Stocks and government bonds collapse, even the giant Gazprom is in the storm: signs that Putin could really launch a blitz, even as a diversion
While Washington threatens to block Russia from accessing the international financial network, Moscow wants to close another door on its own, banning cryptocurrencies. A report by the Russian Central Bank proposes to ban the circulation and mining of bitcoin and its ilk on the national territory, to block a “considerable threat to the well-being of citizens … coming from illegal activities”. So millions of dollars were leaving the cryptocurrency trading squares, and the head of financial stability of the Central Bank Elizaveta Danilova was running for cover, specifying that the Russians will be able to continue to hold bitcoins, but only through international jurisdictions. The Bloomberg agency claims that the secret service FSB asked to outlaw cryptocurrencies, which would like to block the donations of Alexey Navalny’s followers: his organization now crowdfunding within Russia almost exclusively in Bitcoin.
News that comes to shake already very nervous markets: the MMVB stock market index has lost 22.3% in three months, despite the price of oil – the main Russian export product – has reached its maximum since 2014. Half of the fall of the The stock market was registered in the last week, that of intense and fruitless negotiations between Russians and Americans to avoid military escalation on the border with Ukraine. The most lost were the stocks that have so far been considered very solid by state-owned companies and banks such as the monopolist Sberbank, that is, those considered to be at greater risk of Western sanctions. Yields on 10-year OFZ rubles bonds have also shot up in five years, to the point that the Russian Finance Ministry was forced to cancel the weekly auction. Financial analysts told the Financial Times of investors who want to “get out of Russia at any price”. But President Joe Biden’s threat to prevent Russian banks from operating in dollars, although not yet materialized in the mechanisms, could also affect mere mortals: Russian companies and citizens hold about 86 billion greenbacks, and the demand for currency American and European continues to increase, another symptom of insecurity.
It is not the first time that Vladimir Putin subordinates economics to politics: already in 2003, the arrest of Mikhail Khodorkovsky and the forced nationalization of his Yukos oil empire had caused the indexes to collapse. The latest tug-of-war with the West cost about 200 billion dollars burned on the stock exchange in three months, essentially to the detriment of the state and the regime’s own oligarchs. This is without counting the losses of Gazprom, whose supplies to Europe have plummeted since the beginning of 2022 to their lowest since 2015, and by almost half compared to 12 months earlier. One reason was the reduction of gas supplied, and the head of the International Energy Agency Fatih Birol accused the Russians of doing it intentionally to raise prices. Gazprom, however, was the first to lose out: the Europeans have drastically reduced the purchase of gas on the spot market, and the Russian pipelines are running at half power. A sign that could indicate a miscalculation on the behavior of the markets, but also preparations for further political escalation.
In fact, the link with international tensions is evident: last Tuesday the Russian markets rebounded as soon as the Russian negotiator Sergey Ryabkov swore that Moscow would not “attack or invade Ukraine in any way”. The question about the feasibility not only military but also economic of the war remains open, and it is no coincidence that many commentators close to the anti-Putinian opposition continue to consider the hypothesis of the invasion of the neighboring country a bluff, a “trap” like the ‘defined Navalny himself in an interview with Time magazine released from prison: “First he threatens, then he haggles, finally he retires and then he starts all over again”. But the markets seem to be starting to fear it’s not just a bluff.
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