Russia’s invasion of Ukraine on February 24, 2022 will go down as one of the most controversial geopolitical moves of the 21st century.
With first world democracies universally condemning Russia’s actions, it appears that Russia’s days of being connected to the West are over. A whole host of sanctions and other financial penalties have been slapped on Russia for its foreign policy misbehavior.
The decision to kick several Russian banks out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been one of the most notable financial punishments implemented against it. SWIFT is a robust messaging network that banks and other financial institutions rely on for quickly sending and receiving information. For example, money transfer instructions are usually sent via SWIFT.
A broader disconnection from SWIFT on Russia’s end could wreak all sorts of economic havoc on not only Russia but also the rest of the Western world. After all, the world is incredibly interconnected thanks to globalization. So any economic downturn in one area will generate a domino effect of economic collapses across the globe.
It cannot be ignored how volatile the geopolitical situation has become over the past decade. The era of unipolarity, where the U.S. was the only big kid on the block, is over.
Russia has already demonstrated that it’s willing to use raw military power to assert itself on the world stage. However, the People’s Republic of China has emerged as an economic juggernaut that’s quickly emerging as the U.S.’s most credible peer competitor in both economic and military terms.
As Russia dukes it out with Ukraine, China is looking at this situation with interest. Russia will be undeniably pummeled by western sanctions, thus putting it in a vulnerable economic position.
It will need plenty of economic help just to economically get by. With its vast economic resources, China could perhaps extend a financial life-boat to Russia. After all, both countries have grown together as strategic partners and view the US as a malign hegemon.
Should China bail Russia out and build a parallel financial architecture, we could witness the most significant geo-economic development since the dollar became the world’s reserve currency in the 20th century.
The world is experiencing a history moment that future generations will talk about for decades to come.