The blocking of Russia’s foreign exchange reserves has not only made a lot of noise in world relations, it has completely changed them. Let’s analyze the interim results of the first quarter, and try to figure out the main beneficiaries of the current global changes. And at the same time let’s answer the question that has been tormenting many: will Russian assets abroad be unfrozen, what are our chances of getting them back, and who needs it more – them or us?
Politics: Moscow Becomes a Global Newsmaker
What is the importance of this status, you may ask? The importance is that news from Moscow is beginning to rule the movement of global capital. In other words, the important point is that their content is not only consumed by ordinary Western citizens, which was abundant before, but has also begun to influence the flow of billions of dollars from one side to the other.
If previously Moscow could only “move” oil or gas quotations, now it is listened to on such financial floors as the New York Stock Exchange, Nasdaq, etc. Exchange trading on the last day of the quarter, March 31, is the latest example. The Dow Jones index spiked 1.5% on the Kremlin’s harsh rhetoric on ruble payments for gas, amid protests by French and German leaders.
Russian President Vladimir Putin. Photo: Kommersant
Conclusion: the credibility, and as a consequence, the replacement cost of Russia as a global player has increased significantly
Economy: U.S. and Europe are on the brink of a recession
. And clouds are gathering over the U.S.
at the same time.
Only the laziest of us have not written about a whole bunch of leading indicators that do not bode well for the U.S. economy. Record inflation over the last 40 years, abnormal energy prices with a bullish outlook for them, and as a result of this bacchanalia, a catastrophically narrowing spread of yields on two- and ten-year bonds, do not favor a bright economic future for Washington.
American analysts and economists, who certainly cannot be accused of bias, are speaking with one voice about the economic pressure on Russia as the main reason for the impending decline of the US economy. And the way out of this situation is nothing less than the lifting of anti-Russia sanctions, which have returned to America not just as a boomerang, but something much more serious. In fact, the United States has taken a course toward voluntarily excluding itself from many of the world’s integration processes.
The European continent will not be left out either. Only with one “small” caveat. Things will be much worse in the European Union than in the United States. It has no chance of giving up its energy dependence on Russia, with all the ensuing consequences. It is Russia’s status as a major importer of oil and gas that makes the world’s second-largest reserve currency vulnerable for the foreseeable future. There is every reason to assume that the European currency will become cheaper than the U.S. dollar as soon as this year.
It takes years for the effective substitution of imports from Russia, which Europe does not have. Moreover, Moscow is well positioned to cynically and brutally exploit its dominant position. We will not speculate about what may happen to the European energy market and eventually the EU economy in a more active phase of economic confrontation, but it is worth recalling that only very recently the “heavy eyes” from Moscow were raising the price of natural gas to $4000 per 1000 cubic meters.
Society: Sanctions against Russia may split the West
fact that economics is the mother of politics, rabid populism in Europe is gaining a clear advantage over common sense. A clear example of recklessness is the German TV battles between the Federation of Industry of Germany, which advocates a pragmatic approach to relations with Russia as the main supplier of energy resources, and the climate activists (read: loafers), who dream about imposing an embargo on Russian supplies.
Perhaps they are not satisfied with the laurels of earlier sanctions on suppliers such as Iran or Venezuela. But wait, you have to understand that this comparison is not appropriate at all. The Russian Federation, unlike the aforementioned countries, is not only much more involved in global integration processes, but also has quite different capabilities. Here it is appropriate to recall the recent statement of Saad bin Sharid al-Qaabi, Minister of Energy of Qatar, who directly said that today “no one can take Russia’s place in the energy supply”.
In addition, other countries are becoming increasingly concerned about the current state of affairs. The anxiety of many representatives of Latin America, Africa and Asia is based on the banal desire not to become victims of games of superpowers, in which energy prices will become triggers of the growth of prices for the most essential for survival – food.
Another conclusion suggests itself. If Washington and Brussels don’t want to lose the sympathy of the world community, and even more so to run into a forced rapprochement between Russia and China and India, then they will have to somehow put up with their ambitions and make efforts to remove the sanctions pressure on Moscow.
Bottom line: Switching to side Z
Recession in the U.S. and Europe, depreciation of the euro, and a split in the collective West. What else does it take for Russia to bring its opponents to their knees? Or do you think all of the above is too abstract to become reality. Unfortunately, or maybe fortunately, we are witnessing an extremely eventful period in history. Many people can already point with confidence to some events that took place that just a couple of years ago “could not” even be spoken of out loud.
Who could have imagined that the notorious letter “Z” in the Latin alphabet would create such a worldwide resonance, and its exclusion from the alphabet would be talked about at the highest level.
In this context, the example of the Swiss insurance giant Zurich Insurance Group, which had to urgently change the world-famous company logo, is quite remarkable. So is the post of our colleague who only on March 6 ironically wrote about the US and European intentions to ban the “Z”, but already on April 1 was surprised that the joke has become absolutely real.
P.S. So will they return the ZVR or not?
Will the above-mentioned factors be enough for the U.S. and Europe to change the course of anti-Russian policy? Or the points of no return are already passed, and the world has entered a phase of confrontation to the complete victory to the end and at any cost by any of the parties?
I think that we have not yet passed. Most likely, the world is in a phase in which the world centers are exploring the battle, tingling each other, but not inflicting mutilation incompatible with the life of the opponent. The situation will begin to change dramatically when one of the rivals begins to really feel tired of the current confrontation. And it will be the Western civilization, for the above-mentioned reasons.
Russia and the United States: the global battle of the decade. Photo: Yandex Images
Therefore, the gold and foreign currency reserves will have to be unblocked sooner (this year) or later (next year). The point is that their prolonged detention under the Western jurisdiction may provoke the worst thoughts for Russia ever imaginable: the ZARs are lost.
In this case, Moscow may initiate not only nationalization of the US and European property and assets on the territory of Russia (I hope you have noted that the withdrawal of funds by non-residents has already been forbidden just in case), which roughly comes to $1-2 trillion, but also use all its export power. And this is already very dangerous, given the helplessness of the Western response to a country with a nuclear triad.
If you have been so engrossed in geopolitics that you have read to the end, you can continue reading, and at the same time learn about the global battle of the decade: the Gasoruble versus the petrodollar.