If de-dollarisation occurs, the impact will be felt wide and far. Severe sanctions are a double-edged sword which will impact every nation.
Russia’s invasion of Ukraine has been condemned by the majority of countries in the United Nations. NATO has not intervened militarily since that runs the danger of a wider conflagration with the possible use of nuclear weapons. So, instead, the NATO powers have supplied Ukrainian forces with weapons and imposed severe sanctions on Russia. Evermore sanctions are announced every week.
It was said that this would degrade Russia’s capacity to wage war by freezing its assets held in Western banks. Also, its earnings through trade would decline and impoverish it. It was also argued that the Russians would be hurt through multiple channels – higher inflation, the inability of its citizens to get dollars, a collapse in prices of financial assets, like, shares and so on.
Thus, while Russia is attacking militarily, the West is hitting back through economic means. Further, there is also a cyber and media component to the war. It is perhaps the first war on multiple fronts. Will the Russians be hurt enough to stop the war? Can one draw lessons from the sanctions against Iran?
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