Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

We have witnessed the severest form of sanction of the Russian banking system, particularly in the Central Bank of Russia being denied access and being frozen out of accessing its reserves, which is unprecedented. Furthermore, financial transactions with many Russian banks and companies have been prohibited. That means it is very difficult for Russia to sell exports and to buy imports on international markets, which will be significant. European Union banks are prohibited from accepting deposits over a certain amount from Russian individuals and, as I said, the European assets of the Central Bank of Russia have been frozen, restricting its ability to prop up the value of the Russian rouble. Many Russian banks are excluded from the SWIFT payment network and that will hamper Russia’s ability to trade with the outside world, particularly the major global economies. The sanctions are already having an effect, with the Russian rouble crashing to record lows on foreign exchange markets. Russian purchasing power in international markets has also dropped and inflation in Russia is likely to rise significantly. The Central Bank of Russia has been forced to hike interest rates from 9% to 20% to prop up the currency. Interest rates at these levels, if sustained, will severely damage the Russian economy. Russia’s stockmarkets are shut and there are signs of increased stress in the Russian banking system, with media reports of long queues at ATMs. Some analysts have predicted that the stress on the system could lead to a run on Russian banks.

We have to be in for the long haul, which is a phrase that was used consistently last Thursday evening. Vladimir Putin has fundamentally altered the multilateral rules-based order that characterised international behaviours since the end of the Cold War.

It is that fundamental and will cause reflection all over the world and within Europe in terms of how we respond to that and how we endeavour to restore some stability to the multilateral rules-based order to which we subscribe as a country.

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