Effect of Financial Sanctions on Russia
Effect of Financial Sanctions on Russia
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  • 승인 2022.05.02 22:59
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▲Russia faces heavy financial sanctions / The Business Standard
▲Russia faces heavy financial sanctions / The Business Standard


Chelsea FC is experiencing financial problems. In an interview about the lack of money for away games, Chelsea player Kai Havertz said “That is not a big deal. I think that a lot of harder moments are in the world right now and I will pay, it’s simple.” What could have made them fall?
Chelsea’s former owner Roman Abramovich suffered financial sanctions and his corporate account was blocked to prevent these assets from being repatriated to Russia. The resulting freezing of assets is increasing in real-time and it is the largest asset freeze action in U.K. history. As a result, Roman gave up all his rights and profits. Chelsea is experiencing a severe crisis with Korea’s own Hana Bank participating in the acquisition battle. 
A professional football club is not just a sports team, but also a company that serves as the foundation of a region. Thus, just as the U.K.’s financial sanctions affected Chelsea, South Korea’s sanctions could affect the Korean companies related to Russia.
The Korea Institute for International Economic Policy announced that if sanctions on Russia are prolonged, the GDP will decrease by up to 0.06%. This number may seem small, but to Russian-related companies, it is a bolt from the blue. The amount of payment that companies can receive will be determined by the extent of regulations. Domestic shipbuilder like Samsung Heavy Industries (SHI) who signed a contract to build ships for Russia is unclear about how much of the payment, 7 trillion won in the case of SHI, will be received. Companies that have recently built factories in Russia like the Orion Confectionery are unwillingly taking a step back. 
According to the World Bank, Russia’s GDP is expected to fall by 11.2%, indicating that sanctions are effective. Russia believes that financial sanctions such as the SWIFT sanctions are excessive and may retaliate by inflicting sanctions on the countries that imposed sanctions on Russia. For example, the Russian government and companies that have foreign currency debts to foreign creditors will now be able to repay the debts in rubles. Since the ruble has fallen in value, creditors will suffer a great loss.
To conclude, financial sanctions may put large organizations like Chelsea in crisis and cause an economic downturn but are effective enough for Russia to react. As Kai Havertz said, the pain Ukrainian civilians are experiencing is incomparable to the shortage of money. Therefore, it is hoped that the Korean government and companies will find an appropriate level of financial sanctions that may cause some setbacks but not to the extent that triggers a severe economic crisis.