China spy think tank says Russia sanctions will backfire


Ukrainian soldiers take positions outside a military facility as two cars burn, in a street in Kyiv, Ukraine, Saturday, Feb. 26, 2022. Russian troops stormed toward Ukraine's capital Saturday, and street fighting broke out as city officials urged residents to take shelter. (File photo: AP)

Russia Ukraine conflict

Bloomberg
Published: 01 March ,2022: 

A Chinese research organization that advises President Xi Jinping says Russia can weather the sanctions it’s been hit with in recent days, and predicts the US and European allies will wind up suffering for supporting Ukraine.

Russia has largely adapted to dealing with punitive financial measures since 2014, when it was penalized for seizing Crimea, Ma Xue, an associate researcher at the China Institutes of Contemporary International Relations, wrote in an article published on social media Tuesday.

Cutting off Russian banks from the SWIFT money messaging system will wind up hurting Europe roughly as much, according to Ma, whose research body is linked to the Ministry of State Security, China’s civilian intelligence agency.

Ma added that the US could also incur major costs in the future providing economic and humanitarian aid to allies, and that Europe could be destabilized by large numbers of fleeing Ukrainians.

“If the Ukraine refugee crisis is not properly handled, this will be conducive for Russia to sow hatred and sabotage NATO,” Ma wrote.

“The fierce debate on refugee problems inside Europe could also damage its unity at crucial moments.”

Ma’s views on sanctions contrasts with the early reactions to the measures, which included cutting off the Russian central bank from its pile of foreign exchange. That move sent the ruble tumbling the most since the 1990s.

A slew of foreign companies, including BP Plc and Shell Plc, are leaving the world’s No. 11 economy over the financial and reputational risks, and Russian industrial-metal exports have sunk as commodity buyers and financiers pull back.

Why SWIFT Ban Is Such a Potent Sanction on Russia: QuickTake

Still, China could provide some support for Russia to keep the punishments from biting too hard. Chinese companies are expected to scoop up discounted Russian oil if sanctions deter other buyers, traders have said.

It could also provide a financial lifeline because the People’s Bank of China has a multi-billion-dollar currency swap with its counterpart in Moscow, allowing the nations to provide liquidity to businesses so they can continue trading.

Russia has also worked to remove the dollar’s hold over its financial system in recent years -- selling most of its US Treasuries in 2018 -- as it girded for potential sanctions.