Russia Feeling Financial Pain
Unfortunately when sanctions are imposed there is collateral damage being the everyday person in the street. They may or may not agree with Russia's stance on Ukraine yet must suffer the consequences of such actions. This why having a true democracy is so important as decisions by whoever you voted into power has to have his supporters best interests at heart.
Looks like Russia will have to rely on Emirates if they are able to travel during sanctions.
We have seen the domino effect happening with air space as all Russian airlines now have to fly around and not over these countries. I know exactly how that is felt as in South Africa back in the Apartheid years we had to fly out to sea in order to reach the UK. A 10 hour flight was now 19 hours with refueling having to take place in Las Palmas. For instance if a Russian Airline wants to fly anywhere distances have now been increased if airspace is denied resulting in higher running costs. Emirates Airlines however is the UAE and are still friendly with the Russians along with India and China.
The Rouble is almost down 30% and this is day 1 so how far can it drop still. 100 Roubles for $0.97 makes the Rouble value less than $0.01 each.
The tit for tat is something we all expected to happen when the SWIFT ban fell into place. Russia still has options however as there are still some friendlies within the EU that allow payments to happen. For years now Russia realised if SWIFT was denied to them then they needed to add a back up avenue to make payments. SPFS which is Russia's equivalent of SWIFT was launched back in 2014 with it's first transaction happening 3 years later in 2017.
source The SPFS has partnered with the Euroasian Economic Union (EAEU) which is not huge but allows Russia a back door to maneuver. In 2020 Russia realised they needed more countries in the West on their "red" list and have got banks in Switzerland and Germany to name a few of the 23 alternates besides SWIFT.
Sanctions are great if every one who plays ball is transparent with each other not allowing any loop holes or grey areas. The grey areas that stand out are most definitely Switzerland and Germany who the latter dragged their heels over sanctioning SWIFT in the first place.
The one major sanction that hasn't happened is Russian Oil and Gas which surely is the big one to knock them out the park. Everyone is going to feel this pain and not only Russia which is a small sacrifice to pay at this time. Politicians need to do the job properly and stop thinking about their own vested interests. Their supporters who bank roll them no doubt have been leaning heavily on them to protect their interests and why nothing has happened as yet.
Russian Sherbank down 74% today is rather telling how sanctions are going to affect them big time.
And here is another telling share price as Gazprom is seriously hit including Shell bailing on their JV with Gazprom.
The latest is Gazprom is down 58% on the day and one of the reasons why the Russian Stock exchange was closed today. The main takeaway from all of this is the oligarch's who supported Putin will be feeling the pinch plus every person in the street. His support is dwindling and why economic sanctions are so important with no loop holes allowed.
Posted Using LeoFinance Beta