More than one month since it launched its invasion of Ukraine, Russia is still finding new ways to counteract the unprecedented economic sanctions imposed by the Western world.
In recent weeks, Russia has sought retaliation to the sanctions which have devastated its economy by announcing a string of export bans including on medical, auto, and agricultural equipment, as well threatening to restrict foreign ships from Russian ports.
In order to help ease the financial damage of the oil ban imposed by the U.S. and U.K, and debated but not imposed by the European Union, Russian president Vladimir Putin has also demanded that "unfriendly countries" pay for Russian natural gas exports only in rubles—a move which would essentially help prop up the economy by increasing demand for the currency.
The moves arrived amid ongoing reports that Russia has turned to China in order to help it overcome the financial stress of the Western sanctions, reports which both Moscow and Beijing have so far denied.
However, whether these tactics will work—and their failure will ultimately have an effect upon how Russia carries on its conflict in Ukraine—has come into question.
Neutralizing the Impact of Sanctions
Peter L. Hahn, a professor of history, Ohio State University, said there is no doubt that some of the most significant sanctions—including banning Russian financial institutions from the global finance translation service Swift, the freezing of Russia's central bank's assets, and the withdrawal of company operations and supply chains—is harming Moscow's economy and forced Putin to act.
Speaking to Newsweek, Hahn said despite the financial hit the country is taking, Russia may still be able to continue waging war in Ukraine by evading or countering the economic measures, and Putin's success in "neutralizing the impact of the sanctions" will help define his ability to continue military action in Ukraine.
"Putin could pivot to China or other friendly and neutral powers to provide what the West has withdrawn. He could use Russian oil and gas exports as leverage against Western consumer nations that depend on it," Hahn said.
"He could mobilize his security apparatus to suppress any rumbles of public protests against the hardships caused by the sanctions."
However, Natalie Jaresko, the former Finance Minister of Ukraine, expressed doubts that China would even be able to replace economic losses that Russia has faced, or will continue to face, as the war in Ukraine rumbles on.
"Short term, I don't think that they can try and ameliorate it with China with some trade. There is no replacement for the larger Western world," Jaresko, who was brought in to help Ukraine's faltering economy following Russia's annexation of Crimea in 2014, told Newsweek.
"It's going to slow down their economy long term and cause a generational shift."
Paying in Rubles
As for the demand from Putin that Russian gas and oil must be paid for in rubles, a number of countries have already dismissed out of hand the suggestion.
The Group of Seven (G-7)—the biggest world economies consisting of the U.S., U.K. France, Germany, Italy, Japan and Canada—announced they will not meet Putin's demands as it will violate their current contracts to purchase Russia's natural energy in euros or dollars.
Other countries such as Austria and Poland have also confirmed they will not bow to Putin's request and start paying for Russian gas and oil with rubles.
Emily Holland, assistant professor in the Russia Maritime Studies Institute at the U.S. Naval War College, noted that the calls for Russian oil to be purchased in rubles may not even be "feasible" as a change of payment currency would nullify existing natural gas contracts.
Holland told Newsweek that countries would almost certainly demand new terms, such as a shorter duration period, if new contracts were to be negotiated, further damaging Russia.
"Europe needs Russian gas, but Russia also needs Europe to buy it. It cannot easily redirect the flow of gas bound to European consumers to somewhere else, so it would just disappear from the market," Holland said.
Despite the devastating economic loss Russia has already experienced, Jaresko, said that it doesn't even matter if the sanctions against Russia increase, or if the Kremlin's attempts to counteract them succeed, as Putin will be determined to continue with the war in Ukraine regardless.
"I don't know what will make a difference to a man who can begin and conduct a war like this, I can't tell you how his head works because it's beyond my imagination. It's nightmarish," Jaresko said.
"It seems that he will continue the war right now at any cost. It doesn't seem that the same equation in his head works as it does for the rest of us."
