Might is not right, always. Without resorting to coercion, countries can be defeated by delivering soft power. The disturbing, and upsetting, news has moved to the front pages of newspapers since the intensity of the war has escalated.
As the former spy is bombing the country of a former comedian, the world has trained guns at Putin. He has been completely cornered. Global sanctions have created an unimaginable crisis in Russia. Let’s assess the collateral damage of Putin’s actions.
Ruble, the Russian currency plummets against the dollar. It has seen a 30% loss in value. It sank in offshore trade. Banks are going cashless. Reuters reported that the purchasing power of Russians is steadily dwindling.
They are now hoarding electronic items as they fear that the worst is yet to come. Russian citizens have started to feel the heat of western sanctions. Thousands of them are not getting regular salaries. Black marketing and inflation are rising.
Morgan Stanley, the financial services firm, has warned of Venezuela-style default. As bond prices fall, recession in the nation looms and various payment restrictions pile up after it invaded Ukraine.
The cost of war is costing too much to Russia. Western businesses are shutting down. Russia has been isolated. Surprisingly, On March 11, even China refused aircraft parts deliveries to Russia.
The total daily cost of war for Russia is likely to increase $20-25 billion, as per the study conducted by the Center for Economic Recovery. This is the direct expense, the taxpayer’s hard-earned money which Russia is ruthlessly spending. So, what is the outcome? Death, destruction, and devastation in Ukraine, and this madness will severely affect almost all the countries in the world.
As I am writing this piece on March 16th, 33 countries blocked Russian flights from their airspace. Putin also banned airlines from 36 countries including 27 EU nations. What is the outcome? The estimates suggest that 1,50,000 Russian tourists are stranded in these countries.
It is getting extremely difficult for them to go home. The two major companies in the world building aircraft are Airbus and Boeing. The aerospace firms have suspended their services to the Russian aviation industry. Both of them have halted their operations in Russia. What will be the result? Entry to and exit from Russia will be a herculean task.
Major retailers like Zara, H&M, and Puma have suspended their sales and closed their shopping centers in Moscow. Automakers around the world have stopped their operations in Russia.
Honda, Toyota, Jaguar, Mercedes, BMW, and Volkswagen are major car companies in the world. All of them have unanimously decided to cease operations in Russia.
Net result? They will stop exporting their cars to Russia. IKEA, the world’s biggest furniture brand closed all its stores in Russia.
Netflix, the streaming giant, has withdrawn the option for Russians to sign up for new accounts on its platform. Major tech companies like Apple and Microsoft have ceased sales of their products and services.
Elon Musk restored Starlink in Ukraine as the Russian invasion disrupted the internet. YouTube and Meta also blocked Russian state media from monetizing. Google and Twitter have suspended their advertising in Russia. EA play, videogame maker, said it will also stop the sales of games as the conflict continues.
Samsung, a South Korean company also stopped its shipments to Russia. Airbnb, the world’s famous vacation rental company, quite helpful for travelers, closed its operations in the world’s largest country with 11 time zones.
Exxon Mobil exits $4 billion Russian investment over Ukraine attack joining fellow energy giants like BP, Equinor, and Shell in pulling back from the world’s third-largest oil producer in the world. BP, a UK-based petroleum company is to offload its 19.75% stake in Russian state-owned oil firm Rosneft after Russia’s aggression in Ukraine. As more and more companies pull out from Russia, Kremlin legalizes piracy. It is easing its copyright laws and allowing domestic companies to steal intellectual property from ‘unfriendly nations’.
Russia’s last Independent Radio station, Ekho Moskvy, is pulled off the air. BBC website, DW news, Facebook and Twitter, and over 200 websites have been blocked in Russia after Putin signed new sanctions. It is a complete information blackout. Deloitte and KPMG, the top accounting and consultancy firms will no longer have a member firm in Russia.
Samsung, the leading supplier of Smartphones in Russia, has suspended its shipments. Levi’s, the jeans brand has closed its business in Russia. The world’s biggest cosmetics firm L’Oreal and rival Estee lauder stand closed. McDonald’s, Coca-Cola, Pepsi, and Starbucks have also announced to close their business due to Russian Aggression in Ukraine.
The world and European football governing bodies-FIFA and UEFA, in solidarity with Ukraine, have suspended all Russian football clubs and national teams. It means the Russian men’s team will not play their world-cup play-off matches next month and the women’s team has been banned from this summer’s Euro 2022 competition.
Spartak Moscow has also been kicked out of the Europa League. UEFA also ended its sponsorship with Russian energy giant Gazprom. Formula-1 also terminated its contract with the Russian Grand Prix. The 2022 race scheduled to take place in Sochi in September had already been canceled.
It had been due to move to St. Petersburg in 2023 but Formula-1 has confirmed that there will no longer be a race in Russia in 2023 either. Chelsea, a top Football club’s sale has been halted as the UK government imposes sanctions on Roman Abramovich. World Judo body suspended Putin as its honorary president.
Globally, millions of credit cards are created by Mastercard and VISA, the two biggest payment processing networks in the world. Both the companies have blocked Russian banks.
The move has hobbled the country’s economy and cut off Russian citizens from global financial systems, according to a report in The Wall Street Journal.
As per Nilson’s report, a trade publication, 74% of the payment transaction in the country was processed through credit and debit cards of these two companies.
Remitly, PayPal and Wise, International payment transfer companies have also stopped their operations in Russia. Thousands of customers are barred from using Apple pay, Samsung Pay, and Google pay.
When the world is going digital, long queues can be seen outside dry ATMs in Russia. Putin is uprooting Ukrainians, and Russian citizens are paying its price. When a large number of customers withdraw their deposits simultaneously over concerns of a bank’s solvency, it is called a bank run.
This phenomenon is creating massive trouble for common citizens of Russia whose president is attacking Childcare hospitals in Ukraine and killing newborns.
The week-long shuttering of stock trading on the Moscow bourse is its longest closure since 1998. The harsher sanctions have sent the country’s assets plunging. It can see a horrible crash once opened. The crushing penalties on Russia like SWIFT bans have crippled its economy.
Russian banks have been cut off from Society for Worldwide Interbank Financial Telecommunications. Lucidly, it means Russian banks can neither send nor receive any currency from a foreign source.
The US and its allies have decided to freeze the dollar reserves of Russia’s central bank. It means this foreign exchange reserve is a waste. The total forex reserve in Russia is 340 billion USD.
Moreover, the property of Russian oligarchs in foreign lands is being seized. Their private airplanes and huge yachts are being held. Britain has announced an immediate ban on Russian private jets.
It is believed that much of Putin’s money is kept with the Russian Oligarchs. This is a well-thought-out Psy-op to make the life of these oligarchs unpleasant so that they pressurize Putin to stop the war.
Russia is the biggest supplier of Natural Gas to Europe. Russia supplies 40% of Europe’s gas needs. Despite these growing fears, Germany suspended the approval of the Nord Stream 2 pipeline. The alternative can be the United States of America. The US is the European Union’s largest LNG supplier, with the former sending a record 400 million cubic meters of LNG per day.
The world has moved against Putin. It is a good move as the Delhi-based scribe said that if the funds of Hitler had been stopped in time, he would have failed to run the battle campaign.
The world would not witness Holocaust. Germany knows how it feels when the killing machine is not controlled. It offered 1000 anti-tank weapons and 500 stinger missiles to Ukraine from its military reserves to defend itself.
The civilians’ turned forces are fighting the massive military might. They believe, “None of us are born for war but we are here to protect our homeland.”
A large number of Russians are denouncing Putin’s war on Ukraine. A popular daily, the Sunday Times reported about Putin’s mental health. “Bitter, isolated- Putin may have lost the plot.”
The headline read. It further mentioned, “He has withdrawn into himself a lot during the past two years. He spends a lot of time alone stewing in his fears and thoughts.” His dream of victory over Ukraine has been shattered. Winston Churchill famously said of Russia, “It is a riddle, wrapped in a mystery, inside an enigma.”
The war may avoid getting Ukraine to join NATO but it will surely push the average Russian into poverty. Their standard of living would fall.
Palestinian Poet hits hard, “The war will end. The leaders will shake hands. The old woman will keep waiting for her martyred son. That girl will wait for her beloved husband. And those children will wait for their heroic father. I don’t know who sold our homeland. But I saw who paid the price. (Mahmoud Darwish)
Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.