Who may benefit from Western sanctions against Russia over Ukraine?

With Western sanctions against Russia over Ukraine may China and other emerging economies benefit from this circumstances? How this may work for them and what it means for Russia? Read few comments.

Vaughan Winterbottom, Northeast Asia and Russia Analyst, Lowy Institute for International Policy

So on the financial side:

At the start of the year foreign investors had stakes in 70 percent of shares listed on the Moscow Stock Exchange, and controlled 25 percent of the free-float. While some of this money is actually Russian — channeled through accounts in Cyprus — we have seen massive outflows in recent weeks in anticipation of sectoral sanctions, which have now been put in place. Some of this money is heading back to developed markets, but much of it is chasing higher yields in other developing markets. There have been some early indications that Brazil has benefited from outflows from Russia.

On the import / export side:

I don’t see emerging markets stepping up to provide substitutes for European and U.S. products under the sanctions — oil technology, medium and long-term financing and defence. Chinese military technology, for instance, has largely pilfered from Russia in the first place. That being said, we saw Russia yesterday institute some counter-sanctions on Europe in the form of bans on Polish fruit and vegetable exports (under the guise of sanitary concerns). If these kind of counter-sanctions are expanded to the whole of the EU, emerging economies may stand to benefit.

China is already a large fruit and vegetable exporter to Russia, and it stands to gain from any curtailing of European exports in the sector.

What’s ironic is that concerns about the sanitary conditions of Chinese fruit and vegetables are real, whereas for European produce they are fabricated. The losers here — as usual — are the Russian people.

Edward ChowSenior Fellow, Energy and National Security Program, Center for Strategic and International Studies

Much depends on the duration of the sanctions and how they are implemented, which will be dictated by Russian actions in Ukraine. So it is too early to tell. However, I believe it would be false to assume that China and other emerging economies will benefit somehow. They already have ample reasons to want to expand their trade with Russia. The Western sanctions increase the risk of doing business with Russia and limits Russia’s capacity to trade with them. A weaker Russian economy and one with more limited capability to export oil and gas in the future does not benefit China and other emerging economies. One example might be the Yamal LNG project, led by Novatek with equity participation by Total and China’s CNPC, from which China hopes to import LNG. Such a project may be slowed down as a result of the recently announced Western sanctions.

Shinichiro Tabata, Professor, Slavic-Eurasian Research Center, Hokkaido University

Russia could easily find an alternative market for their oil and gas, in China in particular. With respect to need for financial resources, emerging economies, again China in particular, have enough capacity to compensate the loss from the West.

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