The foreign policy direction giving US think tank "Council on Foreign Relations" (CFR) focused on a few months ago with the consequences of tougher sanctions Russia on the global economy, the sanctions are now actually and against the Russian energy, finance since July 2014 Defence Industry addressed.
An article dated 05/04/2014 CFR, Title: "Global Monthly Ecomomics: May 2014. Russia Contagion: Local or Global" by Robert Kahn (Steven A. Tananbaum Senior Fellow for International Economics) discusses the assumption that expanded sanctions against Russia comparatively had little impact on the rest of the world.
Interestingly, this was claimed by "Goldman Sachs Research"; Accordingly, Russia is simply not important enough for the world market, despite its significant energy exports. There is only limited in the global production chains and international markets integrated. Kahn quoted Goldman Sachs' conclusion: "impact on the global economy due to the current tensions could be relatively small." In other words encouraged Goldman Sachs with this assessment downright sanctions.
The CFR-author doubts this loose expertise. So far had never sanctions against such a large and complex country have been imposed assessments therefore very complicated. For the discussion on the issue of crisis contagion possibility is important that precisely at interwoven with the world of the Russian market is, as that one could ignore him.
Intensified sanctions could in Russia lead to a sudden stop of capital flows, ie a kind heart attack similar events.
The sanctions should be for Russia "a shock", but hardly noticeable for the rest of the world?
Kahn doubted that. He expects that shock waves will arrive in the West is connected by the economic and financial channels through which Russia with the West. The author talks about a potential to "outsized spillovers", ie a "very large spillover effects" of sanctions-induced problems such. As recession risk.
In the center of Russian exports are raw materials - energy, minerals, metals. If the financing of trade in natural resources would be broken, he could be blocked and cause interruptions in production commodity-intensive goods worldwide.
The discussion has so far been focused on the energy sector, in which previously seen in a stop of Russia's gas exports in response to sanctions possible price increases of 20-40%. Kahn hopes, however, that Russia's dependence'll draw income from oil and gas exports his revenge in a sanction other direction.
The highest costs of penalties he looks at the financial sector: Russia's financial links with the West were not transparent and credit-based to a large extent. Sanctions and retaliation Russian and foreign investors could cause huge financial losses, increase the collateral for Treasury bonds, as Kahn.
Sanctions against Russian financial sector "could have dramatic consequences not only on Russian financial institutions, but also to the markets in which they operate. For example, Russian banks hold significant derivatives and sanctions against them can damage liquidity and confidence in the market ".
An acute flare-up of the 2008 crisis appears then within reach!
For Kahn, the potential financial ruptures are imponderable: Russia with $ 700 billion in foreign debt (= 34% of the gross national product), borrowers are mostly state-owned enterprises "Any interruption in the payment system could have a domino effect.".
Kahn illustrates the problem with the image of a Christmas Tree Fairy Lights: When an electric candle does not work, the whole chain does not work, and it is extremely difficult to find out which Kerzchen caused the short circuit. Similarly, "if any US company is involved in a transaction of a member of the chain, so suggests potentially fail the entire transaction. Networking is the main problem that we have with sanctions in the face of today's complex financial markets. "
Kahn holds for those too optimistic that want to see the consequences of tougher sanctions only regional: "In the end, it is cut off a global market and Russia which will have an important impact on everyone involved."
Until then, a reader can conclude only that intensified, sectoral sanctions would be an irresponsible gamble which would play no politician with a view to his oath of office.
Amazingly Kahn's final conclusion, the cost would have to be weighed against action non-action, and that it implies is in favor of sanctions, because - Russia has challenged the existing international order.
In political circles so you are fully aware that with the since 29 July 2014, initiated by the US against Russia "sectoral sanctions" u. U. a crisis of global proportions events kicks off.
The blocking of the assets of Russian Banks ( Here is the official list of the affected by the sanctions Russian banks ) is done according to the "International Emergency Economic Powers Act" of 1977, which authorized the US President in the presence of a "threat" to sanctions. A law of the Cold War so!
The EU (28 members) worked well behaved little later the US list of demands from: Sberbank, VTB Bank, Vnesheconombank (VEB), Gazprombank, plus the Russian Agriculture Bank (Rosselkhozbank) now have no access to the EU capital market more. (In addition, the European Commission decided to impose an embargo on arms exports, for "dual-use" -Güter and oil extraction technology).
First predictable and obvious consequences are included in the calculations already occurred: collapse of the stock market: "On the financial markets turmoil is spreading" .
Source: Bank for International Zahlungsausgeich, International Monetary Fund
The adjacent graph of the International Monetary Fund shows that risks lie behind Russia sanctions: Note, for example, the interconnectedness of economic already battered France with the Russian banking market and the German export "wave"..
Therefore, the sanctions have the potential to be a financial and economic crisis à la 2008, and worse trigger.
And the reason is simple: Russia is too powerful for the taste of become "world's only superpower". The old "balance of power" of the British is resurrected in the "rules of the international order", the question presented by Russia's taken in recent years development.
The destructive seeds of these measures starts to work: In the German plant and machine than a million people are employed; decline in orders until May 2014 on the fourth most important Russian market by 19.5% as a result of "geopolitical tensions", as put by Siemens CEO Joe Kaeser quite correct.
How connected in times of globalization everything is seen from the fact that sanctions affect not only Russia but "generally demand in key markets of our industry" hinders and press your mood, so Ralph Wiechers, chief economist of the industry association VDMA ( see. GA Bonn 1.8.14).
Conclusion: The sanctions are aimed primarily against Russia, but in the second against Europoa, especially Germany. All EU countries that they endorse themselves (at least the preparation) guilty of high treason. For it is impossible that the CFR closely related DGAP (German Council on Foreign Relations) and other German politics related thinking tank does not know the words Richard Kahn.
For their "rules" of their "international order" they spark a financial and economic war that will plunge the world into trouble and are capable of jeopardizing inventory of Germany and Europe .
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Tags: CFR DGAP , financial markets in Unruhee , Goldman Sachs , Joe Kaeser , Richard Kahn , Russia , sanctions
Russia is punished, but we (Europe) punish ourselves with it. However, the question has to be, which means we otherwise have available to make a statement?
Russia is simply invaded the Crimea and * bam *, Crimea is now Russian. : D
Maschiert tomorrow "Luxembourg" in Belgium, then it is also Luxembourg? Just because? That can not be, and Europe is strong enough to put a sign ... and if there are only economic sanctions!