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6 Oct, 2023 16:23

'Ineffective' Western price cap on Russian oil still sets dangerous precedent, expert tells RT

Washington is conducting its economic policies at the expense of other markets, a Malaysian economist has said
'Ineffective' Western price cap on Russian oil still sets dangerous precedent, expert tells RT

Western sanctions imposed on Russia have sent a message to other nations that if they “misbehave,” they could easily become the next target, Benedict Weerasena, the research director at Malaysian think tank Bait Al Amanah, has warned.

In an interview with RT on the sidelines of the Valdai Discussion Club in Sochi, he questioned the effectiveness of the $60-per-barrel price cap imposed on Russian oil by the EU, G7, and allied countries last December, along with an embargo on exports of the country’s seaborne crude.

“It’s important to understand the reality of the price cap. Is it really effective? Can it be implemented considering how the OPEC system and global tanker trade works? If sanctions don’t work in reality, then what is the purpose of them in the first place?” Weerasena said.

According to him, countries in South East Asia, especially in emerging market economies, do not support the sanctions on Russia and fear that in the future, restrictions imposed by the US and other Western countries could be directed against Asian oil exporters.

“Countries like us in Malaysia who are oil-exporting countries, we’re concerned that if this [oil trade] could be weaponized, will this be weaponized against us in the future?”

Another thing that has been used as an economic weapon in the past decade is the US dollar, which, according to Weerasena, has become an “unreliable” currency as a result.

He noted that despite the strong fundamentals of many economies in South East Asia, the region’s “central banks are forced to raise interest rates to follow what the United States is doing or else we risk capital outflows, we risk the depreciation of our currencies.”

The dominance of the dollar-based financial institutions and aggressive US economic policies which are often carried out at the expense of emerging markets across the world have prompted the South East Asian region to move to local currencies in trade, the economist said.

“In the recent ASEAN meeting in Indonesia they proposed that we push for local currency payments and also other forms of bilateral swap agreements, because this is the way to move away from the dollar,” Weerasena added.

For more stories on economy & finance visit RT's business section

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