Washington and Moscow Vie for the Stupid Prize, by Paul Craig Roberts

Of all the global economies, Russia’s is the one that comes closest to self-sufficiency, so there is no reason for the nation to adopt its economic policies towards the generation of foreign exchange. From Paul Craig Roberts at paulcraigroberts.org:

Is it Washington or the Kremlin which is the most confused about sanctions and their impact?  Washington and Europe have made it very clear that sanctions do not apply to payments for Russian energy and minerals.  Only the US has banned the import of Russian gas and oil.  As the US uses no Russian gas and only 7% of its oil is from Russia, the sanction is without effect.  There are no bans on imports of Russian minerals as the West can’t get by without them, just as Europe, especially German industry, cannot get by without Russian energy. There are no sanctions on banks for processing payments for Russian energy and minerals.

So, what do the Western sanctions do?  They identify for Russia the pressure points where Russian sanctions on the West can severely damage the West.  Why doesn’t Russia use this power?

I think for two totally erroneous reasons.  One is that Russia wants to prove that she is a reliable business partner that fulfills her contracts and doesn’t use trade relations as a weapon.  But what good does this do Russia when the US and Europe are not reliable business partners and do use trade as a weapon? As Russia is the only reliable partner in the deal, Russia is taken for a ride.

The other erroneous reason is that Russia’s economists and central bank, brainwashed by US neoliberal economists, believe Russia cannot develop without foreign exchange.  The central bank even thinks that it cannot create rubles to finance investment projects unless the rubles are backed up by foreign exchange.  This has caused the central bank to borrow money it doesn’t need on which it pays interest.  In other words, the Russian central bank’s policy is nonsensical and serves Western interests at Russia’s expense.

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