SANCTIONOMICS AND THE MAIN DIRECTIONS OF CHANGES IN THE ARCHITECTURE OF THE WORLD ECONOMY DURING THE CONFRONTATIONAL GLOBALIZATION

Abstract

The paper examines issues related to changes in the global economy that began in the context of the COVID-19 pandemic and were further exacerbated by the Russian war in Ukraine and, especially, due to the economic sanctions imposed by the West against Russia. These large-scale economic sanctions have no analogues in the history of mankind and they have their negative effects not only in relation to Russia, but also vis-a-vis those countries that have imposed these sanctions and the countries that have not acceded to them. For the economies of these countries, these negative effects are exogenous since they are not generated in the “bosom” of the economy but were introduced into the economy by sanctions; that is, from the outside. For economics, and in particular for sanctionomics, the study of the functioning of the global economy under these economic sanctions becomes a priority. These sanctions triggered the “Oil War” and the “Food War” which have directly contributed to the rise in inflation. The main problem of high inflation comes from the disruptions in global supply chains that began during the COVID-19 pandemic and were exacerbated by the war and the economic sanctions. The solution to the problem of high inflation is directly related to the renewal of global supply chains. This requires the diversification of international trade to the maximum extent possible. The issue of a new concept of globalization is on the agenda, one which will take the problems associated with economic security into account as much as possible, especially with energy and food security. It is a fact that the economic sanctions imposed by the West against Russia have shear gaps. In particular, not all countries of the world (for example, Israel, Turkey, China, India) support these sanctions and many EU countries, simultaneously with the introduction of economic sanctions against Russia, do not stop buying Russian oil and gas. As a result, Russia has a stable income from the sale of energy products. Economic sanctions directly affect changes in the architecture of the world economy. At the present time, such an alignment is taking shape in international economic relations which is very similar to the situation during the “Cold War” of the West against the USSR. All countries of the world are divided into three groups: the first includes countries strictly adhering to economic sanctions against Russia, the second – Russia and Belarus and the third – the so-called buffer countries that do not fully or at all support these sanctions. As long as the EU countries continue to consume Russia's oil and gas, they are also buffer countries. On the basis of a gradual reduction in the purchase of Russian gas and oil, the EU countries plan to eventually completely abandon their consumption. Consequently, the EU countries from the third group of buffer countries will move to the first group. These changes in the architecture of the world economy are not indicative of deglobalization but of confrontational globalization that is replacing the turbulent globalization that began during the COVID-19 pandemic. Confrontational globalization requires each country to find its place in the new architecture of the world economy which should come from a rational combination of economic security and the expansion of international economic cooperation and not just international trade. Much in the formation of a new architecture of the global economy depends on when the Russian war in Ukraine will end and what the final results will be. The continuation of the war for a relatively long time will increase the confrontational nature of modern globalization. The entire civilized world hopes for Ukraine’s victory in this war, although, in all likelihood its completion will not automatically lead to the lifting of economic sanctions against Russia.


Keywords: economic sanctions, sanctionomics, inflatio, architecture of the world economy, turbulent globalization, confrontational globalization.


JEL Classification: A00, F38. F51, F52, F63, F65

Published
2022-12-29
How to Cite
PAPAVA, Vladimer. SANCTIONOMICS AND THE MAIN DIRECTIONS OF CHANGES IN THE ARCHITECTURE OF THE WORLD ECONOMY DURING THE CONFRONTATIONAL GLOBALIZATION. ECONOMICS, BUSINESS AND ADMINISTRATION, [S.l.], n. II, p. 3-21, dec. 2022. ISSN 2720-8249. Available at: <http://sciencejournals.ge/index.php/bu/article/view/301>. Date accessed: 03 feb. 2023.
Section
Articles