Sanctions – wrecking ball in a global economy

U.S. government strategists are using sanctions as a wrecking ball to demolish the globalized economy. It is a desperate struggle to preserve their global hegemony and a unipolar world. The policy of consciously demolishing supply chains of essential products amounts to a reckless war on defenseless civilian populations. Sanctions disrupt trade worldwide and send shockwaves far beyond the countries directly targeted. This is well understood by financial planners.

“Food shortages — it’s going to be real,” President Joe Biden said in Brussels March 25 at a NATO press conference, an ominous warning reported around the world. “The price of the sanctions is not just imposed upon Russia. It’s imposed upon an awful lot of countries as well, including European countries and our country as well.” 

For the first time this intentional disruption is rebounding against the countries imposing the sanctions. Wider sanctions are creating unprecedented inflation — the highest in 40 years — supply chain chaos and sharply higher costs of energy for industries, transport and homes. 

Washington is demanding that countries act against their own economic interests and enforce sanctions passed as U.S. legislation, in which they had no voice or prior notice. 

In response to the extensive sanctions on Russia, many countries have opened new forms of currency exchanges to carry out trade. This has in turn led to an erosion of dollar supremacy, a bedrock of U.S. economic hegemony. 

The U.S. and EU sanctions are creating famines throughout Africa. Sanctions under the Countering America’s Adversaries through Sanctions Act (CAATSA) are threatened against India and are already imposed on Turkey, a NATO member, for their continuing trade with Russia. 

After Pakistan continued its trade, Washington orchestrated a coup against the government of Imran Khan. The election of right-wing politicians to the presidency in South Korea and the Philippines, who support U.S. plans for military encirclement of China, confirms a new phase in a struggle dividing the world.

Yet this mounting pressure to enforce compliance has failed to reassert U.S. economic domination. Instead, countries inhabited by three-fourths of the global population are increasingly refusing to accept the latest sanctions. This refusal is a serious setback to U.S. hegemony. 

Economic interests drive war 

Economic interests drive nation states to war. For four decades, corporate interests in the G7 — the top economies of North America, Western Europe and Japan — have applauded and pushed globalization, because they were in control of the process. Their dominant position in the IMF and World Bank and their powerful position in the World Trade Organization assured this control.

During those same decades, and especially after the collapse of the Soviet Union, industrial production of commodities, including garments and electronics, moved from the G7 to Mexico, Central America, China, India, Bangladesh and Eastern Europe. Production of a single garment or piece of electronic equipment was carried out in different countries, organized on a global scale. (See “Low Wage Capitalism,” by Fred Goldstein)

The threat of U.S. sanctions helped push back countries attempting to assert their sovereignty or even attempting a more favorable trade deal.

But now the Chinese economy is surpassing the U.S. in total production. Well over a trillion dollars spent in Chinese Belt and Road development programs has made China a more attractive trading partner, not only in Asia but throughout Africa and Latin America. European Union trade with China has overtaken its trade with the U.S.

The growing integration of the Eurasian bloc of countries, stretching from China and South Asia through Central Asia and Russia to much of Europe, promises a huge economic advantage to the countries involved. 

U.S. provokes conflict to retain hegemony

The growing integration of EU trade and investment with Russia and China challenges both the domination of U.S. corporate power in Europe and U.S. global hegemony. 

It is in the interest of corporate power that Washington provokes a conflict where others pay the greatest cost. Ukraine is a country where its capitalist rivals in the EU will carry the heaviest burden.

The immediate threat to U.S. hegemony is that the EU trade with Russia is $260 billion a year — 10 times its trade with the U.S. The EU is the largest investor in Russia. Breaking this growing economic integration of the EU with Russia and at an even greater level with China serves the long-term strategic interests of U.S. corporate domination, in place since World War II. 

A desperate attempt to break U.S. imperialism’s slipping economic position has driven NATO’s massive involvement in Ukraine.

When the economic repercussions of the present war in Ukraine are reported, the greatest amount of coverage is allocated to European countries and the sanctions’ impact on their industries, due to their reliance on Russian gas, oil, coal and fertilizers.

The business/industrial class, the oligarchs in Germany and throughout the EU, were hit hard by the U.S. demand to impose sanctions on Russian gas and oil. Their trade deals, corporate investments and energy supplies with Russia are unraveling. 

U.S. Executive Order 14024, passed Feb. 21 before Russia’s intervention in Ukraine, prohibited new investment, trade in goods and services and financing. This was just the beginning of a constant drumbeat of the most expansive, unprecedented economic measures. The U.S. demanded that every country in Europe pass their own legally binding economic sanctions of similar prohibitions. 

The inflationary impact and supply chain chaos affecting German industries has been reported widely. British news services report that millions of British families will have to choose between eating and heating. Each European country is dealing with the highest inflation in decades, including in formerly stable Nordic economies. 

Why is Russia targeted?

The power of the Russian economy is much smaller than the power of the U.S., the world’s largest economy, and the combined economic power of the EU, Japan, South Korea and Australia. The Russian economy today is smaller than Canada’s or South Korea’s. 

Russia’s defense budget is one-twelfth of U.S. military spending, and this ratio shrinks further when weighed against the budget of the entire NATO military alliance.

While Russia is neither a military nor an economic threat, it has enormous natural resources that are presently out of U.S. control. That makes Russia a target.

President Joe Biden confidently promised that U.S. and EU sanctions would have a “catastrophic impact” on Russia’s economy. U.S. analysts intended and predicted Russian bank and stock market collapses, hyperinflation, soaring prices, supply chain disruptions, empty shelves and massive unemployment.

This was calculated to weaken President Putin and disintegrate the Russian state.

Graphic descriptions of the impact on the poorest Russians and middle class abounded in all the Western media.

U.S., Canadian and European media, along with Japan’s, South Korea’s and Australia’s, were unanimous in predicting complete collapse. Politicians, economists and bankers said that there was nothing the Russian government could do. Russia would be hostage to the seizure of all their assets held in Western banks and from the imposed cutoffs of all future trade credits.

Proud declarations were made that the major economies of the West would operate in lockstep.

Moscow’s response was that the measures will all lead to an increase in Russian independence, self-sufficiency and sovereignty. Russia is self-sufficient in grains, meats, other proteins and in energy. Its trade with China, India, Brazil and Iran ensures their industry will not collapse for lack of spare parts.

The enthusiasm with which U.S. politicians and the corporate media describe their ability to cause such massive pain to millions recalls the 1990s, when U.S. Secretary of State Madeline Albright assured the world that the death of a half million Iraqi children from sanctions was “worth it” to achieve U.S. strategic aims.

With shortsighted arrogance, the U.S. cut Russia from the SWIFT banking system of payments and trade. Visa and Mastercard shut down overnight. 

This did not, however, create the predicted chaos. The Central Bank of Russia and other banking and credit institutions were able to switch to the Chinese CIPS network that includes 3,000 banking institutions in 167 countries. CIPS is also able to seamlessly process credit card transactions. 

While Russia was able to transition its economy, the U.S. has no immediate solution to provide essential supplies of gas and oil to Europe or grains and fertilizers to numerous countries. They have no long-term low-price solution. Despite all the predictions of collapse, even The Economist, May 7, announced that “Russia’s economy is back on its feet.” 

Sanctions fail

Forgotten in all the congratulatory declarations was that throughout the developing economies of the world, there was no agreement on these U.S.-imposed measures.

The resistance of China, the world’s largest economy, to U.S. demands to comply with sanctions on Russia has given other nations the confidence that they can survive U.S. demands and still have access to development funds, essential technology and trade. 

There is the refusal of not only China, but also India, South Africa, Brazil — the BRICS countries — along with almost all the countries of Africa and Latin America and most Asian countries to stop trade with Russia against their own interests.

Mexico’s President Andres Manuel Lopez Obrador declared: “We are not going to take any sort of economic reprisal, because we want to have good relations with all the governments in the world.” 

Brazil’s Luiz Inácio Lula da Silva, now the leading candidate for Brazil’s October 2022 presidential elections, has proposed creating a pan-Latin American currency, in order to “be freed of the dollar. . . . We are going to create a currency in Latin America, because we can’t keep depending on the dollar.” (, May 6) 

Similar statements were made by the other countries of Central and Latin America and the Caribbean. Several African countries, including Nigeria, a major economy, made note that sanctions were not passed by the United Nations Security Council and were therefore not binding.

The open defiance by so many countries and major trading blocs is a stunning confirmation of the weakening hold of U.S. economic power.

Commentators in many countries of the Global South made note of the hypocrisy of silence and lack of any condemnation at the lawless conduct of the U.S. in unleashing wars in Afghanistan, Iraq, Libya and Syria and providing the blockade and tactical support for Saudi Arabia in Yemen. This was compared to condemnations and harsh punishment of Russia for responding to military attacks on its borders.

Within Europe, Serbia, Belarus and even Hungary — an EU and NATO member — refused to join sanctions, representing internal cracks in the sanctions’ regime. (Boston Globe, March 16)

With SWIFT bank transactions cut by U.S. sanctions, Europe was unable to pay for Russian gas and oil. This created a crisis throughout the EU. Russia’s response was to continue contracts in gas and oil at the same rates but to now demand payments in rubles, the Russian currency. 

The U.S. and the EU reacted with outrage. But 10 European countries have quietly complied. It is the only way to keep their industries supplied with energy. 

Accepting payments in Russian rubles and allowing countries not enforcing sanctions to pay in Chinese yuan, Indian and Pakistani rupee and other currencies meant that both the dollar and the euro were no longer the currencies for major trade transactions. 

The result is that the Russian ruble has rebounded as of mid-May, while the U.S. dollar and especially the euro have been sinking.

The capital controls imposed by Russia, maintained until May 16, have turned the ruble into the world’s best performing currency this year, up more than 11% against the U.S. dollar since the start of the year. “A total of 20 European companies have opened accounts” to pay in rubles. (, May 11 and 12)

Italian Prime Minister Mario Draghi said that Germany has already started paying for Russian gas in rubles. He asserted that other countries will also be able to pay for gas in rubles without breaching sanctions, dismissing the European Union’s decision. 

U.S. provoked proxy war 

U.S. policy is to seek to grind down Russia’s resources in a long and costly military onslaught. The U.S. had instigated the crisis by encircling Russia with NATO bases, organizing constant military operations and supplying heavy weapons to Ukraine to fire near Russia’s borders.

Washington orchestrated a “color revolution” in Ukraine in 2004 and a far more extreme coup in 2014, using pro-fascist forces. This U.S. intervention has systematically destroyed the sovereignty of Ukraine and turned its people into a proxy force to fight Russia. Thousands of U.S./NATO military trainers, mercenaries and equipment had already destroyed Ukraine’s neutrality. 

By placing nuclear weapons on U.S. and NATO bases in Europe and setting up nuclear-capable weaponry near Russia’s borders, NATO openly provoked Russia to strike in self-defense.

Biden threatens World War

Russia finally responded Feb. 24, as Moscow had warned for many months would happen if Ukraine’s attacks continued. 

U.S. corporate power benefits from energy sanctions on Russia, but this comes at an aggravated price for European consumers. The sanctions will do more harm to the EU than to Russia. How did Washington force the EU to go along with sanctions against their own immediate economic interests? 

Biden issued a public ultimatum Feb. 26 declaring that the only alternative to the EU joining U.S. sanctions against Russia “would be the Third World War.” 

“You have two options. Start a Third World War; go to war with Russia, physically. Or, two, make sure that the country that acts so contrary to international law ends up paying a price for having done it. . . . I know these sanctions are the broadest sanctions in history and economic sanctions and political sanctions.” In this interview with blogger Brian Tyler Cohen, Biden further stated that his “goal from the very beginning” was to keep NATO and the European Union “on the same page.” ( Fox News, Feb. 26)

The European Union quickly got the message. In essence, the U.S., through its command of NATO, is holding all of Europe hostage in order to reestablish its economic dominance and expand its military might on the continent.

Within a week of Russia’s intervention in Ukraine, all G7 countries had moved to freeze Russia’s foreign currency reserve assets. Switzerland joined Feb. 28. The seizure of $500 billion dollars in Russia’s funds held in U.S. and other Western banks added to the awareness that no country’s assets were safe from seizure. 

The billions seized of Iranian funds, despite every signed agreement to release the funds, and the billions seized from Venezuela had already undermined confidence in the security of Western capitalist banks. 

Who pays the price inside the U.S.?

The costs of the U.S. military offensive will wipe out many of Biden’s election promises. Build Back Better infrastructure programs, COVID-19 relief and preparation for other health emergencies, student debt relief and every other promised social program have been pushed off Washington’s agenda.

The sanctions have to be reinforced with an endless war — a sure profit maker for the U.S. military-industrial complex. By April 11 Bloomberg News reported $8 billion in additional money to military contractors for war against Russia, along with $2.8 billion from EU countries and $1.4 billion from EU institutions.

By April 28 President Biden enlarged the military handouts for the weapons makers to another $33 billion and sent the package to Congress, which within days increased this to a $40 billion package on top of funds already provided. 

The Biden administration’s response, with overwhelming support of Republicans and Democrats in Congress and major banking and industrial corporations, along with the largest military machine in human history, has been to double down on rushing more and more advanced weapons, NATO troops labeled as “trainers” and escalating military maneuvers and “war games” on Russia’s borders.

Targeting China 

U.S. policy is to expand NATO to China’s periphery. By trying to create an Asian version of NATO, the U.S. intent is to seriously undermine economic cooperation and prosperity in Asia and bring about new divisions to the regional geopolitical and geoeconomic landscape. China’s views are well-known and are the increasing target of U.S. sanctions since the Pivot to Asia in the Obama Administration.

“Developing countries should jointly fight the consequences of Western sanctions against Russia,” the Chinese state publication Global Times stated May 6. ( “It became clear that Western sanctions against Russia will remain a long-term negative factor for the global economy. This will also lead to the further dominance of the West in the global financial, economic and trading systems. 

Therefore, developing countries, including China, India, Indonesia, Brazil and others that have refused to take sides over Western sanctions against Russia, need to consider ways to strengthen their economic coordination to weather the consequent shocks brought about by the West.

“It is important to note that developing countries need to seek a solution through financial and trade cooperation. It’s time for the BRICS to take the first step by creating their own financial coordination mechanism.” 

Beijing is making preparations to withstand further U.S. sanctions arising from China’s refusal to adhere to U.S.-imposed sanctions on Russia. Even banks in Hong Kong, a global financial hub, and the Hong Kong Monetary Authority are making emergency plans should they be cut off from SWIFT transactions.

The Financial Times reports April 30 that China is meeting with banks to discuss protecting China’s overseas assets from U.S. sanctions. An internal conference held April 22 included officials from China’s central bank and finance ministry and executives from local and international banks.

Top regulators, including Yi Huiman, chairman of the China Securities Regulatory Commission, and Xiao Gang, who chaired the CSRC from 2013 to 2016, asked bankers in attendance what they could do to protect the country’s external assets, especially its $3.2 trillion foreign reserves. 

China’s massive dollar holdings range from more than a trillion dollars in U.S. treasuries to New York office buildings. That decoupling of Chinese and Western economies would have a much more severe impact than [decoupling with] “Russia, because China’s economic footprint touches every part of the world.” 

The ability of Washington and its allies to freeze the Russian central bank’s dollar holdings had alerted Beijing to the danger.

On April 27 the U.S. House of Representatives passed “The Assessing Xi’s Interference and Subversion Act,” or the “AXIS Act,” requiring the U.S. State Department to submit ongoing reports to Congress on China’s support for Russia’s invasion of Ukraine, initially within 30 days of the enactment of the law and every 90 days thereafter.

Even the acronym for the act spells out U.S. hostile intentions, recalling the World War II Axis alliance and the “Axis of Evil,” of George W. Bush’s propaganda attempting to justify the U.S. invasion of Iraq and other aggression. 

New wars, new sanctions

A Washington think tank, Center of Strategic and International Studies, recently defined how to prepare for sweeping sanctions on China, based on sanctions on Russia. 

In 2021 China’s GDP was roughly 10 times larger than Russia’s. China is the world’s top trading economy and the number-one exporter of manufactured goods.

Every U.S. plan for sanctions on China starts with a manufactured crisis over Taiwan. In violation of 40 years of past agreements with China, Washington is rapidly increasing military aid to Taiwan. 

All U.S. strategists admit that sanctions and military confrontation with China will be massively disruptive on a world scale. But that prediction does nothing to slow their preparations.

The international movement opposing NATO’s current war in Ukraine needs to know what else is on the imperialist drawing boards. 

There is an urgent need for a global campaign against economic sanctions — a crime against humanity.

Sara Flounders

Published by
Sara Flounders

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