Message from Russia to countries including Turkey! The dollar throne will shake

Assoc. Dr. İsmail Şahin wrote for AA Analysis on the economic consequences of sanctions imposed on Russia due to the Russian-Ukrainian war in the context of global dollar hegemony.

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Since Russia invaded Ukraine, it has faced a boycott unprecedented in history. In particular, the United States, the EU and England subscribe to developments that can isolate Russia from the international system with the sanctions they initiate. Where will these measures aimed at Russia be and what will be the consequences are among the questions that the current debates seek to answer. However, it is very difficult for the moment to make a definitive judgment on the duration of these measures or on the results to which they could lead. Nevertheless, certain conclusions can be reached and certain predictions can be made based on the available data.

– OVERALL RISKS OF SANCTIONS

Many analysts, who consider the sanctions that isolate Moscow from the world a historic mistake, as well as the Russian invasion of Ukraine, say these practices will make Russia even more aggressive. For them, for example, the punitive economic hardships imposed to rein in Hitler-led Germany during the interwar period had led to an overdrive of German nationalism and the entrenchment of a racist and vengeful regime.

In fact, a similar picture may emerge in Russia. Because the failure in Ukraine, the heavy sanctions imposed and the loss of prestige on the international scene strongly restrict Russia’s capacities for maneuver other than aggression. In fact, some experts say conditions worsened by economic sanctions have moved Moscow, which has intercontinental ballistic missiles and an arsenal of nuclear weapons, closer to the danger of nuclear weapons, rather than give up. But that’s a slim possibility, because even in the worst-case scenario, the likelihood of nuclear war is very low.

It is a fact that nuclear war will benefit no one. The primary function of the nuclear threat is deterrence. Therefore, the importance of these weapons for the Kremlin comes from self-defense and intimidation of its enemies. The main reason for Russian statesmen to keep the threat of nuclear weapons on the agenda is to prevent military aid from NATO members to Ukraine as much as possible. Therefore, Russia will repeat the threat of nuclear weapons for some time. Moreover, Moscow knows very well that if it resorts to nuclear weapons, Russia will become a global pariah. Based on this reality, many strategists are of the opinion that the main objective of the Kremlin is a political and economic world war. In fact, the statements made by the Russian side largely confirm this view.

– UKRAINIAN THESES FROM RUSSIA

Russian Foreign Minister Sergei Lavrov said in a statement that Russia’s goal in Ukraine was to end US hegemony built through gross violations of international law. Stating that the hegemony established by the Western powers is based on the order to make wealth from crises and wars, and therefore to constantly produce enemies, Russian officials claim that the United States is using Ukraine as a tool to heal the weakening of the transatlantic alliance and re-establish its hegemony over Europe.

From this perspective, Moscow seems to be trying to push the periphery of the Ukrainian crisis well beyond its own geopolitical concerns. In this context, two important theses with strong global influence are put forward by Russia. The first concerns the political structure of the international system. Accordingly, the United States is making calculations to establish a new hegemony over Ukraine in order to prevent the international system from shifting to a multipolar structure. With this thesis, Russia is trying to convey an important message to leading countries like China, India, Hungary, Iran, Turkey and Pakistan, which are uncomfortable with US hegemony. Thus, the Kremlin plans to take revenge on America by triggering a tectonic rupture in the structure of the international system.

– SANCTIONS erode confidence in the dollar

The second thesis put forward by Moscow concerns the unreliability of the global economic system. In a speech in which he assessed economic sanctions, such as the seizure of Russia’s foreign currency reserves and the country’s exclusion from the financial system, Putin accused Western powers of “theft”, saying that “everyone world now knows that financial reserves can simply be stolen.” It was an important warning. Because the United States, the United Kingdom and the EU, by seizing Russia’s foreign exchange reserves, sent the message that access for all countries to reserve assets in dollars, pounds and euros depended on their approaches to foreign policy.

It is obvious that the approach of determining the foreign policy behavior of states taking into account the security of their foreign exchange reserves will greatly disturb countries that threaten the Western alliance or have problems with them. Recently, US President Joe Biden’s seizure of $7 billion in blocked reserves from Afghanistan by executive order has sparked strong reactions and concerns. So much so that many macro watchers believe such sanctions will hurt the current economic system the most. They are not wrong in this regard. In fact, countries want to work with reserve currencies they can trust, but sanctions are eroding confidence in the dollar, the world’s largest reserve currency, and causing non-Western countries great anxiety.

It is a known fact that the global economic system has been under severe strain over the past decade. In this process, the fact that countries rich in raw materials such as Russia, China, India, Turkey and Saudi Arabia, which want to oppose the use of the dollar as a tool of pressure, are looking for currencies other than the dollar in their international trade indicates a significant break. The possibility of an oil trade between Saudi Arabia and China in yuan, with the Russian energy company Gazprom completely stopping natural gas shipments to Bulgaria and Poland because they do not respect the ruble payment system , India intends to give weight to the rupee-ruble pair to avoid CAATSA sanctions The existence of events that have gained visibility in recent months, such as these, stand out as developments that threaten the hegemonic status of the dollar.

Additionally, Russia’s announcement that it will accept gold and bitcoin as payment in energy trading could end the dollar’s long-term dominance in global markets. Of course, in the short term, there will not be a complete abandonment of dollar reserves. However, in the medium and long term, it is not surprising that countries in conflict with the West, to secure themselves, move away from the dollar and seek a new instrument of payment. Moreover, a multipolar world order will be the most important driving force that will initiate the shift of the global economy away from the United States.

– UKRAINE: BEGINNING AND END

The second group of analysts, who find the possibilities evoked weak, underline the impossibility of leaving the established political and economic order. According to them, the United States will continue to keep Russia and China and other countries that follow these countries within its borders by successfully deploying all vehicles. In this context, they argue that sanctions imposed on Moscow, military aid to countries surrounding Russia and military support to Ukraine extinguish Russia’s dreams and claims.

It is clear that the Western allies have mobilized all their means to prevent this conflict from spreading beyond Ukraine. It is therefore vital for the Allies that Ukraine be the place where Russian aggression begins and ends. If this possibility materializes, Ukraine could become a new sample for all revisionist countries, especially China, from which lessons could be learned against disruptive movements. It is safe to say that the war in Ukraine has so far damaged Russia’s military image. The United States and its allies, however, have dealt a severe blow to confidence in Russian weapons systems and military power, as well as to Russia’s claim to be a “pole”, by allowing Russia to fail militarily in Ukraine.

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[Doç. Dr. İsmail Şahin Ankara Hacı Bayram Veli Üniversitesi Uluslararası İlişkiler Bölümü Öğretim Üyesidir]

* The opinions expressed in the articles belong to the author and may not reflect the editorial policy of Anadolu Agency.

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