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Now, there are at least two wars, one is the real battlefield smoke, and the other is the invisible smoke of war.
One side is Russia, the other is Europe and the United States, especially the United States. The United States has once again inflicted a hard hand on Russia, this time with particularly vicious means.
How about a poisonous method?
Freeze Russia's dollar reserves, not allow Russia to use these dollars to repay debts, and force Russia to default "historicly".
Previously, although the Russian central bank's foreign exchange reserves in the United States were frozen under the US sanctions order, the United States still allowed Russia to use these reserves to repay its debts, after all, the creditors were mainly Americans.
But U.S. policy is shifting.
A spokesman for the U.S. Treasury Department declared on the 4th that on the same day, Russia had a debt payment of $552.4 million, and the U.S. government prevented Russia from using its reserves in the United States, which is intended to force Russia to make a difficult choice, either to exhaust the remaining precious dollar reserves, or to exhaust new revenues, or to face a "historic default."
What do you mean?
I know you have dollars in Russia, but I'm sorry, your dollars on my side are not allowed to pay off debts, I just want to consume the other dollars in your hands, if you don't consume, then you default.
Russia has more than $600 billion in foreign exchange reserves, but after the outbreak of the Russian-Ukrainian conflict, nearly half of the foreign exchange reserves were frozen by the West, and the latest move of the United States is obviously a kind of extreme sanctions, intending to force Russia into a desperate situation.
Sullivan, the U.S. president's national security adviser, declared a few days ago that sanctions are to be ruthless, "it will take time to crush the components of Russian power in the Russian economy, to crush their industrial base, to strike at the sources of income that underpin this war and support Russia's 'kleptocracy'... But now is the best time to solve this problem, and the cost will eventually increase, forcing Russia to have to make a choice. ”
The United States sees the best opportunity and naturally does not allow it to be missed.
This is just one part of the latest U.S. sanctions package, which, according to the U.S., "will impose enormous costs on Russia and put it further on the path of economic, financial and technological isolation."
The United States is acting, and Europe cannot be left behind.
On April 5, European Commission President von der Leyen announced that the EU would introduce a fifth set of sanctions against Russia, a package of measures that includes six aspects:
1. Prohibition of coal imports from Russia;
2. Prohibition of transactions with 4 major Russian banks;
3, prohibiting russian and Russian-operated vessels from entering EU ports, while also prohibiting Russian and Belarusian road transport companies from operating in Europe;
4. Implement further export bans worth €10 billion in key areas, mainly for advanced semiconductor, machinery and transport equipment;
5. Prohibition of the import of a batch of specific products from Russia, worth 5.5 billion euros;
6. Targeted measures will also be implemented, including prohibiting Russian companies from participating in EU government procurement, as well as withdrawing all EU or member states' financial support for Russian public institutions.
Please note that this is the fifth round, and the other sanctions you can think of are basically in the first four rounds.
But don't underestimate the fifth round of sanctions, which will reduce trade between the EU and Russia by at least 20 billion euros a year.
This is a concerted effort to strangle the Russian economy.
In contrast, the expulsion of Russian diplomats by European countries is now more of a gesture and humiliation; as for Zelenskiy's call yesterday, the expulsion of Russia from the Security Council is even more an impossible task; but the economic and financial sanctions between the United States and Europe are really pushing the Russian economy to a precipice.
In particular, the United States prevented Russia from using dollars to repay its debts, more fiercely, more viciously, and in fact no longer considered the feelings of Us creditors, that is, to force Russia to default.
The consequences of default are serious.
If Russia fails to repay its debts in a timely manner, it will be the first time that Russia has defaulted on its debts since 1998. After the 1998 Asian financial crisis, the Russian ruble depreciated sharply, followed by a default.
The default hit the Russian economy hard, and for a long time, it denied Russia access to the international lending market.
Consider the consequences of Argentina's default.
Seeing that some friends sighed, is this not a trick of routine loans in the United States? At the beginning, I lent you money well, but I changed the method to prevent you from repaying the money, and then kept asking for sky-high liquidated damages...
Can't Russia pay its debts in rubles?
In fact, being forced to the point of necessity does not rule out this possibility.
But the biggest problem is that Russia can force European countries to buy natural gas in rubles, because natural gas is just needed by Europe, europe can't do it; but Russian debt is not just needed, investors certainly don't like to collect rubles, which will still be regarded as a default and scare investors away.
Finally, what do you think?
First, frankly, Russia is in a very dangerous situation.
Fighting a war is a game of burning money, the battlefield is burning money every day, and the Russian economy is trying to support it; at the same time, the joint efforts of the West have caused the Russian economy to suffer heavy losses and inevitably affect the people's livelihood.
According to estimates, Russia's GDP will fall by 10% this year, and Ukraine's GDP will fall by 20%-40%. But I estimate that Russia's GDP contraction could be much more than 10 percent.
In the past, we said that the GDP of one Guangdong in China is equivalent to the entire Russia, and with the depreciation of the ruble and the recession of the Russian economy, this year's Russian GDP is not only inferior to That of Guangdong and Jiangsu, but may also lag behind Shandong and Zhejiang.
Alas, this world of turning hands over clouds and hands over rain.
More critically, if the sanctions continue, especially the us, it is not excluded that Russia will eventually have to default. It is true that the Russian economy is in a deep recession, and the world financial system will also face a serious impact.
If it is not done well, it is a new financial crisis, which may not be as simple as the storm in the teacup.
Second, the status of the dollar will inevitably be shaken.
It must be noted that in doing so, the West is actually killing a thousand enemies and injuring eight hundred. Wall Street is also estimated to be in tears, the United States launched a fierce attack, really six relatives do not recognize, Russia's dollars do not want.
But this raises another question, is the dollar still safe?
The dollar seems safe, but Russia's encounter has also let the world see that when the United States suddenly turns its face, no matter how many dollars and how much gold you have in the United States, the United States can all withhold, what is the spirit of the contract? What private property is sacrosanct?
If the United States does not talk about credit, it really does not talk about credit. So it's no wonder that Nixon-era U.S. Treasury Secretary Connery once said, "The dollar is our currency, but it's your trouble." ”
That's how faith is destroyed little by little. Even countries that have good relations with the United States are estimated to be afraid in their hearts, and they must guard against the United States, dare not put all their eggs in a dollar basket, and diversify their foreign exchange reserves as much as possible.
The status of the dollar, perhaps in this war, has undergone a very subtle but historic change.
Third, more dire consequences.
Will Russia sit still?
This is not a Russian style, and it is not in line with Putin's personality. In this world, the horizontal are afraid of being stunned, and the stunned are afraid of not dying. Since the West is so ruthless, don't blame Russia for being rude.
What will Russia do?
I do not know.
But what I do know is that there are some Russian initiatives that we can roughly judge; but many times, one of the characteristics of Russia is that it does not play its cards according to common sense. The consequences of forcing a major power, especially a nuclear power, into a desperate situation are terrible to think about.