The Europeans, unfortunately, have fecklessly allowed themselves to become highly dependent on imports of Russian natural gas. This means that if they were to attempt a full-scale cutoff of Russian exports they would impose soaring prices and shortages on themselves. Given sufficient provocation, they could still do it: Modern advanced economies can be incredibly resilient in times of need.
But even the invasion of Ukraine probably won’t be enough to persuade Europe to make those sorts of sacrifices. It’s telling, and not in a good way, that Italy wants luxury goods — a favorite purchase of the Russian elite — excluded from any sanctions package.
Financial sanctions, reducing Russia’s ability to raise and move money overseas, are more easily doable — indeed, on Thursday President Biden announced plans to crack down on Russian banks. But the effects will be limited unless Russia is excluded from SWIFT, the Belgium-based system for payments between banks. And a SWIFT exclusion might in practice mean a stop to Russian gas supplies, which brings us back to the problem of Europe’s self-inflicted vulnerability.
Yet the world’s advanced democracies have another powerful financial weapon against the Putin regime, if they’re willing to use it: They can go after the vast overseas wealth of the oligarchs who surround Putin and help him stay in power. [Continue reading…]
Russia’s wealthiest individuals were already feeling the squeeze from escalating tensions between the nation and Ukraine.
It got much worse for their net worth after Russian President Vladimir Putin’s decision to invade Ukraine. In less than 24 hours, they lost $39 billion — more than they had up to that point this year.
The damage was across asset classes. Russia’s benchmark MOEX Russia Index closed 33% lower in Moscow, the fifth-worst plunge in stock market history in local currency terms. It marked the first time since 1987’s Black Monday crash that a decline of that magnitude hit a market worth more than $50 billion. [Continue reading…]
In a few weeks you will be able to buy the brilliant Oliver Bullough’s new book, Butler to the World, in which he details how the UK became the servant of some of the world’s worst individuals. To help the oligarchs, the kleptocrats and the gangsters, Londongrad boasts a whole humming, interconnected professional class of reality-launderers specifically designed to service them – lawyers and lobbyists and education consultants and all sorts of others who imagine themselves to work for respectable businesses. But don’t.
I thought of them when I read an article by Marta Shokalo, editor of the BBC’s Ukrainian service, written in the hours after the invasion began on Thursday. She described hearing the explosions in Kyiv and, later, getting her 10-year-old son up and dressed. “We had some breakfast, sitting as far from the windows as we could,” she wrote, “but he was so scared he vomited.” Reading this yesterday before supper with my own children I felt such a deep, painful sympathy for her. There is no one working to launder reality for her child. There is no army of sharp-suited professionals lavishing painstaking hours on making all the bad stuff go away for Ukrainian children, two of whom were reportedly killed in the past 24 hours by Russian strikes on civilian targets. It is their misfortune – their tragedy – to live at the sharp end of Vladimir Putin’s wickedness, while the megarich who exist in grotesque symbiosis with the Russian president have their every rough edge smoothed off in this capital they most adore to call home. Or, as Bullough now asks: “Why are we preferring Russian oligarchs over Ukrainian kids?”
Why indeed? I don’t want to go out on a limb here, but Britain’s professed attempt to deter Putin with sanctions was arguably hindered by not imposing any even remotely irksome sanctions until after he’d actually invaded Ukraine. Less “stop or we’ll shoot”, more “shoot or we’ll stop”. For so long now, the urgency and gravitas that successive governments have brought to this problem are epitomised by Gavin Williamson’s comment that “Russia should go away and should shut up”.
That, you might recall, came in the wake of Putin deploying a nerve agent on our soil. Even now, just typing those words is a proper mindmelt. Not one month before, the wife of Putin’s former deputy finance minister had successfully bid £30,000 at a Tory party fundraiser to have dinner with Williamson at the Churchill war rooms. Indeed, this same woman, Lubov Chernukhin, has spent a fortune buying time with politicians, including £160,000 to play tennis with David Cameron and Boris Johnson. [Continue reading…]