[Skybird]

FOCUS on sanctions:
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Why the US sanctions are not hitting Putin or Xi - but us

Someone in Washington has pressed the "replay" button. We hear the grim echo of history. For the intellectual basis of today's sanctions policy - which imposes punitive tariffs on rivals and punishes them with trade bans - comes from Woodrow Wilson.

As early as 1910, the then US president recommended economic warfare as the ultimate: "A nation that is comprehensively boycotted has no choice but to surrender. Thanks to this economic, peaceful, silent, but nevertheless deadly medicine, the use of armed forces is no longer necessary."

The belief in the omnipotence of economic sanctions persists to this day. When US Treasury Secretary Steven Mnuchin was asked in 2019 what the US would do about a Turkey that allowed the Kurdish minority to be killed in Syria, he replied, "We can shut down the Turkish economy."

That's what Trump thought. That's what Biden thinks. So thinks Economics Minister Robert Habeck, who is in Washington today. But they are all united in error. The fact is:

Nations resist.

Sanctions fail.

The outcasts forge alliances among themselves.

Take Cuba, for example: to this day, the Caribbean state has not allowed itself to be impressed either by military infiltration or by punitive economic measures. On the contrary: Castro offered his island to the Soviets as a launching pad for nuclear missiles. The former German ambassador to Cuba, Bernd Wulffen, said only recently: "Harsh language or even economic sanctions lead to cementing the bunker mentality in Cuba."

Take Iran, for example: the Islamic Republic, which is hostile to the USA, has reorganised its supply chains and is now in the economic prime of its time. The gross national product has doubled in only three years and, according to an IMF projection, will increase by another twenty percent from 2023 to 2027. The construction of its own atomic bomb is also close to completion, according to all Western experts.

Take Russia, for example: within a very short time, Putin was able to circumvent the sanctions and acquire new import and export partners. The whole world is keen on Russian oil and gas. The world's largest democracy - India - is taking the place of the small German democracy as the buyer of the fossil product range. For 2024, the Russian Federation expects - according to the current forecast of the International Monetary Fund - an economic growth of 2.1 per cent, which is considerably higher than that of the Federal Republic of Germany with 1.4 per cent.

Example China: The US sanctions are the most important driver in the emergence of a Chinese domestic market. Its consumer base exceeds the American domestic market threefold. Under the pressure of Western sanctions, China has formed a powerful economic alliance with Russia, India, Iran and Turkey.

Why is this important?

Because America refuses to acknowledge this inconvenient truth - and is driving itself and its partners into a veritable sanctions frenzy. Agathe Demarais, director of the Economist Intelligence Unit in London, the analysis institute of the Economist, has precisely recorded the increase in sanctions:

US President George W. Bush issued 3484 sanctions against companies, individuals, nations and organisation in eight years
President Donald Trump launched around 3900 sanctions against the same group of people between 2017 and 2020. That was four sanctions per working day.
When Joe Biden took office, the pace increased enormously. Today, the US operates 70 different sanctions programmes out of the Treasury Department, affecting 9000 nations, individuals, states and organisations. In her book "Backfire", Agathe Demarais speaks of "sanction overkill".

Why is this dangerous for German and European companies in particular?

Because the USA has discovered that sanctions may not work on its opponents, but they are all the more effective in the camp of its own friends and economic partners. They are forced to end their hitherto successful economic relations - e.g. with Cuba, Iran, Russia and China - and are pushed to the side of the Americans.

A sanctions monopoly is created that pushes market forces aside. In the absence of alternatives, Germans, French and other NATO countries now buy from the USA, of necessity also expensive liquid gas.

With the threat that the sanction-breaker will be excluded from the US market, political friends are turned into willing trading partners. And if the friend is not willing, fiscal force is used, as Agathe Demarais has researched:

From 2009 to today, American companies have had to pay only 300 million dollars in fines, while other countries have paid a total of 4 billion.
A foreign company pays an average of 139 million US dollars for violating the sanctions regime, while a US company pays an average of only 2 million, 70 times less.

We summarise: Those who are supposed to be hit are not. But the political friends and partners suffer because their previous business is made more expensive, more complicated or impossible.

Perhaps this is the irony of the modern age: the US economic sanctions are working - just in a different way than Woodrow Wilson had intended.
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