The knock-on effect of the Russian sanctions on other countries has been considerable, and they are unlikely to be lifted in the long run, Zanny Minton Beddoes, the editor-in-chief of The Economist, told CNBC-TV18. She said the proliferation of the use of sanctions as a weapon is going to change the international financial system over time.
“We have seen a lot of impacts already on commodity markets. And there are two other big shocks eating the world economy right now. One is what's happening in the United States with inflation, and hence, what will happen with interest rates,” Beddoes said.
“The other is China, where you have the Omicron third wave and the shutdowns, which are slowing that economy. So, you have this triple whammy of the sanctions and the war on the commodity prices, the potential of the Fed raising rates, and a slowing China, and that's a pretty dangerous cocktail for the world economy.”
She said if this weapon is used too much and too often, one might see an acceleration of attempts to move away.
“These are the most draconian sanctions that have been imposed, but sanctions have been used widely against different countries for different things. I think that proliferation of the use of sanctions as a weapon is going to change the international financial system over time,” she said, adding it is still hard to dislodge the dollar as the world is dependent on it.
She expects sanctions will be continued in some form though a lot depends on what happens with the conflict now that Russia is gearing up for an attack in east Ukraine.
“I think it's going to be hard to see all of the sanctions lifted, and there will be some continued sanctions, I suspect, perhaps not as draconian as they are now,” the British journalist said.
She said that Germany was under pressure to reduce dependence on Russian gas over time.
“I think if you see more Russian atrocities, there will be enormous pressure within Europe to keep on with the sanctions. But gas is not the only one, right? It's possible to tighten financial sanctions. There are other ways the sanctions can be toughened up, but that is the big question. What will Germany do?”