IMPACT OF WAR ON RUSSIA

Though war is going on in Ukraine where Russia has been dominating, yet Russia is paying the price for the heavy destruction caused. The Russian currency Ruble has crashed in last few days. The banks are out of cash. But why? Let's try to figure out what happens to a superpower country involved in a war even when the war is not going on in that country.

Economic Sanctions

To overpower or stop an extremely powerful country for invading another country, it is obvious that any country would fear to send its own military. So, the best way to do it is by imposing Sanctions. Sanctions refers to a penalty or a punishment that a country imposes on another country for breaking an international law. Russian citizens, these days, are facing difficulties which they would have never imagined.

The cost of just starting the invading operation is around $7 billion which is more than 50,000 Crores. Till now, the cost has reached $24 billion; more importantly it is the taxpayer's money. 

Trade losses in Russia

1. 33 Countries have closed their airlines for Russia due to which more than 1,50,000 Russians who are out of Russia are finding it difficult to get back to their country.
2. Airbus and Boeing, the biggest of the companies that manufactures airplane spare parts, have denied exporting to Russia.
3. All the Super giant Car manufacturing companies stopped their export as well as production in Russia.
4. All the digital platforms such as Netflix, Tiktok, etc. have stopped operating in Russia.
5. More than 70% of FDI (Foreign Direct Investment) have withdrawn their ventures.
6. The Formula 1 racing event, which was about to be held in Russia, has been cancelled.
7. FIFA and UEFA, the two biggest Football Associations in the world, have banned Russian team from all the soccer events.
8. Visa and Mastercard have blocked Russian banks due to which around 74% of payment through credit and debit cards have completely stopped.
9. People are standing in queues outside the ATM to withdraw cash. Banks are running out of cash. This situation is called Bank run.
10. Russian Stock Market has been closed since the war initiated. This has led to economic isolation of Russia and its downfall of economy at least for short duration of time.

Actions taken on International level

Till now, we have understood that how big MNCs have stopped operating with Russia due to war like situations. But there have been actions taken from all over the world against Russia. One of them is SWIFT block. 

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is payment system used by 200 countries and more than 1100 financial institutions. All the banks throughout the world have their SWIFT code that helps proper transaction of money from one place to another. SWIFT block for Russia signifies that Russian banks can neither accept nor send money internationally.

Russia's central bank's assets have been freezed. Assets usually contains Forex (Foreign Exchange) reserves which is the money in another country's currency. Russian central bank has money in US Dollars of worth $630 billion dollar. Freezed central bank assets means USA is no longer accepting the Forex reserves.

Assets and properties of Russian billionaires outside Russia have been seized by government of that country to pressurize Putin to stop invasion. Germany suspended the approval of Nord Steam 2 Pipeline for natural gas, which is considered as a brave step against Russia because the whole world is heavily dependent on Russia for its crude oil and gas requirements.

Countries are trying to come up with alternatives to overcome existing crude oil and gas dependency on Russia. It is important to remember that Russia is the 2nd biggest exporter of these resources.

Conclusion

The Russia-Ukraine war is the result of extremism, not peace. Even though Russia was successful in stopping Ukraine to join NATO, but the common Russian citizens are paying the price for the war they never asked for. The destruction in Ukraine is visible but Russian destruction tells us that how choosing war can put a country way too behind and only the common man has to pay for it.

The value of 1 US dollar has reached 150 Russian Ruble. High inflation would result in decrease in standard of living. Large population will be pushed into poverty, lack of money in banks, unemployment, etc.  are approaching Russian citizens at least for the next few years.