The threat of significant sanctions continues to loom for Russia as the United States appears to almost be willing Moscow to invade Ukraine to enable it to do so – and bring the European Union alongside it in cutting Russia adrift from the West (analysis here).

That will almost certainly mean a full or partial suspension of EU goods marked for Russian consumption – US export trade with Russia being minimal. Talk has also included suspending Russia from the global SWIFT payment system, creating its own – but ultimately recoverable trade problems when dealing with Russia. Moscow has already developed an alternative SPFS system which could be linked with China’s CIPS network and utilize non-US dollar payments that bypass SWIFT entirely. Quite apart from the issue that it would hasten the end of SWIFT as the only global payments network, the rise of sovereign cryptocurrencies, and especially their use in Asia would receive an addition boost. The US dollar would ultimately lose market share from its current position as the leading global currency exchange.

Sanctions at best are hit and miss – times change, products change and tastes change. The West’s sanctions on Russia over Crimea did not reverse the situation, and instead motivated Moscow to look East. Today, seven years on, EU and US trade levels with Russia are back to the same volumes as they were before the annexation of Crimea. What has changed is Russia’s trade with Asia, which has now reached the close to the same export volumes as its trade with the EU.

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