Sanctions tit-for-tat: Catch minus 22 <http://rt.com/op-edge/authors/patrick-young/>
Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges. Get short URL <http://rt.com/op-edge/186296-us-obama-sanctions-economics/> Published time: September 09, 2014 14:32 [image: US President Barack Obama (L) listens to German Chancellor Angela Merkel (AFP Photo / Jim Watson)] US President Barack Obama (L) listens to German Chancellor Angela Merkel (AFP Photo / Jim Watson) 4466 Tags EU <http://rt.com/tags/eu/>, Economy <http://rt.com/tags/economy/>, Obama <http://rt.com/tags/obama/>, Politics <http://rt.com/tags/politics/>, Sanctions <http://rt.com/tags/sanctions/>, USA <http://rt.com/tags/usa/>, Ukraine <http://rt.com/tags/ukraine/> In between rounds of golf, President Obama is helping ease Europe into a lose-lose scenario of mutually-assured economic destruction via sanctions with Russia. The realpolitik of the Ukraine crisis is that there is little way that any sanctions can avoid harming the EU’s declining economic power. The economy is flat and sanctions to date are estimated to have shaved 0.2-0.3 percent off the becalmed eurozone economy. Many cling to the counterproductive rebuke that the aim is to bring Russia to its knees. However that is just a leveraged version of the classical Pyrrhic victory. Apparently Europe is now re-girding its loins for another round of sanctions. Even the custard pie of the Elysee Palace, French President Hollande, has turned coy about delivering the two warships being built for Russia in Saint Nazaire. True, ‘Monsieur Flanby’ may have just been demonstrating a degree of prerequisite bluster to keep in with the aggressive groupthink of the NATO club gathering in Wales last week, or perhaps he just wants more armaments at his disposal to protect against his former girlfriend. The European nation offering to bear the brunt of sanctions remains the UK, although it may yet be less capable of affording this gesture of largesse to its becalmed European neighbors if Scotland happens to disappear into independence later in the month. The Cameron doctrine suggests excluding Russian entities from refunding on Western money markets. The EU has now chimed in with a suggestion to restrict Russian oil companies’ access to Western debt markets, while Obama even interrupted his hectic golf schedule to proffer a similar threat of exclusion from the dollar zone. [image: A gaz flame is seen behind a barbed wire in the Rosneft oil company production plant in Prirazlomnoye, western Siberia (AFP Photo / Tatyana Makeyeva)] A gaz flame is seen behind a barbed wire in the Rosneft oil company production plant in Prirazlomnoye, western Siberia (AFP Photo / Tatyana Makeyeva) Incidentally, one of the less discussed areas of the cold war was how the Soviets operated in Western financial markets through the 100-percent-USSR-owned Moscow Narodny in London (and Singapore), as well as other banks in Paris, Frankfurt, Luxemburg and Vienna. Now Western leaders apparently intend to cut Russia out of Western markets just when there are a goodly few thousand Russian bankers living in Chelsea and other upmarket entrepots. While an acute challenge, it is not impossible to vastly reduce the influence of Western investment spigot from Russia. Nevertheless, the West currently retains such financial dominance that the threat to Russia could be considerable. Then again the ongoing dominance of London as a leading financial center is already threatened by rising centers in Asia - which leads to the issue that it might cost more in the short term, but ultimately Russia can pivot East to raise the funds its government and corporates require. London could be gradually sidelined as a global cash center. Indeed, the West could endeavor to close its payment systems to Russian banks, but then again the highly analogue SWIFT network which forms the basis of banking payments from the West is spectacularly outmoded anyway. A new payments system backed by Russia (perhaps based on the bitcoin blockchain), would be a welcome modernization to many other nations to boot, allowing many emerging nations to make a great leap forward to the next stage of digital payments, leapfrogging aged legacy Western systems. [image: AFP Photo / Stephane de Sakutin] AFP Photo / Stephane de Sakutin Meanwhile, Russia is pondering a closure of its airspace to Western airlines seeking the established primary route from Europe to the Orient - and thus costing airlines a small fortune in extra fuel. In such a feverish atmosphere of tit-for-tat, much perspective has already been lost. Moreover, the desire to be perceived as a strong leader drives economically-irrational responses. In the case of the West, not only is the European economy being pushed further into decline, but ongoing plans call for already hard pressed Western taxpayers to effectively subsidize the two decades of Ukrainian government failure to get a grip on the economy. Europe’s citizens appear doomed to groundhog days of paying for every politicians’ failure, several times over. By inducing negative growth as an economic weapon, the results are rarely an outright victory, unless the aggressor has a massive economic advantage. In a bygone era perhaps that was once true of Europe. However now the EU is a fragmenting morass of failed super-state ambitions saddled with a crippled single currency. For the vast army of unemployed Europeans, the application of more sanctions is an act of economic vandalism. A *‘catch minus 22’* situation is evolving where both the EU and Russia threaten to bind themselves together in a pure lose-lose scenario. The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT. 4466 - 12 comments <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> Login - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Michael Matchett <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> -2 <http://b.cackle.me/comment/12999504/vote/up> <http://b.cackle.me/comment/12999504/vote/down> Who the hell wrote this article and what is the deal with all of those fancy words? I am not even sure some of those words even exist. about 8 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12999504> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Adi Sladar <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +3 <http://b.cackle.me/comment/12996939/vote/up> <http://b.cackle.me/comment/12996939/vote/down> wth does US have with Russia??? for crying out loud! Leave Russia alone! the people of Crimea voted this way!! let them have it... I can foresee in the near future where the people of Mexico from within CA will vote for California to go back to mexico.... what then? we will be screwed because of the violent Mexican mafia! we have real problems here that are being ignored.... about 11 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12996939> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Adi Sladar <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +1 <http://b.cackle.me/comment/12996977/vote/up> <http://b.cackle.me/comment/12996977/vote/down> or is all this meant to be... a big game of theatre for the people to feed on. LOL about 11 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12996977> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Alwyn Beetge <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +3 <http://b.cackle.me/comment/12994925/vote/up> <http://b.cackle.me/comment/12994925/vote/down> Russia have brilliant strategists and are playing a game of chess and will win . Europe has shot themselves in the foot and don't have options to recover from the suicidal embargoes. Their own traders are losing billions in revenue for the sake to appease the USA .Europe have no strong statesmen to stand up and tell the USA to take a hike . Russia has already started to contact China and Asia for resuming business and trade to the detriment of Europe.. about 13 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12994925> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Tony Chestnut <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +2 <http://b.cackle.me/comment/12993432/vote/up> <http://b.cackle.me/comment/12993432/vote/down> Forcing one of the ex G8 nations whom happen to be an energy giant to turn their back on the west entirely and adopt China's economic systems is smart ? If China overtakes the role of largest economy how is that smart to push others into their arms? I take it you read the recent report about Argentina about 16 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12993432> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Martin <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> 0 <http://b.cackle.me/comment/12991322/vote/up> <http://b.cackle.me/comment/12991322/vote/down> So if I understand this piece correctly, Russia does not need to worry too much ift he West closes off Swift, Mastercard/Visa, all its bond markets to it? Russia will just switch to a 'more modern system' based on... the Bitcoin blockchain!!! Haha, that is grand. This Patrick Young guy has the nerve to call himself 'an expert in global financial markets'? Please. about 19 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12991322> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Teddy Bear <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +4 <http://b.cackle.me/comment/12990158/vote/up> <http://b.cackle.me/comment/12990158/vote/down> .....US President Barack Obama (L) listens to German Chancellor Angela Merkel (AFP Photo / Jim Watson)....... He should listen at the other end because that's where she does most of her talking from. about 20 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12990158> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Milorad Crni <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +3 <http://b.cackle.me/comment/12987968/vote/up> <http://b.cackle.me/comment/12987968/vote/down> The Russian people in Russia and around the globe has to get mobilized around patriotic idea to protect mother Russia. The rich and poor, the inventors, the patriots .... should get together and WORK HARD to protect Rodina. Russian gov headed with Putin has to do the open call to Russians for the mobilization. about 21 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12987968> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Adi Sladar <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> 0 <http://b.cackle.me/comment/12997116/vote/up> <http://b.cackle.me/comment/12997116/vote/down> money talks and BS walks.. There are some seriously wealthy Russians living here in the City of SF.. if all the Russians and their tight communities sent money back to support their country... It would become (by Far) the most powerful and influential country in the world. about 11 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12997116> Reply <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> - <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#>Fabrice Allais <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#> +3 <http://b.cackle.me/comment/12982512/vote/up> <http://b.cackle.me/comment/12982512/vote/down> Although it is common knowledge that EU politicians are rather dumb and short sighted, one can hardly presume they are THAT dumb. They are either fed with warp intelligence about Russia or they are hiding the catastrophic economic state of most western countries and they think that running a proxy war with Russia will be helpful to emerge out of the gloom. about 23 hours ago <http://rt.com/op-edge/186296-us-obama-sanctions-economics/#mc-12982512>
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