Sanctioning oligarchs requires thinking like one
Those sanctions are really shaping up.
You can always tell when someone first moved to Russia by what they think the natural rate of the ruble should be. For me, there just should be 28 rubles to the dollar, because that’s what there were a couple of decades ago, so I was never quite got used to the fact it has been twice that weak since the annexation of Crimea in 2014. Now, I am looking at news that it hits lows of 119 with disbelief. I keep wondering how exchange bureaus with two-digit displays are coping, and then I remember there isn’t any currency anyway, so it doesn’t matter.
All the signature achievements of Vladimir Putin’s reign appear to have collapsed in a week: the ruble is unconvertible, foreign investors have fled, he’s been thrown out of international forums, and that’s just the start. It’s staggering. Judged just on the raw impact on the ruble, sanctions have been spectacularly effective. Imports will be hugely expensive, even when they’re available, considering trade restrictions.
BUT, and this is a huge but, we mustn’t mistake this on its own for success, and believe this will pressure influential people in Russia to pressure Putin to end his barbarity. Anyone who has read the economist Gabriel Zucman’s short-but-mighty book The Hidden Wealth of Nations, or his academic papers, or indeed any of the previous newsletters when I have referenced his work, will know that the Russian elite is unusual because it holds so much of its wealth offshore (indeed Zucman writes that the “vast majority” of the elite’s wealth is owned outside Russia).