By José Ernesto Nováez on November 23, 2024
In addition to the economic cost, sanctions are also a tool that has a high human cost, much more difficult to measure. foto: Huele a Azufre
For decades, the United States and its Western allies have relied on economic sanctions as a tool for the political disciplining of countries and projects perceived as hostile to the established order. The effects of these policies, especially against smaller countries, are clearly visible.
Cuba, for example, which has been subjected to the longest siege in history by the U.S. empire, has for more than three decades presented regular reports to the United Nations (UN), which are supported by the vast majority of the international community, in which the economic and social cost of these measures for the country is thoroughly described. The same has been done by Venezuela, which has exhaustively documented the impact of the sanctions on its economy.
In addition to the economic cost, sanctions are also a tool that has a high human cost, much more difficult to measure, and a high political cost, since the deterioration of the living conditions of the population is often used to undermine popular support for Washington’s enemy political project and to promote subversive agendas for regime change, often using extreme violence.
However, the accumulation of sanctions over the years has also had a cost for the contemporary political hegemon. This cost has increased in recent years, to the extent that the practice of sanctions has spread not only against relatively small countries, but has begun to include powerful geopolitical actors such as Russia and China. It is therefore worth looking at the other side of the coin and asking: What is the cost of the sanctions policy for the United States itself and its allies?
The sanctioning power of the United States rests on its economic and military might and its predominance over the financial organizations that emerged after World War II, particularly after the Bretton-Woods agreements.
The imposition of the dollar as the main international reserve and exchange currency also gives it extraordinary control over capital markets and the price of key raw materials such as oil, lithium and gold.
By virtue of this hegemony, more than twenty countries on all continents face varying degrees of sanctions by the United States. Among them, in addition to those mentioned above, are other nations such as Nicaragua, North Korea, Syria, Iran, Afghanistan, Belarus, the Central African Republic, the Congo, Ethiopia, Libya, Myanmar, etc. Sanctions range from an almost total blockade to targeted measures against sectors of the economy, companies or individuals.
A first effect of the sanctions policy, undesired by its architects, is the progressive abandonment of the dollar standard by a growing number of countries in their international financial activities. Giants such as China have begun to sabotage one of the mainstays of the dollar’s hegemony, the famous petrodollars, by buying increasing quantities of hydrocarbons from producing countries in yuan as well as in national currencies.
The emerging Brics bloc, not free of internal contradictions, but with an undeniable potential to transform the international economic and political landscape, has also taken firm steps towards the progressive substitution of the dollar in the commercial operations of its member countries. Other smaller economic blocs, such as the Eurasian Economic Union, have done the same.
According to the International Monetary Fund (IMF), although the dollar continues to be the main international reserve currency, there has been a steady decline in levels, which have moved from around 70% of total international reserves in the early 2000s to 60% in 2024. The IMF adds that among the currencies that have been occupying this space, the Chinese yuan stands out, whose rise corresponds to approximately a quarter of the dollar’s decline.
Sanctions not only affect the sanctioned, but also the sanctioning party, especially when the sanctioned countries are suppliers of key raw materials for the functioning of the US economy and its allies.
A key example is energy raw materials. Trump’s sanctions against the Venezuelan oil industry not only hit Caracas hard, but also had an inflationary effect on the cost of fuel within the country. Especially because many of the key refineries that the United States owns in the Gulf of Mexico are adapted to refine Venezuelan crude, which has a very different composition than the crude produced in the United States.
As a result, the Biden Administration had to issue a series of licenses to Chevron and other companies in order to reestablish, even partially, the flow of Venezuelan oil.
Europe is in the same situation with Russian gas and oil, on which it is critically dependent. The United States also depends on Russian uranium for its nuclear power plants and its technological industry is strategically dependent on rare earths, of which China is one of the world’s main producers.
Sanctions against Russia and China have also had a significant impact on the increase in grain prices and on the expansion of supply chains, which affects inflationary dynamics at the global level.
The interconnectedness of the world economy turns sanctions into weapons that turn against their own creators. Although this cost is generally ignored by the mainstream media, a few facts give an idea. A report published by the Embassy of the Russian Federation in Panama, points out that in 2022 and 2023 there was a decrease in the GDP growth rate of developed countries, which averaged only 2.7% and 1.2% respectively. According to estimates by the Russian Center for Strategic Development, foreign companies have incurred losses exceeding 240 billion dollars as a result of the sanctions against Russia alone.
But undoubtedly one of the greatest costs of the sanctions policy of the United States and its Western allies is the visible loss of leadership at the international level. Despite the hundreds of bases scattered around the world, the growing military budgets, threats, bribes, blackmail and diplomatic pressure, they have not managed to prevent the strengthening of counter-hegemonic blocs and powers, whose main potential in the current scenario lies in the short term in dismantling the unipolarity that has dominated since the 1990s.
In addition, although sanctions have proven to be a useful tool for the collective punishment of societies, they have shown a more than doubtful effectiveness in bringing about political changes in line with Washington, as shown by processes such as the Cuban, Iranian and Venezuelan ones, which are resisting, reinventing themselves and articulating with the pluripolar and pluricentric world that is in the process of being born.
José Ernesto Nováez is a Cuban writer and journalist. Member of the Hermanos Saíz Association (AHS). Coordinator of the Cuban chapter of the Network in Defense of Humanity. Rector of the University of the Arts.
Source: Huele a Azufre, translation Resumen Latinoamericano – English