Sanctions against Russia, is Fontana’s thesis well founded? What the data and facts say

The numbers, and the interpretation made by the International Monetary Fund, are linked to the objective difficulties of Moscow

The sanctions on Russia they return a topic of political discussion. To bring them back to the fore were the words of the Speaker of the House Lorenzo Fontana, which juxtaposed them with a potential boomerang effect. The thesis is not new. In summary, the question arises as to whether sanctions, in the long run, will make Russia worse or the economies of Western countries that have imposed them.

By analyzing the words of the Northern League exponent more carefully, two other elements emerge. “At the beginning I said that sanctions are a great way to wage war without using weapons, so Europe has done very well. But we must be careful because with the counter-sanctions that Russia makes us we could give up before them. because our population is less used to suffering than the Russians. ” There is therefore an evolution over time in the effectiveness of sanctions: initially yes, now no. And there is also the explanation as to why there has been this substantial change: the Russians are used to suffering, we are not. An argument, this, which by extension can lead to nullifying any effort required that involves a sacrifice.

Then there is a third element, which concerns the consequences. “We need to be careful with sanctions, because if they become a boomerang we could find ourselves in serious trouble: there is the issue of wheat which could lead to severe famines and a wave of immigration from Africa and the Middle East. It could be a weapon. used by Putin to defeat Europe “. On this level, the discourse widens and gets lost in the mare magnum of the wider consequences of the war in Ukraine and the tensions that derive from it on the geopolitical level.

To limit ourselves to the effectiveness of the sanctions, there are two factors that can be considered. The first is the data on the Russian economy and those on our economies. The substantial problem is to try to make homogeneous comparisons. It is not easy to solve because there is an objective difficulty in finding correct information. Our estimates and forecasts are based on reliable, certified data, those on the Russian economy are inevitably conditioned by the filter of propaganda. Much has been said about International Monetary Fund estimates. In the World Economic Outlook, he revised upwards the estimates for the Russian economy hit by several Western sanctions packages: GDP will drop by 3.4%, and not by 8.5% as expected only in April or by 6% expected in July, “thanks to oil and resilience of domestic demand and the labor market”. Does that mean that Russia will easily come out of the recession? No, said Alfred Kammer, director of the European Department of the IMF, adding that in the Federation “this year and next there will be negative growth, and in 2023 the GDP will be 10% lower than what we expected before the war. We are therefore talking about a deep recession. The scenario for Europe, on the other hand, sees lower growth, not a deep recession “.

Next to the data, there is the second key factor. They are the facts. The evolution of the conflict in Ukraine, on the ground, sees the Russian army increasingly in difficulty and it is a difficulty due to the reconquest of the territory by the Ukrainians, thanks above all to Western weapons, and the lack of resources to support the Moscow’s war effort, with sanctions playing a clear role. Even the reaction of the last few weeks, with the massive bombings on Ukrainian cities is a fact that has implications on all levels: the war, obviously, the diplomatic one, in the hope that we can open the way for a negotiation that can lead to at least one respite, and the economic one. And sanctions, even considering the costs Russia is incurring in this further military effort, can play a key role.

Loosening the sanctions today would mean nullifying the sacrifices made so far, because the cost of sanctions is also being paid by all Western economies, restoring breath, and room for rearmament and reorganization, to Putin’s troops, and burning the only alternative that resists the use of weapons to the bitter end, economic pressure. For this reason, when we talk about a boomerang, we risk not serving the interests of Rome, or Brussels, but those of Moscow. (from Fabio Insenga)