Friday, February 25, 2022

Putin Taking Long Game on Economic Sanctions

Vladdy's been preparing for Russia to take massive sanctions hits for quite a while.

At the Los Angeles Times, "Russia has spent years preparing for international sanctions":

SINGAPORE — With no appetite for military confrontation, the U.S. and its allies are relying on sweeping economic sanctions to persuade Russian President Vladimir Putin to pull out of Ukraine. But the effectiveness of those measures are anything but certain, relying on a host of factors that includes how much China is willing to come to Moscow’s aid.

Placing a stranglehold on Russia’s $1.5-trillion economy will not be easy, especially since it began trying to buffer itself from international sanctions after it annexed Crimea from Ukraine in 2014.

Russia has sidelined growth to pare down its debt and built up its reserves of foreign currency and gold — so much so that it reached record levels this year at over $640 billion.

The reserves help soften the financial blowback of Russia’s invasion. On Thursday, the Russian central bank pumped liquidity into the country’s banking system and sold foreign currency for the first time in years to prop up the ruble, which plunged to its weakest level since 2016.

President Biden announced Thursday that U.S. and European allies would sanction five Russian banks holding about $1 trillion in assets and block high-tech exports. Russian oligarchs, said to be members of Putin’s inner circle, were also targeted by sanctions.

As it stands, those measures are highly unlikely to inflict enough pain on Moscow to trigger a reversal in Ukraine, analysts said, noting that any sanctions imposed now are likely to be too little, too late...