The Russia-Ukraine conflict has led to an unprecedented experiment in unplugging one of the world’s biggest nations from the global economy, a development that will have broad consequences for the foreseeable future, an expert said Wednesday.
“We’ve never seen anything like it,” said Alexandra Vacroux, executive director of Harvard’s Davis Center for Russian and Eurasian Studies, in a panel discussion at Tsai Auditorium. “Russia is the 11th-largest economy in the world. The other countries that have been sanctioned like this — and no one has been sanctioned to this extent — have been tiny compared to Russia.”
Vacroux said that Russia could see a Great Depression-level decline in gross domestic product. Globally, effects will include disruptions not just to energy and stock markets, but to food supply and agriculture because Russia and Ukraine are major wheat and fertilizer exporters.
Vacroux said removing Russian banks from the SWIFT financial communication system was thought to be the “nuclear option” because the system handles transfer requests and payment instructions across the international banking system. But then Western nations went further and sanctioned the Russian central bank itself, cutting the nation off from international accounts that held roughly half the reserves President Vladimir Putin had built up for a crisis.
The sanctions mean that Russians had no way to pay for imports of everything from auto parts to aircraft avionics to computer parts and consumer goods. Corporate action has been another economic blow, as some 200 companies — including McDonald’s and Starbucks — have announced they were suspending or cutting ties with Russia.