Unusually I’m not going to recommend a full read of the paper highlighted today from Anum Qureshi (et al.) of the National University of Science and Technology (NUST), Pakistan.
Partly because its a bit of a jumble and partly because the output from this kind of analysis, given how little data there is to plug in at this stage, is going to change significantly over time.
However, the paper provides a valuable ‘heads-up’ on the concentric circles of risk that are and will continue to radiate from the Russia/Ukraine conflict, particularly the impact of Russian sanctions.
The paper confines itself to a risk analysis of six countries closely associated with either of the parties, viz. the USA, the UK, France, Germany, Italy and China. It finds that a dial-up in the sanctions applied to Russia increase systemic risk, as you would expect, for all the Europeans in the survey with France the most impacted but, in addition, there are consequences for the USA.
What caught my eye though and the reason this paper makes it into a blog about China is that there has been no discernible uptick in risk for China. The researchers point out that as China has imposed no sanctions on Russia it can’t be the target of retaliatory action.
I’d add a two-pennyworth here though. If the conflict in Europe ends up having material systemic risk consequences for the world’s richest nations then China, although dodging a direct bullet, must ultimately be affected in such a scenario.
Bottom line, a sanctioned Russia will have economic consequences we may not yet be fully aware of; and likely none good for anybody.
The full read, if you care, is here Russia-Ukraine War and Systemic Risk.
Happy Sunday.