The Biden administration's harsh response to the sabre-rattling of Russian rotten armament near Ukraine's borders has resulted not only in massing of strategic intelligence forces in the region and warning the Kremlin to pay a high price. It resulted in the next round of sanctions against the state debt of the Russian Federation.
Whatever is said about the laughing Iskanders and the fact that import substitution has made the Russian economy stronger, the regime in Moscow fears an increase in sanctions pressure.
Because everyone knows how Iran is getting richer, where 60 million people receive fuel allowances, and how Cuba is getting richer, where salaries are $40. Undoubtedly, the Kremlin is also in the loop.
One has only to listen to Putin's annual speech—completed tasks in Syria, the greatest geopolitical catastrophe of the 20th century and foreign policy have disappeared somewhere. And only maternity capital, gas, roads, compensation for Covid-19 and other purely internal agenda have remained.
Sanctions have made Russia richer
Suddenly, when it comes to food cards and the fact that the population is reducing the consumption of meat and fruits, fairy tales about Syria as the homeland of Orthodoxy are no longer enough. Despite the fact that Putin's speech was postponed from January and nothing particularly groundbreaking was announced. This was just a buying-time gesture. Simultaneously, ping ponging the 58th army from the Caucasus and making a show of disembarkation from large landing ships at Cape Opuk. At the same time, within the country, the Ministry of Agriculture distributes quotas between factories for sugar production and there is an ongoing debate about the need to restrict the supply of automotive fuel abroad. The crisis is serious and it is growing.
But the West, in addition to the largest exercise Defender Europe, hit the Russians in the wallet again. On April 15, the United States, as part of a sanctions package for meddling in elections, the Solarwind cyberattack and exercises with weapons of mass destruction (because Novichok is exactly the WMD), expelled a dozen diplomats, deployed a package against 16 organizations and 16 individuals.
In addition, the United States imposed an outright ban on its companies from directly purchasing any Russian debt (regardless of whether it was issued by the Treasury, the National Wealth Fund, or the Central Bank).
Amid tensions in eastern Ukraine and pending sanctions on April 7, the ruble stormed annual highs since last autumn. And all this when oil has exceeded $65 per barrel. If there were no geopolitical tensions and threats of a new package once a quarter, the ruble could well have remained at the level of 71. But the ruble jumps to 78 at its peak and bouncing in the corridor 75-76—the ambitions of the Kremlin regime need to be paid for.
In addition, any statements by US officials on the subject, such as the recent comment by Secretary of State Antony Blinken about their readiness to "take retaliatory measures if the Russian authorities continue to carry out thoughtless and aggressive actions," also add fuel to the fire for non-residents and foreign funds.
Federal loan bonds
But the main thing is, of course, the ban on the federal loan bonds purchase. The outflow of funds from the Russian Federation continues—$11.8 billion in the Q1. The all-time record of $4 billion for March 2020 has not yet been broken, but it is already close. The Russians are blowing their cheeks in the tamed media that all this is not important and that investors can buy securities through bogus companies, giving a share to a counterparty bank. But in general, this is a good mine for a bad game.
The share of non-residents of the Russian Federation in Federal loan bonds (OFZ) is now almost 23%, and quite recently it was 33%—a fairly serious percentage that cannot but be affected by restrictive measures. Plus, Washington continues to keep some really tough things up its sleeve.
Oil in exchange for food, hydrocarbon embargo, disconnection from the SWIFT system, bans on insurance for ships under the national flag, sanctions against non-resident banks that help circumvent bans. These are not fantasies—these are all that the United States has already used in recent history.
Islamic Republic tightens its belts
An example of how sectoral sanctions "don't work" is Iran. The devaluation of the real, that since 1979 has lost almost 600% against the dollar with all the consequences for the population,—mortgage 18% per annum, the dollar exchange rate on the "black" and the official market is three times different, loans for a wedding.
Overcoming imports of gasoline and diesel fuel—only by 2019, and even then by imposing quotas on the domestic market—the largest OPEC country restricts a car to 60 liters of fuel per month, introduces a duty on foreign cars in the amount of 120% of their value.
So the statements of official Washington are being listened to in Moscow, and being listened to attentively. American policy towards Russian aggression in Eastern Europe still looks like a carrot and a stick. Serious things are saved in case of escalation, and the economy is kept in stagnation by regular shots and market expectations. But if the stick is really a stick, then the carrots are the tales of how sweet, delicious and wholesome the carrot is—not a single package, in fact, has been loosened or canceled. This means that the policy of the Russian Federation in the region is still far from de-escalation.