Debunking the Myth “Sanctions Against Russia Aren’t Working”

From What I Observed While Residing Close to the Russian Border

Last time I was in Russia. Author’s copyrights.

More than once, I saw people in distant countries like the US or my homeland, Brazil, saying that the sanctions imposed by the west against Russia are not working.

I am no geopolitical specialist. But as an entrepreneur who lives a few hundred kilometers from the Russian border, I would dare to disagree.

Because things changed, not only for us here in Poland or for our eastern neighbors in Ukraine, but also in Russia (and Belarus).

Here are a few myths that I would like to debunk (or at least contest) using my personal observations.

1st — The economical sanctions against Russia are not working because the Russian Ruble is still strong!

No, it is not. The official exchange rate between the US dollar and the Ruble may give you the impression that the Russian currency hasn’t lost value since the war started.

But here I am going to tell you a short story: a few years ago, I traveled with some friends to Argentina. When we arrived there, we were surprised that locals in every commercial establishment, from markets to bars or restaurants, offered much more pesos for our dollars if we paid directly to them.

So basically, in Argentina, there were 2 exchange rates: the official and the parallel, which were much more favorable to the dollar. This happens because the Argentinian government has for years imposed strict controls over the selling and purchasing of foreign currency in a (foolish) attempt to control the currency market.

The same is happening now with the Russia Ruble. Right now, officially, you need only 65 rubles to buy 1 dollar. Since each dollar buys 4.7 Polish zloty, one could expect that each ruble would be worth (4.7 divided by 65), meaning 7 cents of zloty. Or, in other words, officially, 1000 rubles should be worth 70 zlotys.

But if you go to any exchange house, they will offer you 1 cent of zloty per ruble! That means that the official exchange rate is 600% higher than the real world exchange rate.