New Nation Report :
President Vladimir Putin issued a decree recognising two partially separatist-controlled regions in Ukraine as separate states, prompting repeated threats of severe economic consequences against Russia should Moscow invade Ukraine.
The ruble hit an all-time low of 80.2 against the dollar on Monday before recovering somewhat to 79.7, continuing a slide that began around the time of Russia’s 2014 annexation of Ukraine’s Crimean Peninsula, when the ruble was worth about 35 to the dollar.
The MOEX Russian Stock Index fell 10.5 percent Monday afternoon versus the previous day’s close, ending the year 10.4 percent lower and recording the worst single decline since the annexation of Crimea.
According to Reuters, yields on Russia’s 10-year Federal Loan Obligation bonds reached a new high of 10.64 percent on Monday, as the cost of insuring Russia’s national debt against default surged to its highest level since early 2016, while both Russia and Ukraine’s sovereign dollar bonds plummeted.
Russia has benefited from increased oil prices, which have been pushed up by the crisis. Fuel revenues account for 36% of Russia’s national budget. According to JTD Energy Services head John Driscoll, renewed confrontation between Russia and Ukraine could send oil above $150 per barrel, an all-time high.
An invasion of Ukraine, on the other hand, may jeopardise Russia’s capacity to export fuel to trading partners such as the EU, which now imports around 34% of its natural gas and 27% of its oil from Russia. The White House indicated in January that it was looking for other fuel supplies for Europe, in case Russia responded to sanctions by cutting off fuel exports to Europe.
Russia is not an economic powerhouse, despite its large geographical size and occasionally pivotal place in world politics. Russia’s $1.48 trillion GDP is roughly half that of Germany and one tenth of that of China. “With the exception of oil and gas, Russia is incredibly irrelevant in the world economy,” Harvard economist Jason Furman told the New York Times. “It’s just a gigantic gas station,.”
As tensions build up in Ukraine, US is contemplating sanctions against Putin backed Russian Oligarchs. US Senator Lindsey Graham (Republican, South Carolina) called for tougher sanctions against Russia’s government and oligarchs on Monday, just hours after Russian President Vladimir Putin issued decrees recognising the independence of two separatist-led Ukrainian regions, effectively laying the groundwork for a Russian invasion of the sovereign country.
The Biden Administration announced preparations to apply sanctions that would “prevent investment, trade, and funding by U.S. people to, from, or in” the regions shortly after Putin’s declaration. It would also give the US the authority to impose sanctions “on any person proven to be operating in specified areas of Ukraine.”
Graham, on the other hand, turned to Twitter to warn that tougher steps are required.
“Putin is arguing for the Soviet Union/Russian Empire to be rebuilt because he thinks he can get away with it,” Graham stated. “I am ready, willing, and able to collaborate with the Biden Administration to inflict the most severe sanctions on Russia’s economy.”
Graham proposed stealing “their yachts, luxury houses, and assets” from Russian oligarchs, whom he described as “Putin’s collaborators in crime.” That would be “a good start on the long struggle to push back against Putin,” he said.
