An alternative to the IMF was launched this week (9 July 2015). The so-called BRICS (Brazil, Russia, India, China, and South Africa) jointly founded the new bank, based in Shanghai, and will be able to apply through it for project financing. They will also be able to tap the $100 billion reserve fund set up to offer support in case of financial emergencies.
The bank was launched ahead of a BRICS summit in Russia, and the Kremlin hopes the initiative will demonstrate that Russia has not been economically or politically isolated by the imposition of sanctions over the annexation of Crimea. Nevertheless, the European Bank for Reconstruction and Development expects the Russian economy to contract by 4.5% in 2015.
We had a comment sent in from Hugo, who thinks that the combination of falling oil prices and economic sanctions will force Russia to change its strategy in Ukraine.
Is Hugo being overly optimistic? To get a reaction, we spoke to Michael Rühle, Head of the Energy Security Section at NATO. How would he respond?
To get another perspective, we also spoke to Friedbert Pflüger, Director of the European Centre of Energy and Resource Security at King’s College London, and a former member of the German Bundestag. What would he say to Hugo?
We also had a comment from Ari, who thinks that sanctions against Russia will merely push it to work more closely with countries like China and Iran. Certainly, the relationship between Russia and Iran has been strengthened in recent years, not least because both countries have been the target of Western sanctions.
However, negotiations are currently taking place over Iran’s nuclear programme that could result in the lifting of sanctions, potentially driving global oil prices even lower as Iranian oil appears on the market. We asked Friedbert Pflüger what impact the lifting of sanctions against Iran would have on energy geopolitics?
Will falling oil prices convince Russia to change its strategy in Ukraine? What impact would lifting sanctions against Iran have on energy geopolitics? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!