Chapter 11: The Sanctions Era – Economic Warfare and the New Global Order (Mid–Late 2022)

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The Bear and the Eagle

Volume 2: The Biden–Xi Reset or Rivalry (2021–2022)

March – December 2022
Washington – Moscow – Brussels – Beijing – New Delhi – Tehran

As missiles exploded across Ukrainian cities, another quieter war unfolded—one fought in stock exchanges, shipping lanes, energy grids, and digital markets. The economic response to Russia’s invasion of Ukraine became the most extensive set of coordinated sanctions in modern history.

The West sought to cripple the Russian economy, isolate it diplomatically, and erode its capacity to sustain war. But the long-term impact went far beyond Russia.
This was the beginning of a new global order—one shaped not solely by arms, but by currency dominance, trade dependency, and systemic resilience.

Unleashing the Sanctions

Within days of the invasion, the U.S., UK, EU, Canada, Japan, and other allies initiated:

  • SWIFT bans for major Russian banks (cutting them from international transactions)
  • Asset freezes on $300+ billion of Russian central bank reserves held abroad
  • Export bans on high-tech components, semiconductors, and aerospace equipment
  • Sanctions on oligarchs, including seizure of yachts, properties, and accounts
  • Restrictions on oil, gas, and coal imports from Russia (phased by region)

President Biden described the actions as designed to turn the ruble into rubble.

Initially, it worked.
The ruble plummeted by nearly 30%, Russia’s stock market crashed, and inflation soared. Visa, Mastercard, Apple, McDonald’s, and hundreds of Western firms exited or suspended Russian operations.

But Russia, prepared for years, struck back with financial firewalls and geopolitical pivots.

Putin’s Countermoves: Fortress Russia

  • The Central Bank of Russia hiked interest rates to 20% and restricted capital outflows.
  • The ruble was tied to energy exports—Russia demanded “gas for rubles” from European buyers.
  • Parallel import systems were created via Turkey, Kazakhstan, China, and India.
  • Russian exports of oil and gas surged to Asia, at discount rates, softening the blow.

By late 2022, the ruble had recovered on paper, though the broader economy contracted by over 2% and inflation exceeded 12% (IMF, 2023).

China, while avoiding direct violation of sanctions, offered logistical support, trade lifelines, and rhetorical cover.
India—nominally a U.S. partner—dramatically increased imports of discounted Russian oil, buying in rupees to bypass dollar dependence (Reuters, 2022).

Europe’s Awakening: Energy, Unity, and Strategic Shock

For the European Union, 2022 was a rude awakening. Long dependent on Russian energy, it now faced:

  • Gas prices rising over 400%
  • Inflationary surges in Germany, Italy, and Eastern Europe
  • A looming winter energy crisis

Yet crisis produced unity. For the first time, the EU:

  • Pooled military aid to Ukraine under the European Peace Facility
  • Committed to ending Russian fossil fuel imports by 2027
  • Accelerated the Green Transition, investing in renewables and LNG infrastructure
  • Froze over €100 billion in Russian assets

Germany, long cautious, shifted dramatically under Chancellor Olaf Scholz, launching the Zeitenwende (turning point) policy—doubling defence spending and rearming after decades of pacifism.

Global South: Opportunism and Realignment

In Africa, Latin America, and South Asia, many nations remained neutral or sceptical of Western sanctions.

  • South Africa, Brazil, and Indonesia called for de-escalation but refused to condemn Russia outright.
  • Iran deepened military ties with Russia, supplying drones later used in attacks on Ukrainian cities.
  • China, though cautious, framed U.S. sanctions as evidence of “financial imperialism,” urging global de-dollarisation.

The BRICS alliance (Brazil, Russia, India, China, South Africa) gained momentum, positioning itself as an alternative global bloc. Talk of a BRICS reserve currency began to circulate (Financial Times, 2022).

Economic War Meets Cyber Conflict

Alongside sanctions came cyber escalation:

  • Russia launched waves of DDoS attacks, ransomware, and attempted sabotage on Ukraine’s power grid and Western logistics chains.
  • Ukraine’s IT Army, supported by global hackers and Western intelligence, retaliated with attacks on Russian government servers, state TV, and even military communications.
  • Anonymous claimed credit for multiple Russian state leaks and takedowns.

Digital conflict had become a second front, shaping global opinion and battlefield dynamics alike.

Sanctions and the Global Economy

The ripple effects were profound:

  • Global food prices surged, due to disrupted wheat and fertiliser exports from both Russia and Ukraine (World Bank, 2022).
  • Oil spiked to $120+ per barrel before stabilising.
  • Central banks, from the Fed to the ECB, hiked interest rates to combat inflation—raising the risk of recession in the Global North.

Yet the financial war also signalled something larger:

  • The weaponisation of currency reserves, payment systems, and supply chains had redrawn the map of power.
  • Nations began reconsidering dollar dependency, building FX reserves in gold, yuan, or local currencies.
  • The West learned that interdependence could be used as a weapon, by both sides.

Conclusion: The New Order Emerging

By the end of 2022:

  • Russia was bruised but far from broken.
  • Ukraine stood defiant, bolstered by $100+ billion in Western aid.
  • Europe had transformed itself geopolitically.
  • The United States, under Biden, regained NATO leadership but entered an economic squeeze.
  • And China watched, measured, and planned.

The Bear had withstood the sanctions storm.
But the Eagle had rebuilt the alliance it once nearly abandoned.

The next battles would be about more than territory—they would be about technology, currency, and truth.

References

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