A central bank digital currency could provide Russia with an alternative to the SWIFT international payment system from which it has been cut off, but the digital ruble has a long way to go before it enters mainstream circulation.
The sanctions deployed against Russia have failed to break Vladimir Putin’s war machine, and now the West is looking for ways to make them more potent. In doing so, Western policymakers should remain clear-eyed about potential risks and side effects.
The new sanctions package will be extremely painful for the Russian economy, but it’s two years too late to be a gamechanger. In a global context, however, it increases the risk of the fragmentation of the financial system.
Central Asian and South Caucasus nations should use the interest in East–West trade through their territory to boost regional connectivity.
While Baku appears inclined to pursue a “business only” arrangement with the European Union, it’s unclear whether that would be acceptable for Brussels.
The state has taken an ever-greater role in Russian energy markets in recent years, and the system for regulating domestic fuel prices has become more and more cumbersome. The war in Ukraine has shown both that the system is no longer fit for purpose, and that a government filled with technocrats is unable to see the forest for the trees.
Both Moscow and Kyiv are counting on being able to use the grain market to inflict damage on the enemy without sustaining any losses themselves. In this situation, the resurrection of the grain deal is a far less likely outcome than escalation.
