The recent impact of financial sanctions against Moscow from a Cuban perspective

I found this AFP cable very curious and revealing. It gives an account of Moscow's complaints about the increasingly clear consequences of Washington's battery of sanctions on its finances. Especially since it has managed to blow up bridges that anyone would assume to be solid, particularly with China (although it always seems to me that the relationship between both countries is not as cemented as some observe). As early as mid-February it was reported that three major Chinese banks were "finally getting scared by the West's sanctions against Russia". The Bank of China, China Construction Bank, and Industrial and Commercial Bank of China had ceased processing payments from sanctioned Russian financial institutions. A fairly comprehensive chronology of the West's crusade against Russian finance can be found here or in this resource from OFAC itself. So since December, when both the European Union and the United States tightened their financial sanctions, the headaches for Russian entities began.

_{One of the Chinese banks that have stopped accepting payments from Russia, including in yuan (source).}

Chinese financial service providers are now scrutinizing every transaction involving Russia so as not to fall into OFAC's bloodthirsty nets, and are generally doing the math on how profitable it is for them to antagonize the European Union or Washington, looking at their respective trade balances with these big players compared to those with Moscow. Putin had found an alternative to the financial pressure on Beijing, after the expulsion from the SWIFT system, and was even operating with yuan. But now Chinese banks would not be accepting these payments either. "The unprecedented pressure exerted by the United States and the European Union on China continues, even within the framework of our relations. This poses some problems," said from Red Square. The China Zheshang Bank, Great Wall West China Bank, Bank of Ningbo, Ping An Bank, and DBS Bank have reportedly joined the list of Chinese financial institutions that have reconsidered their ties with the Eurasian nation. The Kremlin spokesman, in a nod to Xi Jinping seeking common ground, spoke of the "special nature" of the bilateral relationship. Then, although the performance of the Russian economy has been praised for its resilience to the commercial onslaught from the West, it is suggested that the results could be somehow serious if this trend is confirmed.

The Cuban connection

Regardless of how hard the U.S. bet to hit Russia in financial matters may be, it falls far short of the strength that the Treasury Department gives to the one against Cuba in the same area. But beyond that, being a country totally alien currently to the development of military—to not say "terrorist"—operations abroad, Cuba is included in Washington's list of state sponsors of terrorism, although it is known that it was a politically motivated move by Trump without any real basis. The interesting thing is that for the island this is not so relevant in practical terms, because the conglomerate of OFAC and Department of Commerce sanctions is sufficiently comprehensive for that designation to have specific effects. But if you want to see the dimension of the strong grip that the United States has on Cuba, temporarily forgetting its particular sanctions regime, let's review why several think tanks have advised against Russia's inclusion on the list.

_{Tens of thousands of Cubans have left the country as a result of an unbearable crisis, largely generated by the relentless sanctions regime put in place since 1960 by the Eisenhower administration. Pictured here is a Cuban father with his 10-day-old baby, looking with other migrants for a point to cross the razor wire fence installed by Texas.}

The literature does not specify the complete arsenal of consequences implied by the designation as a state sponsor of terrorism, but the latest country-by-country report on terrorism produced by the State Department—which speaks of "a wide range of sanctions"—refers to the following: 1) a ban on arms-related exports and sales; 2) controls over exports of dual-use items; 3) restrictions on U. S. foreign assistance; 4) visa processing requirements; and 5) imposition of miscellaneous financial and other restrictions. I emphasize those "miscellaneous" financial restrictions. In addition to the practical effects that emerge from laws and regulations, it has an impressive deterrent effect, because it is easier to close all ties with the countries included in the SST list than to spend resources in monitoring that a certain transaction or business does not violate the related sanctions. So the designation triggers "other restrictions, which are unspecified in the statutes but which [...] have coincided with increasingly severe sanctions that wind up applying to the entire economy and population of the listed country". I will not touch the issue of the vulnerability that also implies for the sovereign assets of the sanctioned country in the United States, because in the Cuban case, certain judicial rulings have blessed a disrespectful plundering of them—even though in 2015 the value of those still blocked but countable was set at just over $243 million.

It happens that "repressing" Russia financially has global consequences, touching many interests beyond the strategic brotherhood of the West and the "solidarity" with Ukraine. To do so with Cuba only condemns a tiny island with an almost imperceptible incidence in the international concert, largely because its economic capacities are quite depressed as a result of the wearing down impact of the U.S. sanctions. This is without taking away, as I always emphasize, the debatable and many times certainly erratic and reprehensible internal management of the Cuban State in economic matters. In the last few years, in particular, the country has been governed in a lurching manner. But, to finalize, returning to the issue of sanctions, see here all the maneuvers that a huge economy like Russia's—which anyway is expected to grow this year—must make to sell its seaborne oil to India in a context that, I repeat, is far from emulating the Cuban case, which next October will "celebrate" 64 years of ruthless economic scourge and financial isolation.

_{A Turkish powership at Havana's Bay (source). Trump started a "maximum-pressure-style policy" against Cuba, with the oil sector as a main target.}