A report from HM Treasury praises the government’s role in punishing Russia for its brutal war against Ukraine.
As part of the global sanctions regime, Britain has frozen a record £18 billion in assets controlled either directly by Moscow or by supporters of Vladimir Putin.
Britain has sanctioned all kinds of regimes over the years, from Iran to North Korea. Together, the total frozen assets are much lower than Russia’s.
Sanctions: As part of the global sanctions regime, Britain has frozen a record £18bn in assets that are either directly controlled by Moscow or supporters of Vladimir Putin
Part of the reason for the large number is due to the Russian oligarchs, who, before the occupation of Crimea in 2014, chose to establish their base in what came to be known as the London Laundromat.
Roman Abramovich, the former owner of Chelsea FC, was the most visible London exile. But he was the tip of an iceberg.
At least two billionaires, with extensive interests in Britain and established philanthropists, have been in touch with me in recent months to point out the alleged injustices of the British regime.
They argue that the government refuses to acknowledge that they have never been “friends” of Putin and that their business networks were built outside of Russia.
As impressive as the sanctions regime may be, there are questions about how effective it has been in isolating Putin and ending a war that has been raging for nearly nine months. It shows no real sign of abating despite setbacks to Russian forces.
Intelligence sources close to the UK and NATO allege that even as divisions develop between Putin and his generals over the conduct of the campaign, the West’s patriotism of “Mother Russia” and Putin’s willingness to put it off for so many months or winters as necessary to secure territorial and strategic gains.
Economic and financial sanctions are nothing new.
In ancient Athens, Pericles blocked Sparta’s allies in hopes of causing trouble for the dissident countries. Instead of breaking off a conflict, it sparked the Peloponnesian War. Former US President Woodrow Wilson described sanctions as a tactic more “huge” than physical conflict.
They failed to prevent the outbreak of World War I on his watch.
The only modern example of sanctions overturning a regime was in apartheid in South Africa, where a largely racist and affluent minority was cut off from international banking and found its position no longer tenable.
Personally, I always found it a relief to think that a British ban on the sale of programs at Stamford Bridge and refusing first-class travel to professional footballers would overthrow Putin.
In its press release, the Treasury describes in detail the damage the sanctions regime has inflicted on the Russian economy.
It says the UK is ‘degrading the Russian military machine’.
It points to a projected 6.2 percent reduction in national output by 2022 (compared to projections), a 2.3 percent decline expected in 2023 and 60 percent of Russia’s reserves immobilized.
But this has another side. The attack on Ukraine did not happen by accident. Putin had prepared and built a war chest of gold and overseas currencies worth an estimated £600 billion.
Some of it is stored in Moscow and not – as has often been the case with previous sanctioned regimes such as Libya and Iran – in vaults at the Bank of England.
The Kremlin is confident enough in replenishing its financial resources to have shut down gas supplies to Europe with the sabotage of the Nord Stream 1 pipeline.
It was able to do this because of a good market for its oil in two of the world’s largest fossil fuel burners, China and India.
Western confidence that cutting Russia off from the Swift bank transfer system would starve the country of hard currency proved false.
Fintech and non-bank intermediaries have enabled Russia to bypass traditional ways of moving cash.
It has also benefited from Saudi Arabia’s efforts to stabilize oil prices.
All this does not mean that it was morally wrong for Putin to be financially isolated and for Russian companies to be suspended (if not permanently banned) from the London Stock Exchange.
Ordinary Russian citizens and businesses are in pain. However, there is little evidence that this will stop Putin from acquiring weapons, such as drones from Iran, and continue to dismantle Ukraine’s infrastructure.
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