Opinion – Helio Beltrão: West launches atomic sanction against aggressor Putin

The authoritarian and expansionist Putin has done one more thing. This time he achieved the feat of uniting the world in opposition. It’s no surprise to those who follow his trajectory. Already in his first election campaign in 2000, he was asked by a journalist what it was like to be an ex-KGB agent candidate. She replied with a smirk: “there is no such thing as an ex-KGB agent”.

Its first major crisis came when 40 Chechen terrorists took 850 hostages in a Moscow theater. Putin-led special forces employed chemical agents, who killed the 40 insurgents and 130 hostages, including 9 foreigners.

In 2003, it shut down the last independent TV station and made it illegal for the media to comment on elections. In 2004, he began to appoint the governors. In 2005, he claimed that the collapse of the Soviet Union was “the greatest geopolitical disaster of the century”. He eliminated political enemies, many allegedly with poison, coerced and enticed the oligarchs, and brought major Russian companies under his orbit.

At least since 2008, Putin has been shouting that, if Ukraine joined NATO, it would annex Eastern Ukraine and the Crimean peninsula. Rascals usually give advance notice of what they will do, but the West didn’t pay any attention and preferred to fight. That year, Ron Paul, an American liberal politician, voted ‘no’ to the Bush administration’s proposal to expand NATO, warning that “NATO expansion could involve the United States militarily in conflicts that are not in the national interest.”

The continuous foreign policy blunders of the United States and NATO do not justify the annexation of Crimea in 2014, Ukrainian territory since 1954. Putin violated Ukraine’s sovereignty and mocked international law by committing soldiers without insignia. Since then, hostilities between the parties have increased and Putin has opted for infamy.

I don’t think Putin glimpsed the potency and extent of the international reaction, which unplugged Russia with a “financial atomic bomb” and made it an instant pariah.

Sanctions on individuals were already imagining, so far implemented against about 700 oligarchs, businessmen and members of the circle of power, who had their assets frozen in Europe and the US.

The international community is also disconnecting several Russian banks from Swift, a financial transfer facilitation network made up of 11,000 banks. While the measure does not prevent Russia from carrying out international transactions, it will make them more costly and cumbersome.

However, the ‘atomic sanction’ to turn off the faucets of the war and financially destabilize Russia was the freezing of the gigantic international reserves (US$ 630 billion) of the Russian BC.

Without its backing, the ruble can go into a devaluation spiral with inflation. As there are no dollars to face the huge imports and other commitments, it will be up to the BC to print money.

When Russia is financially unplugged, there is a serious risk of contagion from foreign banks and companies, which may experience payment delays and defaults. And the more than US$ 300 billion that Russia makes available to the financial system overnight, which will be a shock to Western banks, evaporates.

The Kremlin said “sanctions are problematic, but Russia has the potential to neutralize them.” Unlikely. The shares of Sberbank, the largest Russian bank, have already fallen by 90% and the Russian stock market by 60% in dollars (indicated by the ETF ‘RSX’, proxy for the exchange).

Putin seems willing to sacrifice the people and the economy. The risks of his reaction – at the limit, the continuation of the war escalation – are enormous. The financial atomic sanction can be perceived by Russians as a renunciation of the traditional and rehearsed rules of escalation and an act of war analogous to the blockade of trade.