Sanctions will lead to bigger cracks in West-led global order

International sanctions are not something new, and they are often used in political and economic practice. Western countries, especially the US, are keen to apply them as a tool to promote both their political and economic interests.

But sanctions may not be effective when they are used against a country which is not either heavily involved in the interdependent world economy or highly motivated to resist outside pressure. In some cases, unilateral sanctions may backfire when the country finds ways and means to offset losses by finding other internal or external resources.

Russia now finds itself under sanctions introduced by the US, the EU, Norway, Japan, Canada and Australia. The first package of sanctions came into effect this March because of Crimea joining Russia. Some Russian officials and businessmen were on the blacklist from entering these countries, and their bank accounts were frozen.

In July the EU expanded its measures by imposing restrictions on various areas of the Russian economy. Some leading Russian banks were deprived of full access to long-term financial resources in the West. In August, Russia struck back by banning food imports for one year from the countries which had imposed sanctions on Russia.

How can this tug of war between the West and Russia be assessed? The purpose of Western sanctions is to punish Russia for its independent foreign policy course by raising its economic and political price. Nevertheless, in our interdependent world, sanctions have a boomerang effect.

To various degrees, the EU countries will suffer more than countries like the US, Canada or Australia. What is more, inside the EU, some members are more vulnerable than others. For example, Latvia's damage is 55 million euros ($72 million), Poland's losses are expected to reach $662 million while Holland may lose up to $1.5 billion. The EU emergency fund is 400 million euros and it cannot offset all the losses of the EU members. Certainly, Russia's reply measures may lead to some difficulties on the food market inside the country. Trade business will lose their Western business partners. There may be temporary shortages of some food products, but they can be easily replaced by other producers.

Before sanctions, Western food producers had dominated the Russian domestic market, pushing or limiting national producers. Russian farmers have been complaining about difficulties in Russian trade networks.

Now the market is open for domestic producers. Competition will continue to exist. The Western decisions and Russian reply measures created economic niches which will be filled by other foreign trade partners of Russia. Some former Soviet republics and even distant Russian partners like Latin American countries are ready to increase their food exports to Russia, angering the West.

China also expressed its willingness to supply necessary food to fill the gap in the Russian market. Under the current circumstances, China can play a stabilizing role in turbulent Russian-West relations. Besides, Western sanctions against Russia open an opportunity for China. China can profit by exporting food to Russia. And the EU energy market will gradually become less important for Russia.

According to some estimates, oil supply to the east of Russia reached a record high 1.2 million barrels a day, while Western exports fell by 20 percent. In 2012, Russia exported 20 percent of its total oil supply to Asia. In 2014, Russia exports 30 percent of the total oil export in the same direction. China has become a major Russian energy consumer, bringing the two closer together.

It would be useful to consider economic sanctions against Russia in a broader political context. They may boost the fragmentation of the global economic and political space created by the West to run the world. The BRICS made a decision to set up its independence from the Western financial institution. Obviously, the new development bank is not supposed to replace the IMF or World Bank overnight. But such a decision will give the world an alternative, and give the BRICS the opportunity to pursue more independence from the Western political and economic course. Prolonged sanctions against Russia will speed up the trend.