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G-7 Sanctions Accelerate China-Russia Axis – Bill Campbell 3-8-22
Posted: Monday, March 7, 2022

Since the Feb. 24 invasion of Ukraine by Russia, the West has moved forward with a series of severe sanctions aimed to exact an economic toll on Russia in order to force Moscow to stop the invasion. These sanctions will inflict damage on the Russian economy, but unintended and counterproductive consequences are already rising. First, the sanctions are worsening the outlooks for risk markets, growth and inflation outside of Russia. Second, the world has seen how quickly the West was able to freeze Russia’s G-7 assets. Some countries might look to diversify away from G-7 holdings in favor of assets beyond the long arm of G-7 law. Finally, to counter the sanctions, Russia and China will accelerate their geopolitical, financial and economic linkages. It remains unlikely that the current sanctions will deter Russia from pursuing its objective to prevent Ukraine from moving more into the spheres of the European Union (EU) and NATO, as Russian President Vladimir Putin views either outcome as an existential threat. To summarize, while sanctions are questionable as a deterrent to Russian aggression, they will quicken the emergence of a bipolar world with the Western economies at one pole and China-Russia at the other.

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