The sanctions imposed against Russia by the U.S. and E.U. were relatively weak compared to the sanctions imposed against Iran, which successfully forced Iran to the negotiating table on the nuclear issue. The U.S. and E.U. were able to ban Iran from the SWIFT system, making it impossible for Iran’s banks to send or receive funds overseas, which crippled its economy.
The difference between Russia and Iran is, Russia already has one of the world’s largest arsenals of nuclear weapons. When word got to Putin that Obama was thinking about having Russia banned from SWIFT, Putin made it clear that banning Russia from SWIFT would be an act of war and Russia would have an “unlimited response”.
Western sanctions against Russia have had the unintended consequence of pushing Russia towards China. Since the sanctions were first implemented – Russia and China have solidified their relationship with the signing of many large business contracts and investment deals – including a 30-year $400 billion agreement for Russia to supply natural gas to China.
Russia and China are rapidly becoming very close allies – with both countries sharing many of the same economic interests, including their strong desire to weaken the U.S. economy by eliminating the U.S. Dollar‘s status as the world’s reserve currency. Over the last two years, China and Russia simultaneously became aggressive net sellers of U.S. Treasuries, while becoming aggressive net buyers of gold bullion.