Monitoring Risks by Dr. Ziva Rozen-Bakher

Analysing in-Depth Security & Political Risks and Economic & Strategic Risks

Monitoring Risks https://www.rozen-bakher.com/monitoring-risks-1

**Dr. Ziva Rozen-Bakher**

**Researcher in International Relations with a Focus on Security, Political and Economic Risks for Foreign Direct Investment (FDI) and International Trade**

CV

Sanctions against Russia: USA Coalition vs. Russian Coalition, 14 March 2022

Sanctions against Russia: USA Coalition versus Russian Coalition

Since the start of the Ukraine War, countries worldwide split into two groups (see Appendix I below) : i) The USA Coalition that includes countries that joined the sanctions against Russia. ii) Russian Coalition that includes countries that did not join the sanctions against Russia. Although the reasons to join or not to join a specific coalition differ between countries. Nevertheless, there are countries like Turkey that ‘sit on the fence’ between the USA Coalition and the Russian Coalition, yet at the end of the day, what matters is which coalition the country decided to join, namely if the country decides or not to join the sanctions against Russia, despite the pressure from the other side.

Grounds for Joining a Certain Coalition

The decision of each country to join or not to join the sanctions against Russia is influenced by various factors, as follows:

Alliances. The USA and Russia have different alliances that de-facto create the stronghold of each coalition, so one of the most important factors in joining a certain coalition is the alliances that each country belongs to, as shown in Appendix II below. Nevertheless, some countries like Turkey belong to USA alliances alongside Russian alliances, which leads Turkey to ‘sit on the fence’ in terms of not imposing sanctions against Russia, despite that Turkey being a member of NATO. Still, the NATO membership leads Turkey to cooperate at a minor level with NATO against Russia. Importantly, Russia is more engaged in multilateral alliances, while the USA is more engaged in bilateral alliances. Multilateral alliances have more power to create global political power compared to bilateral alliances. Please see my paper on this topic: Rozen-Bakher, Z. The Chess Game of Forming International Trade Agreements: Shaping Global Economic and Political Power. Research Paper, PD10. https://www.rozen-bakher.com/research-papers/pd10
Favour one Superpower over the Second one. Many countries oppose the Russian invasion of Ukraine, yet when they need to choose a side between Russia and the USA, then many countries decided to not impose sanctions against Russia. It could be because they are dependent on Russia in some way or because they less prefer the USA over Russia, such as some Arab countries. On the contrary, other countries joined the sanctions against Russia because they more favour the USA over Russia, such as in the case of Taiwan that imposed 'symbolic’ sanctions against Russia, despite that the country has no trade with Russia.
Dependency. The level of dependency on one of the superpowers significantly impacts the decision of a country to join or not to join the sanctions against Russia, as shown in Appendix III below. Although there are four main types of dependency that influence the decision, as follows:
- Economic Dependency - The level of trade (export/import) and FDI with each superpower impacts, in general, the decision of each country whether to join or not the sanctions against Russia, such as the examples of Turkey, Vietnam and India that are included in the top 20 exporters of Russia, as showen in Table 1 below.

Table 1. Examples of Countries that have Significant Trade with Russia and did not Join the Sanctions against Russia

Energy Dependency. Russia is considered one of the most important energy providers worldwide, particularly to European countries. Hungary, for example, is ranked as 1st in natural gas dependency in Russia among the European countries, so it likely explains the refusal of Hungary to let lethal weapons pass via its territory to Ukraine, despite that the country being a NATO-EU member. Nevertheless, the EU bloc decided to join the sanctions against Russia, despite that many EU countries having energy dependency on Russia, yet it could severely backfire on these EU countries if Russia imposes counter-sanctions regarding its energy exports to EU countries, still, Russia may exempt Hungary from these sanctions because of Hungary's decision to block the transfer of lethal weapons to Ukraine via its territory. Russian gas edging toward extinction in Europe | Business | Economy and finance news from a German perspective | DW | 11.03.2022
Defence Dependency. Some countries join the USA Coalition or Russia Coalition because of the significant defence dependency on one of the superpowers, such as South Korea and Japan that imposed sanctions against Russia, despite having significant trade with Russia, as shown in Table 2 below. South Korea and Japan are not members of NATO and their geographic location is far from the Ukraine conflict, so the only reason that they join the sanctions against Russia is the significant defence dependency on the USA because of North Korea.

Table 2. Examples of Countries that have Significant Trade with Russia and Joined the Sanctions against Russia

Strategic Dependency. The decision to impose or not impose sanctions against Russia is also influenced by strategic dependency on one of the superpowers. Israel is a good example of Strategic Dependency on Russia, despite that Israel is considered a loyal ally of the USA. Israel has a strategic dependency on Russia because of three main reasons: i) Russia is an important actor in resuming the Iran Nuclear Deal. ii) Russia has an important role in defusing the escalation of the conflict between Israel and Syria. iii) Israel has 1 million Israeli Jewish citizens that immigrated from Russia (Aliyah), while Russia still has 600,000 Russian Jewish citizens that still live in Russia. Regardless of the above, the Red Army released most of the Nazis' extermination and concentration camps in WWII.

Establishment of Each Coalition

Since the start of the Russian invasion of Ukraine, the establishment of each coalition occurred via three mechanisms:

Country Declaration about the Sanctions against Russia. Since the start of the Russian invasion of Ukraine, each country worldwide was pushed by the USA and Russia to declare its position about the sanctions, namely if the country is going to join the sanctions or not. Indeed, some countries declared their positions, yet many countries refrained from declaring their positions, but, at the same time, they did not join the sanctions against Russia, especially those from Africa, the Pacific, South America and South Asia. Hence, if a country did not join the USA in imposing sanctions against Russia, then it refers to a country that de-facto joined the Russian Coalition, yet the reason for that could be favouring Russia over the USA or dependency on Russia.
List of Russian Unfriendly Countries/Territories. Any country that declared about joining the sanction against Russia was added by Russia to the list of Russian Unfriendly Countries/Territories. Likely, Russia will target these countries in some way with counter-sanctions. (Russia releases list of unfriendly countries and territories: Check Full List here (jagranjosh.com))
United Nations (UN) Vote on Ukraine
Since the start of the war between Russia and Ukraine, two significant votes took place in the UN regarding the Russian invasion of Ukraine, namely at the UN security council (see Map 1 below) and at the UN General Assembly (see Map 2 below). These votes ‘forced’ countries worldwide to declare their positions about the Russian invasion per se, but not about their positions about the sanctions against Russia. Hence, many countries voted in favour of stopping the Russian invasion of Ukraine, yet without joining the sanctions against Russia, likely because they favour Russia over the USA or they have some kind of dependency on Russia. Moreover, if we look in-depth at the result of the UN General Assembly Vote, then it revealed that only 5 countries voted against the resolution to stop the Russian invasion, while 35 countries abstained, and importantly, 12 countries, most of them loyal allies of Russia, did not participate in the vote, as shown in Table 3 below. Given that, it will be more accurate to see the results as ‘Not Favour-52’ versus ‘Favour-141’.

Map 1. UNSC Vote about Stopping the Russian invasion of Ukraine

Against-1, Abstained-3, Favour-11
UNSC resolution on Russian invasion of Ukraine: How countries voted | World News,The Indian Express

Map 2. UN Vote about Stopping the Russian invasion of Ukraine

Against-5, Not Voted-12, Abstained-35, Favour-141
UN vote: UN General Assembly vote on Ukraine result, has Russia been condemned and which countries abstained? (msn.com)

Table 3. UN Resolution about Stopping the Russian invasion of Ukraine: Not Voted and Abstained

War Sanctions: Types of Sanctions/Counter-Sanctions

Since the start of the Russian invasion of Ukraine, a War-Sactions has started between the USA Coalition and the Russian Coalition, as shown in Appendix IV below. More specifically, the USA coalition has started with sanctions against Russia that include several types of sanctions, yet each of those types of sanctions could be targeted also by Russia with counter-sanctions or even with different types of counter-sanctions. Importantly, currently, only the USA coalition as a group of countries imposed sanctions against Russia, while only Russia has started to impose counter-sanctions against the list of Russian Unfriendly Countries/Territories. However, the war sanctions between the USA coalition and the Russian coalition could expand in two ways: i) Countries from the Russian coalition will back Russia to allocate Russian export/import from the USA coalition to the Russian coalition. Likely, Russia has started to engage in this process even before the invasion. For example, Iran has neutralised the West's sanctions against her by reducing its export/import with West Countries over increasing it with non-West countries, which is de-facto Russia-China Coalition. Thus, if we look at the case of Iran and previous West sanctions that were imposed against Russia in 2014 due to Crimea, then we can assume that after the short-term shock of the West sanctions, the economic situation of Russia will improve progressively until Russia will finalise the trade transformation from the USA coalition to the Russian coalition. ii) It is even possible that War-Sanctions will start between the USA coalition and the Russian coalition in a way that some countries from the Russian coalition may join Russia with the counter-sanctions against the West. Hence, in this option, we will get global war sanctions that likely will occur if a military confrontation takes place between Russia and NATO, which may trigger the activation of Russian military alliances. Hence, here are the main types of sanctions that could be involved in the War-Sanctions between the USA coalition and Russia:

Individual Sanctions. Individual sanctions mainly refer to the freezing of assets of individuals. The USA coalition mainly targets Russian government officers and Russian Oligarchs, while Russia imposed counter-sanctions against West individuals that have assets in Russia. (The 25 richest Russian oligarchs on the 'Putin list' that the US just released (businessinsider.nl))
Financial Sanctions. The aim of the financial sanctions is to create chaos for the economy in terms of increasing debt, rising inflation, volatility in the exchange rate, hindering the creation of new business, decreasing the value of stock exchange firms, preventing access to money transactions to obstruct the money flow of firms, and more. Currently, the financial sanctions are mainly imposed by the USA coalition against the Russian finance sector, such as restrictions against Russian banks, blocking access to Swift, and more. (A SWIFT ban for Russia may sound important but there are many ways the country can get around it, according to experts (yahoo.com))
Strategic Sanctions. Strategic sanctions refer mainly to a ban on the export of goods and technologies that are related mainly to the defence and oil sectors, yet keep in mind that it does not include a ban on energy but on its related strategic items. (What the EU sanctions against Russia include (belsat.eu))
Energy Sanctions. Energy sanctions refer to a ban on the export or import of gas and oil. Currently, only the USA imposed a ban on Russian oil imports, while the energy ban in the UK is supposed to start only at the end of 2022. However, Russia could cut the gas export to the EU as part of its counter-sanctions against the West. (Biden announces ban on all Russian energy imports over Ukraine invasion; experts expect gas price spike (yahoo.com))
Full Ban on Trade and FDI. Trade and FDI are not taking place between enemies that have a war without diplomatic relations, so it is likely that a full ban on trade and FDI will occur only if a war starts between NATO and Russia.