Since February 24, sanctions have been gradually imposed on Russia. First the blocking of transactions with banks, then strategic importexport, then oil and coal to the US and UK and from August for coal to the EU. Finally, the freezing of sovereign debt by American banks. But how much are the actions of the US, Canada, the EU, the UK, Switzerland, Iceland, Japan, South Korea, Singapore, Australia and New Zealand really weighing on Moscow? We see it after examining dozens of databases, international statistics, documents from Ofac (the US Office of Foreign Assets Control), the European Commission and with the help of the Institute for International Policy Studies (ISPI) and the Italian Public Accounts Observatory have consulted (Ocpi). There are 37 countries that have imposed sanctions on Russia, but they represent 59% of global GDP. Among the 193 that don’t use them are China, India, the United Arab Emirates, Iran and Turkey.
transaction blocking
Transactions with ten Russian banks on securities, loans, investments, debt repayment and loan collection suspended. These are Sberbank, VTB, Gazprombank, Alfa Bank, Promsvyazbank, VEB, Otkritie, Rosselkhozbank, Sovcombank and Novikombank. Together they make up about 70% of the assets of the Russian banking system. The US Treasury Department estimates that Russian banks conduct about $46 billion worth of foreign exchange transactions per day worldwide, 80% of which are in US dollars, and that the vast majority of these transactions are affected by the sanctions. Then there’s the Swift block, which is the 811 character alphanumeric string that identifies the bank and country of origin used to speed up payments in international markets. This blockade affects Rossiya as well as six other banks already affected by the suspension of operations (VTB, Promsvyazbank, VEB, Otkritie, Sovcombank and Novikombank). The exceptions are Sberbank and Gazprombank, which have the right to collect payments for the export of gas, oil and coal (which allows nearly $1 billion to arrive daily).
The reserves of the central bank
The sanctions have triggered bank runs and capital flight, causing the ruble to plummet. In response, the Central Bank of Russia increased the cost of money and put its hand on official reserves, which fell by $39 billion in a month. By February 18, 2022, the central bank had $643 billion in its stomach, now it’s 604. Not much, because here too the sanctions have frozen 60% of the reserves, i.e. the share in euros, dollars, pounds and yen, which is about 350 equates to billions of dollars. Since March 24, the US has also imposed a freeze on 133 billion gold reserves. However, Russia can have the share of reserves in currencies of nonsanctioning countries, including China with 83 billion yuan. To tighten the rope, since April 5, the US Treasury Department has banned Russia from using its dollars in US banks to pay off its national debt. This means that the state’s bankruptcy proceedings could begin as early as May 27 when a 101 million coupon expires.
The damage of the embargo
The embargo also weighs on sanctioned countries that can no longer export technologies to Russia, such as semiconductors, computers, lasers, sensors, navigation and telecommunications equipment, i.e. everything that can be used for military purposes, in the aviation sector and in oil refining. Also stop the export of logistics and luxury goods, from haute couture to perfumes, jewellery, electronic devices worth more than 750 euros, cars over 50,000 euros, watches and their parts, art objects. On the other hand, the EU bans the import of iron, steel, coal, wood, building materials and rubber. The US and UK have blocked their oil and coal imports totaling just over 12 billion. While EU coal is worth 4.3.
How much does it weigh on Russia?
According to ISPI calculations, sanctions block 12% of Russian imports, which totaled $247 billion before the pandemic, and 7% of Russian exports, equivalent to $427 billion. For its part, Russia has blocked shipments of wheat, corn and fertilizers. On the other hand, the greatest impact is on EU countries due to the lack of exports and imports, even considering that the same measures are applied to Belarus as a supportive country and to the Donbass, since it is believed that the purchases will serve to finance the war. Italy and Spain are hit hardest by the lack of steel and rubber imports from Belarus and Donbass, France and Germany to a much lesser extent. There is no shortage of attempts to circumvent the embargo through triangulations with third countries: customs data, for example, show a sudden increase in exports of prohibited goods to Armenia and Kazakhstan. On the other hand, all other goods, from food to manufacturing, can be exported to Russia, but the war economy has reduced demand, with a global impact estimated at 30 billion (about 20%).
Who goes and who stays
The Yale database shows that out of 773 companies operating in Russia to date, 252 have withdrawn, including international giants such as Apple H&M, Ikea McDonald’s, Microsoft and Netflix, as well as the four Italian Assicurazioni Generali, Eni, Ferragamo, Yoox. They ceased operations in 237, including international container companies MSC, Maersk and CMA, and Italian companies Ferrari, Iveco, Leonardo, Moncler and Prada. They reduced their business to 62, including Enel, Ferrero and Pirelli. 91 people take their time, like Barilla and Maire Tecnimont. Remaining in 131: Acer, AuchanRetail, Lenovo and the 11 Italian Buzzi Unichem, Calzedonia, Campari, Cremonini Group, De Cecco, Delonghi, Geox, Intesa Sanpaolo, Menarini Group, UniCredit, Zegna Group.
The wealth of the oligarchs
The lists of billionaires, politicians and military personnel whose property is to be frozen are misaligned. The EU has compiled a list of 1,110 names, the UK has 989 names, the US has 407. And so it is that among the 20 richest oligarchs and officials in Russia who have been sanctioned by the EU and UK but not the US, I am I am fertilizer industrialist Andrey Igorevich Melnichenko, Roman Abramovich, AlfaBank founder Mikhail Fridman, steelmaker Viktor Rashnikov. Instead, sanctioned by the US and UK but not the EU, there is commodity producer Victor Vekselberg. While none of the three have sanctioned the president and main shareholder of Russian gas company Novatek Leonid Mikhelson and steel magnate Vladimir Lisin. No sanctions for the president of oil giant Lukoil Vagit Alekperov, who is seen as less close to Putin than the president of Rosneft Igor Sechin, who aims to make Lukoil the absolute champion of Russian oil (sanctioned by both the EU, Britain and the US). Finally, among the untouched is metal magnate Vladimir Potanin, who the United States has named among 210 people closely associated with the Russian president.
The decision to sanction some and not others is the result of political and economic assessments of individual countries, since according to Forbes, Russia’s dominance in exports of oil, gas and raw materials has linked the fate of Western producers and companies with that of Russian companies and their owners, namely the oligarchs. Atlantic Council estimates that oligarchs and officials hide around $1 trillion in tax havens (as much as the entire Russian population owns), making their holdings difficult to trace. Assets worth 29 billion have been frozen in the EU so far.
expelled sports
Sanctions also for sport and culture. Made up of athletes and teams from Olympic competitions, tennis, soccer world cup, skiing world cup and junior swimming world cup. The Champions League final and the Formula 1 Grand Prix circuit will be held outside of Russia.
In the end, only the European Union can play the decisive game, which decides whether we fear barbarism and the end of the rule of law or a period of strict austerity measures most.
Outside of Eurovision 2022 and Warner Bros., Disney and Sony suspended the release of films in Russian cinemas. Bottom Line: The sanctions as a whole are isolating Moscow and doing some damage to its economy, but this is amply offset by exports of hydrocarbons that the EU, and especially Italy and Germany, desperately need. In the end, only the European Union can play the decisive game, which decides whether we fear barbarism and the end of the rule of law or a period of strict austerity measures most. The answer is the solution.
April 11, 2022 | 06:41
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