AFTER SANCTION IN IMPLEMENTATION, KREMLIN’S FINANCIAL RETALIATION TO USA




Mustafa AY – TDO – 08.08.2017 Following US Senate’s decision to adopt new sanction over Russia, Kremlin made a series of retaliation against USA. Particularly, Moscow took some steps that led obstruction of diplomatic channel with USA. First step of Russian administration was to confiscate two compounds of US embassy in Moscow. In the right aftermath of this, Kremlin played second card steering to expel almost 800 US diplomats on account of espionage. Besides all bothersome progresses, Russia took some military-oriented measures varying from 50-year-lasting military presence in Syria, to planning for deployment of 100.000-sized reinforcement on Baltic border. With those decisions, Russia seemingly tried to pay US attention to its military deterrence, but not worked as expected. On contrary, USA did not take a step for alleviating the severity of through-freezing diplomatic ties. In effect, these moves of Russia prompted counter-precautions of Pentagon like keeping its European troops -armored brigades and other reinforcements sent to Germany and Poland in January- ready. This situation does fuel imminent war between Russia and NATO, but nothing else.

Russia has not benefitted from its diplomacy and military-oriented moves against USA. For this reason, Kremlin changed its way to deal with USA. That is tiring USA over finance as it wasn’t used to so. In detail, Moscow is planning for totally terminating its payment system based on USA and reliance on Dollar. Russia justifies this plan by emphasizing “USA’s financial and monetary superiority in foreign transaction and national economies. This pose threats to Russia and its national interests”. So, Russia addressing the message “USA is capable of pressuring on the countries opposing US interest through its monetary and financial power insomuch that this power can lead the catastrophic impact on foreign economies”. USA applied this intimidating scenario over Russia in 2014. Following Washington’s new sanction in that year, Mastercard withdrew its service with 7 Russian banks. Right after this progress, Moscow decided on improving national payment system to supplant Mastercard with the aim of reducing foreign dependency in terms of finance. In 2015, Russia introduced ‘the Mir’ for the banking system for Russia and Russian banks.

Russia’s ‘Mir’ encourages Kremlin to follow different ways of diplomatically responding the opponent’s moves.  From now on, Russia sets its mind on finding out ‘national’ solutions for inadequacies in technological infrastructure. Kremlin can do it by applying ‘import substitute’ economic policy. So, this economic policy will enable Russia to;

  1. Locally producing the technological commodities by modeling foreign goods, instead of importing goods. By the virtue of applying this, Russia will be able to reinforce its technological infrastructure and promote the quick qualification of personnel,
  2. Terminating import and then stabilizing foreign currency reserves which help increase in public wealth and prosperity,
  3. Rendering economic sanctions unnecessary,
  4. Guaranteeing continuity of development projects, despite the sanctions.

So, it is possible to regard this situation like that Russia sees the sanctions as an opportunity to cease all economy and finance-rooted depressions.