The Washington Post: Putin May Have To Choose Because Of Ruble Crash

Sanctions are making themselves felt.

Prolonged anti-Russian sanctions, including restrictions on key Russian imports, and the resulting ruble crash, will eventually force Russian President Vladimir Putin to choose between continuing the war and saving his economy.

According to a piece in The Washington Post, the weakening ruble is one of the most obvious signs of strain on the Russian economy. The impact of sanctions has put pressure on the ruble, leading to one of the sharpest depreciations in developing markets this year as a result of heavy government spending amid trade imbalances.

As of July, the U.S. had imposed sanctions on more than 3,600 individuals, entities, ships and aircraft. Targets of the US sanctions included 10 major Russian banks, military manufacturers and government figures as far back as Putin.

The number of EU sanctions exceeded 1,800. The largest and most significant sanctions include the coordinated blocking by Western governments of some $300 billion in Russian central bank assets held abroad and an oil embargo. There are also restrictions on exports of technology used for military purposes. Additional sanctions include asset freezes, banking and trade restrictions and other financial sanctions on Russian individuals and entities.

Russia's oil revenues were 41 per cent lower in July than a year earlier. The current account surplus - roughly the gap between exports and imports - fell by more than $140 billion in the first seven months of 2023 from a year earlier.

According to the piece, the U.S. and its allies plan to crack down on circumventing and evading sanctions and trade restrictions, especially through third countries. One possible step could be to strengthen so-called secondary sanctions against third parties - for example, a company based in Turkey or China - for doing business with Russian individuals or entities under sanctions. This is what the US has done in the case of North Korea and Iran.

In the case of Russia, there is a danger that secondary sanctions could lead to conflict between friendly countries, such as the US and India, and complicate already difficult relations with China.