A new round of economic sanctions on Russia has begun. Many countries of the world have started imposing restrictions in their own way. Five of the new European Union countries have withdrawn Preferential Nation (MFN) status from Russia. Due to these sanctions, Russia has suffered a loss of annual turnover of Rs 38.56 lakh crore. Australia has taken the latest step in this episode.
Australia has banned the export of alumina and bauxite to Russia. Australia imposed the sanctions on Sunday, promising more weapons and humanitarian aid to Ukraine. The export ban imposed by Australia is aimed at affecting aluminum production in Russia, which depends on Australia for 20 per cent of its alumina.
This step has been taken by Australia, when a few days ago it banned Russian oligarch Oleg Deripaska. Oleg Deripaska holds some stake in Queensland Alumina Limited. The company is a joint venture between Russian aluminum company Rusal and mining giant Rio Tinto. According to Australian Prime Minister Scott Morrison, his government is working to put maximum pressure on the Putin government to drive out Russian forces from Ukraine. According to Marison, Australia has imposed 476 sanctions on Russian installations since the attack on Ukraine.
Due to the war between Russia and Ukraine, the world seems to be divided into two parts. On the one hand there are Russia, Belarus, Syria and Arab countries, on the other side there are America and the countries of European community. The value of the Russian currency ruble has fallen by 30 percent against the dollar. In such a situation, five countries, including the US, have snatched the status of the Most Favored Nation or MFN from Russia.
There are 164 member countries of the World Trade Organization (WTO). All the countries under it give MFN status to each other. After this, all the countries can do business easily with each other without any discrimination. Suppose India provides some special facilities to Japan to do business with it, then it will have to provide the same facilities to other members of the WTO.
Similarly, special concessions are given to India in doing business in other countries. Under this status, one country promotes import-export to another country with the lowest customs duty or any duty. Member countries also give relaxation in the licensing process to companies from other countries. It becomes easier for developing countries to gain access to other country’s markets.
After the revocation of MFN status from Russia by five countries, the impact on mutual trade is certain, which can be more than Rs 38.56 lakh crore. Russia’s annual trade with America is Rs 1.79 lakh crore, which is now at a standstill. Business worth Rs 21.38 lakh crore with European Community, Rs 12.74 thousand crore with Canada, Rs 1.44 lakh crore with Japan, Rs 1.21 lakh crore with Britain has now come to a standstill. Earlier, the value of the Russian ruble has declined by 30 percent against the dollar.
Russia has also been excluded from the international banking system SWIFT. Western countries freeze the assets of Russia’s central bank. Russia’s foreign capital reserve stands at $630 billion. The US and Britain have unilaterally imposed restrictions on two of Russia’s largest banks, Sberbank and VTB Bank.