Will industry-wide sanctions be able to cripple Russian economy?

Highlights

  • Lots of sanctions have been imposed on Russia by several countries like the US, European Union, Australia, and the UK.
  • Economic sanctions have become the most preferred tool to overcome geopolitical tensions and hurt the country’s economy.
  • Many industries and businesses across the globe have stopped their services and operations in the country.

Russia’s military operations in eastern Ukraine have attracted sharp criticism, and many international leaders have widely condemned the attack. Within days of Russia’s invasion of Ukraine, many sanctions were imposed on the country by several countries like the US, European Union, Australia, and the UK.

Economic sanctions have become a preferred tool to overcome geopolitical tensions and hurt a country’s economy that breaches international law. The current sanctions imposed on Russia are meant to discourage its military operations and look for a diplomatic way to handle tensions between the two countries.

After the announcement of economic sanctions on Russia, many industries and businesses followed suit and stopped their services and operations in the country.

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Let us look at some of the key industries and businesses that announced walkout or discontinuation of operation in Russia:

Mastercard & Visa block services

Major US-based transaction service provider has blocked Russian financial institutions from accessing their payment networks to comply with the sanctions imposed by the US government. Denial of payment network would restrict the Russian banks from accessing the global financial system and impact the international trades and banking transactions.

Major oil companies selling stakes in Russian venture

Major energy oil & gas companies like BP Plc (LON: BP.) and Shell Plc (LON: SHEL) have announced plans to exit the joint venture linked to Russian energy firms.

BP Plc announced that it would immediately exit its shareholding in Russian state-controlled oil company Rosneft. At the same time, Shell Plc said it would leave the joint venture with Russian natural gas company Gazprom. The withdrawal of major investment from Russia might impact the oil & gas trades and severely impact its economy as it is majorly dependent on oil exports.

Boeing suspends support to Russian airlines

The US-based aircraft maker has announced that it will be halting its service operations like maintenance and technical support to Russian airlines. Also, the company has temporarily closed its offices in Ukraine for the safety of its employees.

Aircraft maintenance is a key part of the airline’s operation, and halting the same might impact the Russian airline industry.

Termination of major sporting events

Major sports authority like International Olympic Committee (IOC) has condemned the Russian attack and has asked major sports bodies to cancel all events in Russia. Football international governing body FIFA has banned the country from the Qatar World cup, which is slated to take place in September 2022.

In addition, the UEFA champions league final, which was scheduled in Russia on 28 May 2022, has been shifted to Paris. Moreover, the Russian Formula1 race has been cancelled. The series of event cancellations will impact Russia’s sporting industry and lower foreign earnings earned through such big-ticket events.

Apple has stopped selling its iPhones and other products in Russia, reacting to the invasion of Ukraine. Its Apple Pay and other services had also been limited, while its mobile app store has been blocking downloads of RT and Sputnik.

Shipping boycott

Sanctions to put pressure are not limited to the ground but in the sea as well. Major players from the shipping industry have suspended their operations to and from Russia. Danish shipping company Maersk, Singapore’s Ocean Network Express (ONE), Swiss-based MSC, and Germany’s Hapag Lloyd all have suspended cargo shipments to and from Russia.



 


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