat on that scale.
While China needs the West, the West needs China too – it’s the world’s largest auto market, for example, while Russia’s economy is the size of a pint for all its energy.
Russia is an ailing economy with a shrinking population and declining life expectancy, trying to regain the glory of a lost Soviet empire with its invasion of Ukraine while China is an economic superpower. and the rising diplomacy of our time and the biggest winner in the post-1990s globalization of the world.
To be sure, there will be sparring. Even as China has overtaken the US as Europe’s main export market, the investment pact between Brussels and Beijing has stalled.
Beijing has certainly made some note of its deaf diplomacy recently, especially with regard to Lithuania, population 2.8 million, compared to Taiwan.
However, the result can be a a slower freeze is the sudden death of globalization. But that will create losers, raise prices and stifle innovation, and possibly ultimately stoke conflict.
https://www.independent.ie/business/irish/ireland-was-a-winner-from-the-globalisation-putin-wants-to-destroy-41429461.html Ireland is the winner of the globalization that Putin wants to destroy