Russia got caught off guard by the severity of the western economic sanctions imposed in response to their unprovoked invasion of Ukraine.
Foreign Minister Lavrov (in place as Foreign Minister for 14 years and a member of the permanent mission to the UN before that for 10 years) said as much this week, a very surprising admission by the Empire Builders.
Putin and his puffer coat crowd thought they were pretty clever hiding lots of foreign currency reserves overseas — there is really no place to hold foreign currency that is safe inside Russia. Apparently, based on their foreign currency reserve hoarding, they’d been planning their move on Ukraine for almost two years.
No surprise there as Russia began to press against the Ukrainian border with troops almost a year ago.
So, when the west unshackled many of the Russian banks from the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system with 11,000 member institutions and 42,000,000 messages a day in more than 200 countries, they were caught unable to access those reserves because the conduit — the SWIFT system — was blocked.
SWIFT also threw Iran out of the system in 2012 – 2016.
One of the things Russia did immediately on Invasion Ukraine Day, 2-24-2022, was to close down its Moscow Exchange, their biggest stock market and the place where Russians and foreigners owned Russian stocks.
In London where many of these stocks also trade, the Russian stocks were down as much as 98%, so the prospect of a gargantuan sell off was very real. Continue reading →