Sanctions take their toll
The package of Western sanctions on Russia is of unprecedented scope, said Robin Wigglesworth in the FT – and its effects have been “swift and severe”.
The rouble has lost 30% of its value in the last week; interest rates have reached a whopping 20%; and Russians have been queuing up at banks to withdraw cash. Moscow’s stock market has been shut since Putin launched his invasion, but the value of Russian firms on the London Stock Exchange fell 98% in two weeks. Why? Because the West has deployed “weapons of mass financial destruction”. First, it excluded an array of Russian banks and businesses from the global Swift payments system; then it froze Russia’s access to roughly $600bn of assets its central bank held overseas.
Putin prepared for this, said Ruth Sutherland in the Daily Mail. Russia built a huge “war-chest” of 2,300 tonnes of gold before this year, and its central bank reserves were equivalent to nearly 40% of its national income last year. Yet its ability to access such assets was “drastically constrained” by the sanctions. As a result, Russia’s GDP could shrink by as much as 9% this year, said Bloomberg: a worse slump than in the 2008-09 financial crisis. And with more curbs on oil and gas in the offing (see page 47), “the hit could be closer to 14%“. That means “jobs will be lost” and there’ll be shortages of goods, said Larry Elliott in The Guardian. Make no mistake, these sanctions will seriously hurt millions of Russians.
Russia also faces cultural boycotts abroad, said Kat Rosenfield on UnHerd. Russian films are being pulled from festivals; athletes are barred from international contests like the Paralympics; Bolshoi Ballet performances are being cancelled. At a university in Milan, a course on Dostoevsky was even briefly suspended. Corporate giants are also fleeing Russia, said Rachel Elbaum on NBC News. This week, McDonald’s led a fresh exodus of global brands from the country. For now at least, Russians will be unable to shop at Ikea, Zara or H&M, drink a Coca-Cola, or visit Starbucks – a small but potent symbol of the “economic war” the Kremlin complains the West has now unleashed on Russia.