Russia’s Foresight Stands It in Good Stead
Alex GORKA | 05.08.2018 | BUSINESS

Russia’s Foresight Stands It in Good Stead

Charles Maurice de Talleyrand, the famous French diplomat who served as foreign minister for Napoleon, said “The art of statesmanship is to foresee the inevitable and to expedite its occurrence.”

Moscow realized that the US would continue its efforts to strangle Russia economically to make countermeasures inevitable. The Russian government expedited the occurrence by taking steps to lessen the dependence on Washington, including selling off US treasury bills. The ability to foresee the worst scenario and take timely measures to prevent it pays off.

The recent events show Moscow did the right thing at the right time. Just a few months ago, it got rid of US dollars to increase gold reserves. It has taken measures to become almost immune to Western sanctions with no fiscal deficit, a solid current account balance, and very little debt.

On August 2, a bill was introduced in the US Senate to impose “crushing” sanctions on Moscow to include restrictions on new Russian sovereign debt transactions, energy and oil projects and Russian uranium imports, and new sanctions on political figures and businessmen. One package follows another to no avail as the country is well prepared for it with no “soft underbelly” left. There are more steps planned over Russia’s alleged violations of sanctions against North Korea. The vicious circle is unstoppable but the impact has been minimized.

The US has recently imposed sanctions of Turkish top officials. The well-calculated move not only damaged the bilateral relationship but also made the Turkish lira plunge to an all-time low. The currency has fallen by over 40 percent since 2016.

Meanwhile, the US is preparing new sanctions to hit its NATO ally, including what the administration calls “large sanctions’ or “designation packages” to assault Turkey’s economy dependent on foreign investments. With foreign capital gone, the country will not be able to shoulder its large current-account deficit. It needs roughly $200 million a day in foreign financing to plug it. The sanctions could also bring down the banking system.

In late July, the Senate Foreign Relations Committee passed the “Turkey International Financial Institutions Act”. The legislation directs the US executive of the World Bank and the European Bank for Reconstruction and Development (EBRD) to oppose future loans, except those for humanitarian purposes, to Turkey by the International Finance Corporation (IFC) and the EBRD until the administration certifies to Congress that Turkey is “no longer arbitrarily detaining or denying freedom of movement to United States citizens or locally employed staff members of the U.S. mission to Turkey.” If the bill becomes law, and there is each and every reason to believe it will go through without a hitch as lawmakers strongly support it, it’ll deliver a really heavy blow on Turkey. In 2017 alone, the EBRD invested €1.6 billion in 51 projects. The country is near the top of the pile for a debt and currency crisis. 

Washington believes the policy of sanctions works. It sets Iran as an example, where protests are on the rise having reached Tehran, the capital. The frustration over the country’s economic performance is the main cause of public dissatisfaction with the government.

On Aug. 7, sanctions will be re-imposed on Iran’s purchase of US currency, its trade in gold and precious metals, its dealings with metals, coal and industrial-related software. The measures will also affect US imports of Iranian carpets and foodstuffs and on certain related financial transactions. According to Reuters, Iran’s oil exports could fall by as much as two-thirds by the end of the year.

The US State Department said on its Persian-language Twitter account: “While it is ultimately up to the #peopleofIran to determine their country’s path, #America supports the voice of the Iranian people, which has been ignored for a long time.” That’s the pattern. Incite protests first to interfere into internal affairs second. And Russia, whose meddling into the 2016 election has never been proven despite all the “probes” conducted by so many agencies and both houses of Congress, is subject to sanctions while the US keeps on pontificating about “non-interference”, the need to comply with international law and other things it, itself, has nothing to do with. And it stubbornly refuses to look at the mirror.

It all goes to show the wisdom of taking a page out of Russia’s book. The world is going through changes and the nations have to adapt to new reality.