Not only is it possible to switch to renewables, but it’s also cheaper and would make economies less vulnerable. Yet, bizarrely, politicians and the fossil fuel industry, who are using the war on Ukraine to justify high gas prices, are now calling for more oil to be produced.
Long used to cheap gas at the pump, Americans are experiencing serious sticker shock these days as gas prices rise to $6 or even $7 a gallon. News headlines are linking this sharp increase to Russia’s war on Ukraine. Guilt-inducing memes are cropping up on social media shaming people for complaining about the high gas prices in the face of Ukrainian suffering.
Such logic is based on the idea that oil companies have no control over the price of oil and that high prices are stemming, almost “naturally,” from an imminent scarcity of oil as a result of a ban on Russian energy imports.
Whether or not this is true, an economy based on a source of energy that is so fickle will always be vulnerable. So where are the calls for ending our dependence on oil and gas?
Collin Rees, senior campaigner with Oil Change International, told me in a recent interview that there is “a complex interplay” of forces that determine prices, and in fact, “the U.S. doesn’t actually import that much Russian oil and gas.” Only about 8 percent of all oil and gas imported into the United States comes from Russia. When accounting for domestic oil and gas production, the Russian contribution to American fossil fuel use is a paltry 2 percent.
Rees explains that if Russia’s war on Ukraine had any effect, it was that “increased fear among investors [has] driven up prices.” So, no, the Russian war on Ukraine has little direct connection to the hike in gas prices at the pump. Rather, it is investor fear over losing out on current and future profits that is pushing prices up.
Still, it is important to point out that oil has become a convenient ransom note in the war: the West threatens to stop importing Russian oil, while Russia threatens to cut off oil supplies to the West. “It’s a complex issue with a lot of leverage on both sides,” says Rees.
In the meantime, for those Americans struggling to make sense of what they’re seeing at the pump, prices actually began rising in 2021 as pandemic-related quarantines eased and Americans resumed commuting and travel. According to the U.S. Energy Information Administration, last year “[r]ising crude oil prices and increased gasoline demand contributed to… the highest average nominal price since 2014.” Additionally, “[t]he average price for retail gasoline increased by more than $1.00/gal between the start and the end of 2021.”
“The oil industry is a boom-bust industry,” says Rees. “This is an extremely volatile industry that goes through price spikes and price dips, and for that reason it’s not something that we want our economies to be hooked to in the future.”
But the fossil fuel industry is already using the price spike to make the case for generating more oil and gas and to demand the sale of more oil and gas drilling leases. If the logic of Russian oil scarcity as the reason for price increases is to be believed, then conversely, it’s easy to make the case that increasing supplies will bring down prices.
The idea that supply and demand drives prices is an elegant one that fits well with the myths we have all been fed about capitalism. Ever the opportunist to ensure corporate profiteering, Tesla CEO Elon Musk tweeted, “Hate to say it, but we need to increase oil & gas output immediately. Extraordinary times demand extraordinary measures.”
But it’s not just Musk. Energy Secretary Jennifer Granholm said recently, “In this moment of crisis, we need more supply… right now, we need oil and gas production to rise to meet current demand.”
In other words, Americans are being told we have to accept that the price of isolating Russia for its war on Ukraine is more expensive gas, and the price for ensuring cheaper gas is to increase reliance on fossil fuels.
Only a few months ago, Granholm admitted that “the energy industry is making enormous profits. They’re back up… above where they were before the pandemic started.” Rees concurs, saying the industry is “raking in massive profits” amounting to “obscene amounts of money.” In fact, the top 24 oil and gas companies in the world made $174 billion in profits in the first nine months of 2021.
The organization Earthjustice points out that with the windfall, these companies “are buying back their own shares, funneling dividends to their shareholders, and paying lobbyists to demand cheap new federal leases so they can stockpile them for future profit.”
It’s easy to mock Americans for paying more attention to the price of oil than the price of milk. But decades of artificially low oil prices, combined with out-of-reach electric vehicles, have created a dependence that is not the fault of ordinary people. Oil profiteers and their allies in Washington, D.C., are to blame for ensuring that our economy remains wholly reliant on a product that also threatens the survival of our species through resulting climate change.
President Joe Biden during his March 1 State of the Union address could have used high oil prices to boldly tout his climate justice agenda. He could have linked the volatility of oil prices to the need for less reliance on oil. But he did neither.
Instead, he assured Americans that there would be plenty of oil, saying the United States was “releasing 30 million barrels from our own Strategic Petroleum Reserve,” adding, “we stand ready to do more if necessary.”
Biden, who ran for president on an ambitious climate justice platform, and who appointed the first Native American Interior Secretary, Deb Haaland, known for her climate activism, has betrayed his own agenda. The Washington Post in January pointed out how “Biden has outpaced” his pro-oil predecessor, Donald Trump, on issuing oil and gas drilling leases on public lands.
What’s bizarre is that our continued reliance on oil and gas is no longer financially sensible even by the logic of capitalism. Leading environmental activist and founder of 350.org Bill McKibben wrote in the Guardian, “scientists and engineers have dropped the cost of solar and windpower by an order of magnitude, to the point where it is some of the cheapest power on Earth.”
“Big oil and gas [have] bought out our politicians,” explains Rees about why there remains such a continued dependence on a destructive and dwindling resource, whose prices are volatile, and whose sources are politically fraught.
Just as the fossil fuel industry and its political allies are using Russia’s war on Ukraine and resulting high prices to justify increased dependence on the resource, now is the time for advocates of sanity and safety to use this moment to instead pivot as far away from petroleum as fast as possible.
Rees concludes, “It’s more critical than ever in these moments to recognize that this is a chance to free ourselves from that dependency, to free ourselves from that cycle of conflict and fossil-fueled harm and pain and death, and to build a better world, hopefully.”
By Sonali Kolhatkar is the founder, host and executive producer of “Rising Up With Sonali,” a television and radio show that airs on Free Speech TV and Pacifica stations.
Independent Media Institute.
Central Asia Struggles With the Consequences of Russia’s War
During the Antalya Diplomacy Forum in Antalya, Turkey, which took place from March 11 to March 13, 2022, the Kyrgyz Republic’s Foreign Minister Ruslan Kazakbaev told Helga Maria Schmid, the secretary-general of the Organization for Security and Cooperation in Europe (OSCE), that his country would be happy to host Russian-Ukrainian talks and serve as the “mediator for re-establishment of peace and mutual understanding” between the two countries.
On the sidelines of the forum, Kazakbaev also met with the Minister of Foreign Affairs of Azerbaijan Jeyhun Bayramov and the State Secretary of the Ministry of Foreign Affairs of Slovenia Stanislav Raščan and told them that the Kyrgyz Republic wanted the Russian-Ukraine conflict to end, reiterating that his country was willing to play a role to achieve this outcome.
Why is the Kyrgyz Republic so keen to get involved in Russia’s war in Ukraine? Because this landlocked Central Asian country of more than 6.5 million people is reliant on its economic ties with Russia through the Eurasian Economic Union, “an international organization for regional economic integration,” which includes Armenia, Belarus, Kazakhstan and the Kyrgyz Republic. Any Western sanctions on Russia will directly impact the Kyrgyz Republic, where 20 percent of the population lives below the national poverty line, according to 2019 figures. The conflict between Russia and Ukraine has already begun to have a negative economic impact on the five Central Asian republics of Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan, which were once a part of the former Soviet Union.
Oil, Remittances and Food
Sanctions on Russia have sent shock waves from Nur-Sultan, the capital city of Kazakhstan, to Ashgabat, the capital of Turkmenistan, as each of the countries in Central Asia struggles with the fallout of these sanctions and the impact they will have on their economies.
Kazakhstan, which “exports two-thirds of its oil supplies through Russian ports,” hastily raised its baseline interest rate from 10.25 percent to 13.5 percent and intervened in the currency markets to protect the tenge, its currency, which “sank alongside the Russian… [ruble] after Moscow launched attacks on Ukraine,” according to Reuters. Kazakh officials held talks with the U.S. embassy in Nur-Sultan thereafter to minimize the impact that the Western sanctions imposed on Russia could have on Kazakhstan’s economy.
Meanwhile, no major Russian city can function without seasonal migrants, particularly in the construction trade; roughly 5.2 million migrant workers entered Russia between January and September 2021 from the Central Asian countries of the Kyrgyz Republic, Tajikistan and Uzbekistan, according to data provided by the Russian Ministry of Internal Affairs. Many of these migrants send money they earn as remittances back to their home countries. This accounts for a significant percentage of the gross domestic product (GDP) of the Central Asian states like the Kyrgyz Republic, where these remittances accounted for 31 percent of the GDP in 2020, and Tajikistan, where these remittances made up 27 percent of the country’s GDP during the same year. As the ruble continues to fall against the dollar, as Russia places capital controls on the currency transfers, and as economic tightening sets in within Russia, migration and remittances will slowly dry up in Central Asia. Kazakhstan’s tenge and Uzbekistan’s som are already struggling to hold their value. The continued Western sanctions against Russia are going to have a serious long-term impact for the Central Asian republics.
On top of the crises of oil and remittances being faced by the countries in Central Asia, Russia also recently announced that it will no longer be able to supply Kazakhstan and the Kyrgyz Republic with grain and sugar. These republics rely on grain and sugar imports in normal times, but with the drought in the central belt in 2021, these imports have become fundamental for the survival of the people in these republics. For now, the governments of the region say that they have enough stocks of grain and sugar, but the “temporary ban” of these items by Russia will become a problem if the situation runs into the summer.
It is important to point out here that Russian speakers comprise significant sections of the population of each of the republics of the former USSR and also form a large part of the population in many of the Eastern European countries. As nationalist attitudes thrive in Russia—something that Vladimir Lenin warned against in 1914—worries percolate about witnessing similar destabilization among those countries that share a border with Russia, especially where Russian speakers are in some cases a majority (in Belarus, where 70 percent of the population speaks Russian) and in others are a substantial minority (in Kazakhstan, where 20 percent of the population speaks Russian). It did not help that Vyacheslav Nikonov, from Russian President Vladimir Putin’s United Russia party, said on “The Great Game” program on Russian television in December 2020 that “Kazakhstan simply did not exist”; this statement irked the government in Nur-Sultan, which demanded a retraction.
For now, relations between Russia and many of these states have been largely fraternal, with Russia providing security, when necessary, mostly through the Collective Security Treaty Organization (CSTO)—a military alliance comprising Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia and Tajikistan—that was formed as a result of a treaty signed in 1992 by these post-Soviet states. It was through the CSTO that Russian forces intervened in Kazakhstan in January 2022 and helped the government put an end to a protest movement against them, and the CSTO forces agreed to “reinforce” the shared borders of Afghanistan with the Central Asian states that are members of the organization, after the U.S. withdrew from Afghanistan in August 2021. Belarus could also support and join Russia in the Ukraine war as a consequence of its membership in the CSTO; no other CSTO member state has joined this war so far.
The Chinese Connection
Across Central Asia, the governments are scrambling to take hold of the instability resulting from the Russian war in Ukraine. Kyrgyzstan, for instance, hastily set up an Anti-Crisis Committee. On February 25, Russian President Vladimir Putin called Uzbek President Shavkat Mirziyoyev to discuss the war and the crisis produced by the Western sanctions; that same day, Russian Prime Minister Mikhail Mishustin visited Kazakh President Kassym-Jomart Tokayev to talk about the decrease in trade between the two countries and what this will likely mean. Russia is concerned about the impact of the Ukraine war on the countries of Central Asia, largely because Russia has no solutions to the problems that they will face.
China, on the other hand, is well-positioned to play a key role in Central Asia in the years to come. China has already built up a number of institutional arrangements that will become important for strengthening this relationship in the region, two important ones being the Shanghai Cooperation Organization and the Belt and Road Initiative (BRI). On January 25, the “China Plus Central Asia” meeting took place virtually between China’s President Xi Jinping and the heads of state from Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan; this was to commemorate the growing ties between China and these countries over the past 30 years since the USSR collapsed. In this period, China-Central Asia trade grew by 100 percent, with the largest volumes being in China’s purchase of energy from the post-Soviet republics. But this virtual conversation, which took place before the Russian intervention in Ukraine, extended beyond trade along China’s Health Silk Road (set up in 2016) and the creation of a regional trade hub in Urumqi, the capital of the Xinjiang Uyghur Autonomous Region. During the height of the pandemic, Chinese investment in Central Asia slowed down; now there is an expectation in the region that not only will it return to its pre-pandemic levels but that it will also make up for any losses north of the borders.
Central Asia has other options, notably to increase trade with India, Iran and Turkey. In January 2022, India held the first biennial virtual summit with the five Central Asian republics, and there are expectations for these ties to deepen over time. However, India—unlike China—does not share a land border with any of these states, and its trade turnover ($2 billion) is much less than China’s trade volume with Central Asia ($9.2 trillion between 2013 and 2020). The trade relations of Iran and Turkey with Central Asia are significant, but also minimal, and what trade relations are important to these countries have already been integrated into China’s BRI project.
The economies of the Central Asian republics are fundamentally integrated into that of Russia. China can provide some investment support, but it cannot so easily supplant the 100-year-old Russian institutions that have played an important economic role in Central Asia. The Central Asian republics will struggle as the sanctions tighten on Russia, but they will get some relief from the BRI and their regional partners (including Iran and Turkey).
No wonder that Kyrgyz Foreign Minister Kazakbaev eagerly called for mediation in Ukraine. His country wants this conflict to end and for the harsh sanctions to be withdrawn. Otherwise, economic distress will increase in a region that continues to be plagued with instability as a result of the 20-year U.S. occupation of Afghanistan, and the economic hardship might lead to political unrest that could set the entire Central Asian rim on fire.
By Vijay Prashad is an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He is a senior non-resident fellow at Chongyang Institute for Financial Studies, Renmin University of China. He has written more than 20 books, including The Darker Nations and The Poorer Nations. His latest book is Washington Bullets, with an introduction by Evo Morales Ayma.
The Russia-Ukraine War is Threatening Turkey’s Economy
As Russia’s invasion of Ukraine grinds on, its impacts are already being felt far beyond Ukraine’s borders. In Turkey, the war has cast a shadow over President Recep Tayyip Erdogan’s economic ambitions, which include reining in soaring interest rates, boosting exports, spurring growth, and creating jobs.
Turkey’s ties with Russia and Ukraine have long benefited the Turkish economy, but now, they have become liabilities.
Once viewed as having the potential to be a major food producer, Turkey today imports most of what it eats. As inflation rates climb, this dependence on buying from abroad is bankrupting consumers. The Turkish Statistical Institute (TUIK) recorded a 16.4 percent increase in the consumer price index during the first two months of 2022, while Turkey’s Inflation Research Group (ENAGrup), which tracks price trends, estimates that consumer goods and services spiked nearly 124 percent between February 2021 and February 2022.
The rising cost of wheat is particularly problematic. In 2019, Turkey became the third-largest wheat importer in the world, and today, it imports almost 20 tons annually. According to the Turkish Grain Board, the price of wheat per ton has surged to USD $517, up from $262 last March, the most it’s been in 14 years. As a result, the price of bread is 120 percent higher than three years ago. And because Turkey imports 65 percent of its wheat from Russia and 13 percent from Ukraine, these prices are only going to worsen.
The war in Ukraine has also led Turks to panic buy sunflower oil, which Turkey imports in abundance (it is the world’s largest importer of this commodity). Again, Russia and Ukraine are the key sources, accounting for 70 percent of Turkey’s imports. In the last week alone, the price has jumped to $2,000/ton from $1,400/ton, and fears are rising that the country will soon run out of the essential cooking oil. Ankara is trying to solve the problem by subsidizing the planting of sunflowers this growing season, but it remains unclear how much of Turkey’s needs can be met domestically.
Finally, fuel prices are skyrocketing, as they are in many countries. Six months ago, the average price for a liter of gasoline was 7.76 lira (about $0.53). Today it is nearly triple that. Some 4,000 service stations are on the verge of shutting down as customers stay away from the pump. If things continue like this for much longer, more than 50,000 people connected with the oil and gas industry could be out of work.
As Turks line up for bread across the country, inflation fears are dominating Turkish society. “Everything is getting expensive, from your food to your bread, from your shirt down to the socks you wear,” one participant in Istanbul’s subsidized bread program recently told Al Jazeera. The sentiment is nearly universal. A February 2022 report from the Gezici Research Institute found that 71 percent of Turks say that the country’s teetering economy is their biggest concern and that an economic crisis is looming.
Unfortunately, the government’s mitigation strategy is obfuscation. Despite the lira losing 44 percent of its value against the dollar in 2021, the government insists Turkey’s economy grew 11 percent last year. But as economist Fatih Ozatay has suggested, official numbers are almost certainly tampered with; the actual percentage is likely closer to four percent. Yet even if Turkey’s economy did grow anywhere close to double digits last year, 2022 will be another story. As Simone Kaslowski, President of the Turkish Industry and Business Association, notes: “The war between Russia and Ukraine has increased the [economic] risks for Turkey.”
One reason is Turkey’s exposure to the Russian and Ukrainian markets. Currently, there are more than 700 Turkish companies in Ukraine with more than $4.5 billion worth of investment. One of them is Anadolu Efes, Europe’s fifth-larger brewer, which has 11 facilities in Russia and three in Ukraine. All of them have temporarily shut down.
The ready-to-wear clothing manufacturers based in Istanbul’s Laleli district have also been hurt. Orders by companies in Russia and Ukraine make up 40 percent of the district’s $3 billion in annual trade volume. Sales have come to a standstill since the war started.
Unlike its Western counterparts, Turkey has fewer options to bring Russia to the table. While Europe shuts its doors to Russian airlines in retaliation for the Kremlin’s actions, Turkey remains reliant on Russian holiday makers. Russians do not need a visa to enter Turkey and can stay in the country for 90 days every six months. There are already roughly 30,000 Russians living in Antalya, and the Russian-Turkish Business Association estimates there have been as many as 100,000 marriages between Russians and Turks in recent years.
These family ties translate into new cash flowing into the housing market, especially in Istanbul. According to TUIK, in December 2021, Russians were among the top foreign buyers of homes in Turkey. Already a popular Russian tourist destination, Turkey could become an important safe-haven for those escaping Russian authoritarianism.
As the smoke of Russia’s war machine continues to engulf Ukraine, Europe is on edge for what comes next. But in Turkey, the war has already arrived. The sooner that Ankara concedes to this reality, the more ammunition Turks will have to weather the economic storm.
By Alexandra de Cramer is a journalist based in Istanbul. She reported on the Arab Spring from Beirut as a Middle East correspondent for Milliyet newspaper. Her work ranges from current affairs to culture, and has been featured in Monocle, Courier Magazine, Maison Francaise and Istanbul Art News.
Two Decades On, the African Union Needs to Rediscover its Founding Spirit
Last month, for the first time since 2017, a summit took place in Brussels between leaders from the European Union and the African Union. The EU is increasingly worried about its influence on the continent amid China’s efforts to entrench its position of dominance. But although the Brussels summit focused on European-African relations, the real question on the minds of many diplomats was the African Union’s effectiveness. An AU meeting with US officials last week was overshadowed by the Ukraine conflict. With the AU about to celebrate its two-decade anniversary in June, many wonder if the continental body has lost its ability to handle crises and chart an equitable path forward for the continent.
The AU came into being in 2002, when it replaced the Organization of African Unity. Based in Ethiopia, it was given a far-reaching mandate to end wars on the continent, increase intra-African trade, and establish Africa’s diplomatic voice in global affairs. These ideas took shape at a time of great optimism in Africa as the tide of democracy was rising and economic patterns were starting to help advance emerging market countries. But the hope was short-lived.
From the start, outsiders questioned the location of the AU’s headquarters, given Ethiopia’s questionable record on press freedom. Concerns were put to the side as the AU sent troops to intervene in the genocide taking place in Darfur. Unlike its predecessor, the AU has a mandate to use force to intervene in conflict, and it used that right in the early days. In addition to Darfur, the AU also sent troops to Somalia to counter the threat of militant groups. Nonetheless, those early successes have given way to a crisis of incompetence.
In Mozambique, ISIS-linked fighters have taken over large parts of the country’s oil-rich north; the instability continues as the AU has failed to craft a viable strategy to contain the militants. The same is true in the Sahel region, where French troops have been fighting an increasingly brutal insurgency against militants with little material support from the AU. In the early days of the union, coups in Africa were deterred by the AU’s threat of a unified response. That sense of intimidation is almost entirely gone.
The recent military coup in Burkina Faso is damning evidence that the AU is either unwilling or unable to help member states work through problems to prevent coups. Some analysts have gone so far as to claim that the AU has evolved to give illegitimate political leaders a veneer of legitimacy through their positions in the bloc.
Guinea’s former president, Alpha Condé, was elected as chair of the AU in 2017 – despite being embroiled in accusations of human rights violations and public demands for economic and security reforms. The late Ibrahim Keita, Mali’s former leader, found himself in a similar position in 2019, when he was appointed to lead the AU’s arts, culture, and heritage initiative. The most blatant example of the AU providing cover for political failings is taking place in its host country, where the AU has been unable to end Ethiopia’s bloody civil war.
The crisis isn’t contained to intra-African issues. Last July, the AU’s legitimacy woes bled into international politics, when Moussa Faki Mahamat, the former prime minister of Chad and chair of the AU Commission at the time, accepted Israel’s accreditation as an observer to the body. The decision sparked protests and claims of undue influence by Israel, which has been trying to gain access to the AU since its founding. The AU has agreed to suspend the debate on Israel’s status until the next summit in 2023. Still, the mere fact that Israel’s inclusion has created such a visible row demonstrates the depth of disunity at the heart of the organization.
The AU has had some successes. The African Continental Free Trade Area (AfCFTA), which began operating in 2021, has helped transform trade flows. At the same time, the AU has worked closely with Beijing to increase trade between the continent and China. However, the results of those agreements might end up benefiting China more than the AU’s member states.
Two decades on, it’s easy to wonder what the AU has accomplished and whether a United Nations-style governing body can succeed in Africa. The AU’s track record doesn’t inspire much optimism, but that doesn’t mean such a body shouldn’t exist. Every similar multi-national organization from the UN to the EU has faced its own scandals of incompetence and corruption. The AU isn’t unique in the fact that it has been plagued by misconduct.
The AU’s biggest challenge is that it is only as strong as its member states. Given the level of current and historic interference from China, the United States, and even Israel, the AU is facing a daunting uphill battle. As the AU enters its third decade, the challenges confronting the bloc are clear and easily identifiable. Going forward, the focus should be on reinstituting the body’s founding spirit and ensuring that successes like AfCFTA become fully operational. If Africa can assume control over its economic potential, the myriad diplomatic challenges will be easier to solve.
By Joseph Dana is a writer based in South Africa and the Middle East. He has reported from Jerusalem, Ramallah, Cairo, Istanbul, and Abu Dhabi. He was formerly editor-in-chief of emerge85, a media project based in the UAE exploring change in emerging markets.
Yuan Deposits Replace Dollar and Euro in Russian Banks
The state lender is offering maximum interest rates for Chinese currency deposits to attract customers
With Russia now officially cut off from both the US dollar and the euro, the state-owned VTB Bank has offered its clientele the opportunity to open Chinese yuan savings accounts that yield a maximum interest rate of 8%. The country’s second-biggest bank has been hit by the Western sanctions aimed at the total financial isolation of Russia over its war in Ukraine.
“In light of the rising dollar and euro exchange rates, many clients are showing interest in investing in other currencies, and the yuan is one of the most affordable and promising options for investing funds,” the bank said in a statement.
Existing customers are reportedly able to open deposits remotely on VTB Online with a minimum amount of 100 yuan ($16). At VTB branches, they can deposit a minimum of 500 yuan.
According to the bank, the latest offer will be the most profitable alternative to deposits in other foreign currencies. The annual yield on a three-month deposit is 8% in dollars and 7% in euros.
Meanwhile, a six-month ruble deposit currently offers an annual percentage yield of 21%. VTB said that, over the past week, customers had invested over a trillion rubles ($15 billion) in traditional savings products.
Russian financial institutions have been placed under increasing pressure after Ukraine-related sanctions were introduced. The banks have had to turn to China to start using its UnionPay system for credit cards, after Visa and Mastercard announced the suspension of operations in the country.
“Some Russian banks can’t get access to other currencies, so yuan is probably the best other alternative,” Khoon Goh, head of Asia research at the Australia & New Zealand Banking Group, told Bloomberg.
“Still, the easiest way for Russia to raise yuan would be to receive yuan via trades. Russian banks’ clients who are exporters could sell to China and receive renminbi as payment.”
Russia’s SWIFT Ban Will Boost non-Dollar Trade, Says Turkish Exporters Union
Severing the country from the global payment system is likely to expand trade in national currencies
Disconnecting Russian banks from the SWIFT payment system will boost trade between Russia and Turkey in the two countries’ national currencies, according to the Turkish Exporters’ Assembly.
“Despite sanctions and restrictions [against Russia], Turkish lira exports increased by almost 100% in February this year,” the National Union of Turkish Exporters said on Friday, as cited by the TASS news agency.
The organization said the SWIFT ban would have no impact on the supply of Turkish agricultural products to Russia, although payment delays were possible.
Russia and Turkey signed an agreement on settlements and payments in national currencies in October 2019. Turkey is expected to expand its infrastructure to accept electronic transfers via Mir, the Russian alternative to SWIFT, and to connect its banks and businesses to the analog financial messaging system of the Central Bank of Russia, to provide an alternative to Visa and MasterCard, which are currently restricted from use in Russia.
In February, Russia was challenged with a wave of consolidated sanctions from the US and its Western allies. Among other penalties imposed on the country over its military operation in Ukraine, its financial system, energy exports, and forex reserves have been targeted. Seven Russian banks have been severed from SWIFT, effectively denying them access to international markets.
Turkey Warns of ‘Disastrous Consequences’ From Russia Sanctions
Sanctions on Russia can de-rail the global energy market, Ankara says
Washington’s decision to cut off oil exports from Russia will have disastrous consequences for the global energy market, Turkey’s Deputy Minister of Energy and Natural Resources Alparslan Bayraktar said on Tuesday during CERAWeek, an international energy conference in Houston, Texas.
“It will be very difficult to replace the Russian oil on the world market. Russia is the largest oil producer in the world,” stated the Turkish official. According to Bayraktar, with the global economy is recovering from the recession caused by the Covid-19 pandemic, an increase oil production is needed, the opposite of what the US is trying to do, at present.
Earlier on Tuesday, in a bid to “target the main artery of Russia’s economy,” US President Joe Biden signed an order banning oil and gas imports from the world’s largest nation in retaliation for Moscow’s military attack on Ukraine.
“We’re banning all imports of Russian oil and gas and energy. That means Russian oil will no longer be acceptable at US ports, and the American people will deal another powerful blow to Putin’s war machine,” Biden explained.
Staggering inflation and supply-chain disruptions have already made gas prices in the US skyrocket, approaching a record-high $5 per gallon. The newly introduced ban on Russian petroleum products, which amount to 8% of all US oil imports, will likely make the prices climb even higher.
Later the same day, when reporters asked Biden what Americans should do about the rising costs, he responded “what can you do about it? Can’t do much right now. Russia is responsible.”
Meanwhile, the European Union has no plans to cut off Russia’s oil exports. While the US does not import Russia’s natural gas, it amounts to one-third of the EU’s energy consumption.
“We’re moving forward with this ban understanding that many of our European allies and partners may not be in a position to join us,” said the American leader.
The new round of sanctions against Russia were triggered by the Kremlin’s decision attack Ukraine on February 24. The measures target Russia’s financial and energy sectors. On top of these Western governmental actions, many international companies have announced their decision to leave the Russian market.
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