You know, ever since Biden and NATO made it clear that they would not be sending troops into the Ukraine, and relying on sanctions, people have been bitching that they are giving Russia free rein in Ukraine by being wussies. But that’s not necessarily true. It all depends on the sanctions.
Granted, up until now, when a country or organization announces sanctions against another country, the sanctions are normally levied against corporations, high mucky-mucks, and other upper echelon entities. None of which have any immediate, or even near term effect on regular citizens.
Let’s start with this to set the table. Even without sanctions, tens, if not hundreds of thousands of everyday Russians have taken to the streets to protest Putin’s war crime in progress. They are risking not just a police beating, but also possible arrest, charges, and a conviction that could make it almost impossible to get a job for years, if not decades. And yet they are out there every night.
Now for the sanctions. As I said previously, when sanctions are normally issued, they are against specific individuals and government controlled corporations, and nobody on the street even knows anything has really happened. But earlier this week, when the US, UK, and EU announced a particularly intrusive tranche of financial sanctions, the Russian stock market lost 50% of it’s total value in one day, the worst single day loss in history.
Look, the Russians use their stock market exactly the way that Americans use the New York Stock Exchange. Russian companies list their stocks there to provide them liquidity. Russians with the odd punt in their pockets make the occasional trade. I’m no international stock expert, so I don’t know anything about the Russian version of 401k’s or IRA’s, but how would you like to come home one day only to find that your company or portfolio was only worth half of what it was 8 hours ago.
And it wasn’t just the Moscow stock exchange. On the same day, the Russian ruble, their form of currency, reached its lowest value ever. This doesn’t have shit to do with the stock market, rubles are what Russians use when they go to the store for a six pack and a pack of smokes. This has nothing to do with oligarchs and major Russian corporations, this is ordinary Russians going into a grocery store to find that their money wasn’t worth what it was yesterday.
And now today. The US, the UK, and the EU announced that they were sanctioning several major Russian banks by removing them from the S.W.I.F.T. system, which carries the vast majority of financial transactions back and forth between banks. Once again this is not something exclusive to oligarchs and political figures, but devastating to the Russian economy.
Let’s just say that you’re a simple, legitimate Russian businessman, with a thriving company. You travel all over Europe to sell your products. But what happens if your company has its account with a S.W.I.F.T. sanctioned bank, how do you do business? You can’t pay them for the order, because the system won’t accept the transaction? And how can they pay you for what they sell, because again, the system won’t accept the transaction. And just for shits-n-grins, if you go to a Hamburg ATM, it won’t let let you make the withdrawal.
Since the start, the nattering nabobs of punditry have belittled sanctions as being ineffective, because they only were levied against the already rich and powerful. But for once, the western alliance has managed to find a way to make the sanctions hurt the Russian people more than they hurt Putin and the oligarchs. And that’s a problem.
Because the Russian people have become mickle displeased with Putin for quite a while now. Just look at the mass protests that erupted all over Russia after each of Putin’s last two successful election campaigns. And the mass rallies and protests that Alexei Novalny was able to put together before he was poisoned and imprisoned. What’s going to happen when Russian housewives go into the grocery store and find that their Pampers and refried beans cost double what they did last week? Keep an eye on Russian protests over the next few weeks.
I got the sense yesterday Germany was softening its opposition to using SWIFT as an economic weapon against Russia. Reading today that they are now open to the idea has to have Putin and more importantly his oligarch pals both inside and outside Russia shitting bricks.
But here’s the best part. I’m sure that over the years a good deal of that ill gotten wealth has been tracked to various banks and other financial entities. Not all of it but enough that if the hammer was ever dropped it would hurt like having their testicles fed into an old fashioned hand-cranked meat grinder with the person doing the cranking taking their sweet ass time. However that’s not the best part. Just the news (and intel) that SWIFT might actually be brought into play may well have caused some panic. As in if not trying to hurredly set up an extra layer of hiding money/assets then doing some discreet checking to make sure (they hoped) certain accounts couldn’t be traced back to them.
Ding Ding Ding!
What if the right people were watching (and I’m betting they were) for exactly such a thing to happen? They might well have screwed themselves with their own double-secret probation OOPS.
All of which goes a long way towards explaining why Putin wants results on the battlefront by Monday. Not that it will help him with this but…
Bought a wood table a few years back from Ikea. Produced in Ukraine. I wonder how many Russian companies in are shitting bricks now that their Ikea accounts are lost.