Putin has hammered the final nail in the coffin of Russia’s financial future

It was a weak attempt at bluffing. You can’t scare someone by threatening to take something they don’t want. There will be no queue to return to Russia as long as Putin retains the lead. The invasion of Ukraine has already caused immeasurable damage to the country’s reputation. But by declaring the expropriation of private property as a legitimate tool of the state, Putin has put the final nail in Russia’s coffin as an international economy.

Forced nationalization of foreign-owned assets is the desperate act of a despotic regime. It relegates Russia to an exclusive club of pariahs alongside Venezuela, North Korea and Cuba. Now that Moscow is isolated, the Kremlin may have decided that there is no turning back, no more damaging reputation and thus little to lose.

It is safe to assume that Exxon Mobil has billions of dollars left over as a result of Russia’s actionsCredit:AP

Or perhaps Putin is betting that, as Europe struggles to break away from Russia’s oil and gas supplies, realpolitik will ensure that international ties eventually prevail – or can be quickly rebuilt where they don’t. There are certainly doubts about whether European leaders are willing to sacrifice the voters needed to make a clear cut with Russian imports. There are also doubts as to whether European solidarity can survive the tension of the energy crisis.

Countries have tried desperately to maintain a united front, but with energy prices pushing the continent to the brink of recession and households being asked to curb consumption, rifts have begun to appear in relations. The coming winter will be the ultimate test. The head of the International Energy Agency (IEA) has warned European countries of a battle for energy security in the coming months. Fatih Birol, the IEA’s executive director, said he feared a “wild west scenario” that threatens to disrupt unity among EU member states and cause social unrest with European countries no longer cooperating on energy supplies.

Yesterday, the global energy watchdog made a new plea: Europe must cut its gas consumption by more than a tenth to avoid the risk of power rationing and widespread blackouts.

But the problem with the IEA’s warning is that it’s explicitly based on a worst-case scenario, which immediately reduces the urgency to act. There is also a tendency towards defeatism, which says Putin is right about the continent that Russia needs.

By declaring the expropriation of private property as a legitimate tool of the state, Putin has put the final nail in Russia’s coffin as an international economy.

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A more rational approach is needed where the West turns in the opposite direction and cuts the Kremlin completely out of the system. Of course it will be painful, but with topped up gas storage facilities, increased LNG supplies from North America and Qatar and energy efficiency measures, it can be done.

With European LNG imports projected to increase 40 percent in the coming months, these shipments, along with the natural destruction of demand from higher gas prices, are enough to cover a complete shutdown of Russian pipeline flows, the company said. Bloomberg research showed.

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The other assumption Putin seems to have made is that he will remain in power. But as Russian troops retreat across parts of Ukraine, thoughts inevitably turn to a leaderless world for the past 22 years.

Without regime change, there is no going back. Putin’s gangsterism has turned his country into an uninvestable basket.

Telegraph, London

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