Russian economy shows resilience amid rigorous Western sanctions

2024-09-18 08:32:33

(MENAFN) As the Russian economy has shown resilience amid rigorous Western sanctions, many have celebrated the rise of a multipolar world, viewing it as a significant setback for the West. However, recent developments in Russia's ability to settle payments with China indicate that this resilience may be faltering under pressure.

In June, the United States Treasury intensified its approach, targeting the local banks of countries engaged in trade with Russia through secondary sanctions. While the legal groundwork for these sanctions was laid in December, it was in June that the United States signaled a more serious commitment to enforcing these measures. This announcement sent shockwaves through the financial landscape, particularly impacting China, Russia's largest trading partner.

Initially, major state-owned Chinese banks began distancing themselves from transactions involving Russia at the start of the year. The expectation was that smaller, regional banks—less integrated into the Western financial system—would step in to fill the gap. For a time, it seemed these institutions could effectively support Russian trade. However, by summer, even these banks started to withdraw.

Reports indicated that by late July, Chinese banks were rejecting approximately 80 percent of Russian payments made in Chinese yuan. Further analysis in mid-August revealed a more alarming trend: as many as 98 percent of Chinese banks were refusing direct yuan payments from Russia. This drastic shift illustrates the significant impact of United States sanctions and the increasing difficulty Russia faces in maintaining its trading lifeline with China.

The implications of these developments are profound, suggesting that the United States has made significant strides in curtailing Russia's economic partnerships. As the landscape of global trade continues to evolve, the resilience previously attributed to the Russian economy is now being tested, revealing vulnerabilities that could reshape its future interactions on the international stage.

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