Watch Russia and China’s moves

Nato’s big bad wolf may do a lot of huffing and puffing but Vladimir Putin’s brick house of aggression is unlikely to come tumbling down any time soon.

While supposedly imposing the strictest sanctions yet on Russia – indeed on any nation – the West has stopped well short of declaring all-out economic war on Moscow.

That is because such a drastic step could backfire and do serious damage to the economic wellbeing of the West. So, the oil and gas industries – which are the mainstay of the Russian economy – have been left untouched.

No surprise there, because Europe gets about 40% of its natural gas supply from Russia. Gas prices have already been increasing and will do so even more because of the crisis.

Any attempts to cut off Russian oil exports, too, could further accelerate the upwards spiral of the crude oil price. Disruptions to Ukrainian grain supplies (the country produces 8% of the world total) will see food prices around the world soaring and the West will be hit hard.

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It is unlikely that Russia will be forced off the SWIFT system of international payments, to which 11 000 banks worldwide are signed up. Russia already has an alternative payments system and, in any event, has been moving towards a back-door payments system via China.

Removing it from SWIFT would fast-track that. And there might lie the even bigger consequence of Putin’s move on Ukraine.

If the West is provoked enough to try to squeeze him, he and his Chinese friends will speed up their plans to set up an alternative global financial system, where the almighty US dollar will have competition for the first time since World War II.

That would be an even bigger threat to global peace and stability. So watch Moscow and Beijing closely in future…