GLOBAL ECONOMIC TURBULENCE: THE RIPPLE EFFECTS OF SANCTIONING RUSSIAN CENTRAL BANK ASSETS

Abstract

In recent years, the use of sanctions as tools for deterrence and corpulence has escalated significantly, introducing heightened uncertainty and volatility into the global economy. This trend has been underscored by the weaponization of the Russian Central Bank's foreign reserves by Western powers, precipitating substantial shifts in the international financial landscape. Non-Western central banks are responding by diversifying their external reserves away from Western currency-denominated assets, reflecting a broader geopolitical recalibration. The intertwined nature of firms' international operations with political dynamics has increasingly complicated the landscape of international business. Political interventions, particularly through sanctions, have become more frequent and unpredictable, presenting challenges for multinational enterprises (MNEs). The sanctions imposed on Russia by Western nations, in response to geopolitical events such as the Russia-Ukraine conflict, have not only impacted Russian entities but have also triggered retaliatory measures, exacerbating losses for MNEs operating in affected regions. Predicting political interventions and their business implications remains a formidable task due to the volatile nature of international relations, where geopolitical alignments can swiftly evolve. Nevertheless, MNEs can enhance their resilience by adopting robust risk management frameworks, maintaining flexibility and adaptability in operations, intensifying information gathering and monitoring efforts, and refining investment strategies to mitigate the risks associated with unforeseen sanctions. This paper explores the evolving landscape of international sanctions and their ramifications for global businesses, with a focus on the recent geopolitical tensions involving Russia. By examining the impacts of sanctions and counter-sanctions on multinational enterprises, this study underscores the imperative for proactive risk management strategies in an increasingly politicized global economy