Is Russia facing its biggest economic storm in 20 years?
Did Russian President Vladimir Putin expect such a massive economic, political and military
punishment?
Will the Russian economy be able to withstand this tsunami of sorts?
Exactly how far are the allies willing to go?
Listen up.
Moscow has carried out the largest military offensive in Europe since 1945.
An offensive that has left us with images we thought we would never see again in old
Europe.
We were wrong.
Tanks, heavy artillery, aerial combat and the bombing of cities are back.
Of course, this time, far from receiving the cheers, accolades and popular acclaim for
battlefield victories, Putin has been met with a huge tsunami of losses, condemnations
and punishments from across the globe.
("The Russian invasion of Ukraine marks a turning point.
It threatens our entire post-war order.
In this situation, it is our duty to help Ukraine, to the best of our ability, to defend
itself against Vladimir Putin's invading army."
Olaf Scholz, Chancellor of Germany)
("We will show that a reckless act of violence comes with a huge price.
The international community’s relationship with Russia can no longer be the same as before."
Fumio Kishida, Prime Minister of Japan)
The allies warned Russia again and again and again: the cruel and unjustified invasion
of Ukraine would have devastating consequences for their society, their economy and also
for the Russian army itself.
And so, VisualPolitik viewers, in this video we are going to tell you exactly how the United
States, the European Union and, in general, all NATO allies seek to damage, erode and
even destroy the economy and much of the power of Russia.
And take note, because they want to achieve this despite the fact that the Russian bear
will continue to be a major exporter of oil, natural gas and raw materials.
So the challenge is enormous.
The question is, how on earth can they pull it off?
In what ways can Vladimir Putin be stopped in his tracks?
How are the allies punishing Russia for the invasion of Ukraine?
Well, let's take a look.
But let’s take a minute, because many of you have asked us if there is any way to help
Ukraine in this war.
And the truth is that there is: in addition to showing your condemnation of the invasion,
the Central Bank of Ukraine is accepting donations from all over the world to support the Ukrainian
armed forces and the Ukrainian resistance.
This is not advertising, obviously nobody pays us to say this.
We do it for information purposes only because we think some of you may find it useful.
If you are interested we have left the link in the description.
(DRIVING RUSSIA OUT OF THE GLOBAL ECONOMY)
The war is being waged on many different battle fronts.
And one of them is precisely that of the economic war.
The United States, the United Kingdom and the European Union were very clear: If Putin
invaded Ukraine, Russia would face unprecedented punishment.
And guess what?
No sooner said than done!
This is exactly what they are doing.
Not only to try to stop the war, but also, and perhaps above all, to limit the power,
threat and influence of Russia.
If the invasion of Ukraine has made one thing clear, it is that in the end, a country with
few resources has many limitations:
insufficient supplies, old equipment, poor training, and a long list of other problems
of all kinds.
No matter how much propaganda there is, reality ends up rearing its head:
Russia is a relatively poor and highly corrupt country.
So their military, as large as it is, has more holes in it than a Swiss cheese.
As we have all seen, when it comes down to it, the Russian armed forces suffer from all
kinds of shortcomings.
Which obviously has consequences.
For example, sources indicate that during just the first 5 or 6 days of the invasion,
the Russians suffered more casualties in Ukraine than the United States suffered in Afghanistan
throughout 20 years.
Leaving the physical battle aside, as we have already told you, the aim is to punish Putin
and limit Russia's economic capacity as long as Russia remains hostile.
Of course, many of you may say, – yeah, yeah, [Name of Host], here we go with the
usual comments, that sound very geo-strategically smart but then when it comes to the crunch,
practically nothing eventuates.
Well, you can believe me when I tell you that this time the allies are very, very serious.
The invasion of Ukraine has changed everything.
And that is why their first objective has been to kick Russia out of the international
financial system:
Firstly, the sanctions are intended to reduce foreign financing for the Russian government,
banks and companies.
To make this happen, the allies have approved limitations on debt purchases and sanctions
against the country's major banks.
The United States, for example, has blocked, among several others, the country's two main
banks, Sberbank and VTB, which together control almost 60% of the Russian financial system
and can no longer operate with US banks.
In other words, they cannot carry out operations in dollars.
And of course, most of the international operations are carried out precisely in dollars.
But it is not only the United States.
The United Kingdom and the European Union have followed suit.
A move that has left Russia trembling.
The second course of action has been perhaps the most anticipated of all: the expulsion
of many Russian banks from the so-called SWIFT system.
The international messaging system that connects most of the world's banks.
SWIFT, a Belgian-based cooperative, is an interbank communication system that is involved
in more than half of all high-value cross-border payments.
Every day it processes more than 40 million financial messages between more than 11,000
financial institutions worldwide.
Well, now a major chunk of Russian banks will be excluded from this system.
And, take note because when in 2012, Iranian banks were expelled from SWIFT they suffered
a catastrophe, suddenly they could no longer handle international transfers because they
could no longer communicate or verify them.
In the case of Russia, not all banks will be affected, or at least not completely.
After all, the Europeans want to continue to buy Russian oil and gas, and they have
to be able to pay for it.
What’s more there are the debts that the Russians have contracted with Western banks
and which, obviously, they want to recover: we are talking about $121 billion dollars.
Nevertheless, the damage to the Russian financial system will be more than considerable, because
while there are alternatives to SWIFT, they are more expensive, entail control problems
and many banks will never be compensated for using them.
So, one way or another, the excluded Russian banks will no longer have access to a significant
part of the world's financial system, which as you can imagine: will complicate and make
trade, foreign investment or, for that matter, the management of remittances more complicated
and expensive.
In other words, it’s a huge kick in the shin.
And then finally we have the third course of action.
While the expulsion from SWIFT has been the most high-profile sanction of all, let’s
take a moment because the real blow has been the decision of the United States, the European
Union, the United Kingdom and Canada – and more countries may follow – to block the
Central Bank of Russia and with it most of its international reserves.
You see, as we covered in a previous video, one of Vladimir Putin's greatest trump cards
were the more than $600 billion dollars in reserves that Russia has accumulated over
the last few years in the form of dollars, euros, gold, yuan, yen, etcetera, etcetera.
Check it out.
Well, now most of these huge reserves, the fifth largest in the world, are gone.
At least the Russian government can no longer draw on them.
("This is a kind of financial nuclear bomb that is falling on Russia....
The war came and the money ran out – the money ran out sooner than the war ended."
Sergei Aleksashenko, former deputy finance minister and former deputy governor of Russia's
central bank)
Cash reserves are needed to pay for imports and also to support the local currency.
For example, in view of the capital flight and the outflow of investments caused by the
war and sanctions, the Central Bank of Russia no longer has the necessary resources to support
the ruble, which will cause it to collapse, dealing a heavy blow to the entire country:
Inflation will skyrocket, real incomes will plummet, and savings, well, the value of savings
will volatilize....
This is a process that Argentinians are all too familiar with.
Plain and simple, all of a sudden, overnight, the blockade of the central bank has snatched
the equivalent of hundreds of billions of dollars from the Russian government.
We are talking about a measure that until now had only been taken against Iran, Venezuela
and North Korea.
Russia, Russia, what a distinguished club you've joined.
Unsurprisingly, all this has forced the Russian government to take measures, some of them
very severe:
Shortly after the major sanctions were announced, the Central Bank of Russia, in an attempt
to stem capital flight and the consequent plunge in the ruble, had to raise interest
rates to 20% from the previous 9.5%.
This of course has a very negative effect on Russian companies and families.
The government has also had to impose tight capital controls that, for example, prevent
Russians from sending money abroad freely and that stop international investors from
liquidating their investments in the Russian stock market.
Let's see who is the brave one who invests in Russia any time soon.
And remember we are not only talking about the United States, the United Kingdom and
the European Union: many other countries such as Japan, South Korea, Australia, Canada,
Norway and Singapore are also imposing sanctions on Russia.
Even neutral Switzerland has joined in kicking Putin's government for goodness sake!
(Switzerland backs full EU sanctions against Russia -Swissinfo.ch)
(Norway's $1.3tn oil fund to ditch Russian investments.
FT)
But it doesn't end here.
Because once the allies expel Russia from the International Financial System, they also
want to isolate it, check it out.
(RUSSIA, MORE ALONE THAN EVER)
You see, along with financial sanctions, the allies are also passing trade sanctions that,
for example, prevent Russia from buying critical products, such as technologically advanced
components.
At the same time, the risk of violating some of these sanctions, as well as the reputational
risk, is causing many companies to announce that they are going to cancel all or a major
part of their operations in Russia.
This is the case with Volvo, Daimler, Disney, Apple, Nike, Jaguar, BP, Shell, Equinor, Intel,
UPS, Fedex and AMD, among many, many others.
And of course the country is also being suspended from all kinds of cultural and sporting bodies
and competitions: from Eurovision to the World Cup.
(Fifa and Uefa suspend all Russian clubs and national teams.
BBC)
But if there is one area where we are beginning to see what the isolation of Russia really
entails, it is none other than aviation.
The European Union, the United States, the United
Kingdom and Canada have all closed their airspace to Russian aircraft.
("Our airspace will be closed to every Russian plane – and that includes the private jets
of oligarchs".
Ursula von der Leyen, President of the European Commission)
And not only that.
The allies have also established strong restrictions on the sale of all goods and technology linked
to aircraft.
In other words, if an aircraft goes to Russia and, for example, has a problem, the airline
risks being stranded because it won’t be able to get the parts it needs.
That is why many international airlines are suspending their flights to Russia.
What's more, the European Union has also banned aircraft leasing companies from working with
Russian airlines.
And, take note because more than half of the commercial aircraft in Russia are leased,
which is a very normal operation in the industry.
Between one thing and another, Russian skies are going to be very empty.
You could say that Russia is being fully expelled from the international community.
And it follows that without money, without communications and with restrictions of all
kinds...
You can probably guess what the future of its economy is going to be like.
What can I say, it looks bad, very bad, for Putin and for Russia.
On top of all this, in addition to all the financial and trade sanctions, the trio of
major allies, the United States, the European Union and the United Kingdom have also targeted
Russian oligarchs close to the Kremlin along with government heavyweights.
Many of them are going to be investigated, have their assets frozen and be banned from
entry.
And guess what?
Even Monaco has joined in this task.
("We are targeting oligarchs’ private jets, we’ll be targeting their properties, we’ll
be targeting other possessions that they have."
Liz Truss, British Foreign Secretary)
So I don't know, it is not so unusual that it is precisely the oligarchs in Putin’s
own entourage who are the first to start questioning the invasion.
(Top Russian Oligarchs Are Speaking Out Against the War in Ukraine.
Vice News)
Oh, oh, they’re sure going to miss the high life.
This, VisualPolitik fans, is the other war.
The war that the allies are waging against Russia.
But remember it’s still a war...
The punishment also extends to the military field.
Yes, yes, that’s right.
Listen up.
(WEAPONS, WEAPONS AND MORE WEAPONS.
AN ENORMOUS ARSENAL)
Vladimir Putin looked very, very smug: the Ukrainian army would be no match against the
formidable Russian mobilization.
However, as you all know, the story has been completely different so far.
Russian troops have encountered a much more robust and better equipped army than they
thought.
And not only that, after the invasion, supplies from NATO and allied countries started arriving
like there was no tomorrow.
At first countries like Germany were reluctant to supply arms to Ukraine.
In fact, they even vetoed deliveries of German-made weapons to other countries such as Estonia.
But then everything changed.
Suddenly the pressure from the United States, the United Kingdom, Poland and the Baltic
countries had an effect: now everyone has realized that every day that the Ukrainians
resist, things get worse, much worse for Russia.
Precisely because of this, the vast majority of European governments are announcing massive
arms deliveries to the Ukrainian army: anti-tank weapons, air defense systems, ammunition,
food supplies, vests, rifles, etcetera, etcetera, etcetera.
Even the European Union itself has announced that it will use its Peace Fund to finance
the purchase of armaments for Ukraine.
This is the first time in history that the European Union has earmarked funds for the
purchase of military equipment.
And obviously, all this has made the Ukrainian army better able to resist and cause great
damage to the Russian army.
An army for which every day of combat costs a fortune it does not have, as well as a lot
of casualties.
Indeed, even Sweden has joined this huge campaign!
The Scandinavian country has pledged to send more than 5,000 anti-tank missiles and thousands
of vests and helmets along with other equipment.
In fact, practically the only exceptions have been Hungary, which has pledged to donate
thousands of liters of fuel but no weapons, and Spain, which has sent a shipment with
some vests, some helmets and a lot of gloves, gowns and masks, heaps of masks.
Yes, yes, the coronavirus kind.
I guess Madrid thinks that masks are better than weapons for winning wars.
Anyway, we have already told you in various videos that Spanish politics are going through
a bit of a rough patch lately.
The point is that all these measures are how the United States, the European Union, the
United Kingdom and all the allies hope to punish Russia for unleashing the horror of
war in Ukraine.
And, at the same time, limit its future threat.
But at this point, it's your turn: What do you think of the strategy being followed by
the allied countries?
What else do you think they should do?
Will it work?
Will it fail?
Leave us your comments below.
And now if you found this video interesting don't forget to like and subscribe to VisualPolitik.
From all of us here we wish strength and encouragement to all the Ukrainian people.
In future videos we will tell you about many other consequences that this war will have
for Russia and for the whole of Europe.
All the best and see you next time.