The United States is on the verge of crushing and destroying the Russian economy, and uses Ukraine as a good reason
The United States admits that Russia can be completely isolated from the international financial system in the event of a military invasion of Ukraine, said U.S. Under Secretary of State Victoria Nuland.
As Nuland noted, the United States is already discussing such a scenario with its allies. De facto isolation would have consequences for both Russian businesses and Russian citizens, as it would restrict their opportunities for work, travel and commerce, she noted. In an effort to prevent Russia from aggression, the United States is considering all available options, including unprecedented sanctions that can be introduced in stages, Nuland said.
In addition, the United States expressed hope that the Nord Stream 2 pipeline would be closed if Russia invaded Ukraine. The United States is currently in talks with the new German government, and American officials can already see that their German counterparts are ready for decisive action against Russia.
Sleepy Joe would rather sleep than sanction Putin
US President Joe Biden, in conversation with Russian leader Vladimir Putin, also warned that the United States would introduce economic and other measures in the event of a military escalation in Ukraine. Putin replied that the sanctions are not producing any positive effect for anyone, including the United States.
The Kremlin noted that Biden had softened his rhetoric on possible sanctions against Russia during his online discussions with Putin. In particular, the Kremlin said, the US president spoke of restrictive measures in a form that was more acceptable than what Russia could hear from US officials before.
US wants mother of all sanctions imposed on Blessed Mother Russia
On December 7, the chairman of the International Committee of the US Senate, Democrat Robert Menendez, announced the development of the “mother of all sanctions” against Russia that would be imposed in the event of a military invasion of Ukraine.
“If Putin invades Ukraine, the implications will be devastating for the Russian economy, but also for the Russian people,” he said, adding that he had proposed to include restrictive measures in the draft budget. defense, but that he would now seek other possibilities to insert into the legislative framework.
US throws anti-Russian media hysteria bug
On December 6, it was reported that the United States had prepared a new package of sanctions against Russia, including steps to disconnect Russia from SWIFT. The authors of the document described him as a damn aggressive package. The package contains a ban on major Russian entrepreneurs and members of Putin’s team from using American banks and payment systems.
The Kremlin has ignored all of the above information as yet another wave of hype. The first vice-chairman of the Federation Council’s Committee on International Affairs, Vladimir Dzhabarov, said he was skeptical of threats from the US authorities and considered that disconnecting Russia from the SWIFT system was an unlikely scenario.
On December 7, it was learned that the United States had abandoned sanctions on Russia’s sovereign debt. The US defense budget was presented without corresponding restrictions. In addition, the document did not include sanctions against the Russian Nord Stream 2 pipeline or against Russian individuals suspected of human rights violations.
US sanctions possibility of converting Russian rubles to dollars
US authorities are also considering restrictions on converting the ruble into dollars, euros and pounds sterling if Russia invades Ukraine, Bloomberg reports, citing knowledgeable anonymous sources.
However, it is believed that the baseline scenario of disconnecting Russia from SWIFT and banning currency conversion will not be used. Putting pressure on the Russian administration seems to be part of the political bargain.
In order to prohibit operations to buy dollars against Russian rubles, the US Treasury should add the agents concerned to the list of SDN (Specially Designated Nationals) sanctions. If he is on this list, he will be banned from completely accessing the US financial system. For example, in 2019, the United States added the Venezuelan government to the SDN list, which forced Caracas to pay interest on Russian government loans in rubles rather than dollars.
However, it seems that the US would not want to use blocking sanctions on Russia, because it would also be necessary to freeze the government’s dollar holdings. Therefore, such sanctions could affect bilateral trade and other aspects of the relationship.
The Russian sovereign wealth fund – the National Welfare Fund – controlled by the Ministry of Finance, has no dollar assets. Yet around 45% of liquid funds are held in euros and pounds sterling. In addition, around 21% of international assets managed by the Bank of Russia are nominated in US dollars ($ 119 billion at the end of the first quarter of 2021), RBC reports.
Currency conversion restrictions will have serious consequences for everyone, including ordinary Russian citizens. A Russian who had a debit card issued by a Russian bank could not pay by card anywhere in the United States, as it would be impossible to convert rubles into dollars. You will also not be able to withdraw money from an ATM due to conversion issues.
The US dollar rules the world no matter what
Participation in the dollar banking system provides an opportunity to conduct business activities around the world, as almost all countries in the world have a developed system of US dollar correspondent accounts. Neither the ruble, nor the yuan, nor even the euro has such a system of corresponding accounts, said Dmitry Timofeev, the head of the anti-sanctions department of the Ministry of Finance in 2019, said. RBC reports.
Today, most liquid currency pairs include the US dollar. Paired trade transactions that do not include the dollar are often done through the dollar as an intermediate currency. As a result, liquidity in pairs such as Ruble-Yuan, Rublendian Rupee, etc., is very low, and their use to convert large amounts of monetary assets will incur significant technical and financial costs.
Interestingly, when Iran, following the 2016 nuclear deal, wanted to use its funds that had been frozen in various banks and attempted to convert Omani rials into euros, it failed to do so. do because a special US license was required to first exchange rials for dollars before it was possible to exchange dollars for euros.