Under the pressure of sanctions, Russia is short-lived

Although the global sanctions campaign against Russia is still less than a month old, investors and sanctions holders held their breath this week as Russia struggled to pay কু 117 million in coupons on March 16, which came in part this time.

Meanwhile, new sanctions are being introduced in various ways in an effort to persuade Putin to stop the invasion of Ukraine. While more than just fine-tuning, most of these new measures widen the sanctions net, but not the usual large-scale new sectoral sanctions that will put pressure on the Russian economy.

Russia pays in dollars – nothing else matters

Some Russian creditors have received 7 117 million in coupon payments due on March 16, Reuters reports, a day after the deadline. Since these obligations are accompanied by a 30-day grace period, payments received after the due date indicate that Russia is at least working to meet its obligations and has decided to blast the West by offering only ruble payments, legal under new Russian law but to the country’s creditors. Largely unacceptable.

Washington had earlier announced that it would not block the repayment of this special loan from Russia. However, technical issues related to the transmission of sanctions-related funds have delayed several Russian payments since March.

The crisis has apparently been averted, with Russia-observers now focusing on the default-triggering possibility of two impending Russian sovereign debt repayments, one on March 31 ($ 360 million) and the other on April 4 (approximately $ 2 billion) in exchange for dollars or euros. Arranged loan repayment. Aware of these two deadlines, Western credit institutions are increasingly noticing that the default could be “imminent.”

Economic woes are on the rise

In contrast, despite Russian claims, the Western sanctions campaign has had a growing impact on the Russian economy. There have been growing reports of panic shocks, bank runs and snap deficits, although we were too quick to promote sanctions to take them as evidence of sustainable success. The ruble fell sharply to 4 154 per dollar since the onset of the attack and the first wave of sanctions was announced, from যুদ্ধ 84 per dollar in pre-war levels, but has since stabilized and recovered substantially to about প্রতি 97 per dollar. Yet most analysts believe that this recovery is only temporary because inflation accelerates and Russian GDP begins to decline, perhaps at least 15 percent this year.

A Russian automaker says it is experiencing severe input shortages and will bring workers summer vacation in April to create a breathing space. The initial indications of such an industrial disruption in the global sanctions task force announced in the first week after Russia’s invasion of Ukraine must bring spirits to Russian economic monitors.

Putin announced on March 16 the initial government relief measures to try to reduce the undeniable effects of rising prices, which he still claims are temporary. He promised to raise the minimum wage and the salaries of all public sector workers.

The new ban further tightens the network

The new sanctions announced by the United States, the EU and others over the past ten days have not been particularly newsworthy, as they consist mostly of an expanded list of authorized individuals / entities close to Putin’s inner circle and a few new trade restrictions. Taken together, these are far more significant than the usual fine-tuning, which we will see from this point onwards unless / until the EU reduces its huge purchases of power from Russia.

Russia’s “Most Favored Nation” (MFN) tariff status was announced a week ago by the G-7 in a coordinated manner, requiring legal action in a number of cases, particularly in the United States. This is only symbolic in many ways because Putin last week announced export bans on several of the country’s traditional exports that are not yet subject to sanctions. The United States and the European Union have announced that they will ban the export of luxury goods of choice to the Russian elite.

The European Union’s fourth embargo package, approved March 15, covers the above-mentioned suspension of MFN treatment for Russia, adds many more Russian oligarchs and business elites to the travel ban, and blocks the export of luxury goods such as the United States. Also important were the ban on transactions with a number of state-owned enterprises and the ban on investment in the energy sector and the new export ban on equipment, technology and services for that sector.

The EU is also banning imports of some Russian steel products currently under EU protection measures, amounting to about € 3.3 billion in lost export revenue; Lost Russian quotas will be redistributed to other producers.

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