17 ms·

Russia's top bank quits Europe due to sanctions

117 points by awb 5y ago

jacquesm 5y ago
That's backwards: They got ordered out. > The exit does not affect Sberbank's business in Switzerland Let's hope that changes. This is one the Swiss won't be able to sit out.
- deleted 5y ago
  [deleted]
- ausudhz 5y ago
  They've been independent forever I don't understand why they need to take a side on this one. We all know dirty money go there eventually
s_dev 5y ago
It's kind of like quitting after you've been fired? No?
Ambolia 5y ago
The problem with this type of sanctions is that they are only going to work once, no country on the periphery of "polite society" is going to put their faith on any of these institutions going forward. The strength of these types of global payments systems is that they are global and neutral. If they stop being neutral soon enough they will stop being global.
- ipython 5y ago
  So you’re saying that Russia has the choice to invade a sovereign nation but the coalition of banks have no right to kick out the aggressor nation? If I punch you in the nose, I don’t care what institution you represent. You won’t remain “neutral” for long.
- JamesBarney 5y ago
  I don't necessarily think this is true. There are a ton of disadvantages to closing yourself off to the world, and unless you're planning an invasion it doesn't make sense to pay that cost.
  - Ambolia 5y ago
    I'm not saying countries will leave SWIFT in mass, but they will prioritize joining and developing alternatives. There's a lot of hunger to absorb natural resources and fertilizers [1] [2] from Russia and Belarus, so countries will find a way to do it, and once it's in place it will be user for other transactions and be a permanent alternative. [1] https://blog.nationalbulkbag.com/produce-packaging/how-is-the-fertilizer-shortage-impacting-the-agriculture-industry https://blog.nationalbulkbag.com/produce-packaging/how-is-th... [2] https://investingnews.com/daily/resource-investing/agriculture-investing/potash-investing/top-potash-countries-by-production/ https://investingnews.com/daily/resource-investing/agricultu...
    - toomuchtodo 5y ago
      Negotiations are won by those with the least to lose. Russia's economy is predominately oil and gas based, which the world is rapidly transitioning away from, so their remaining economic activity requires the rest of the world more than the rest of the world requires Russia.
      - withinboredom 5y ago
        Maybe in a few decades. But for today, we still need it to make tiny booms in little metal boxes to move big boxes with rubber tubes.
        toomuchtodo 5y ago
        The more painful it is in the short term, the faster we get to an oil free (realistically, a greatly reduced oil future) future. No one is getting off of cheap oil. It should be as painful as possible to use petroleum.
- jacquesm 5y ago
  There is no free pass for money in wartime. That's one of the first things that gets curbed. Even the Russians do this, they just restricted the amount of money you can take out of Russia.
- raxxorrax 5y ago
  I think the message was received. Will take a few years, but I bet we see other channels being conceived. Swift has to comply, because they get threatened with sanctions themselves. But countries outside the western sphere of influence very likely noticed the problem.
  - jacquesm 5y ago
    I think it will be a good indicator of which countries are secretly harboring imperialist ideas.
    - andreilys 5y ago
      Or any country seeking to displace the US dollar as the global reserve currency, this’ll be the perfect wedge to do so. I expect the federal reserve won’t be able to print trillions of dollars with ease anymore once USD loses its global reserve status.
      - adventured 5y ago
        > I expect the federal reserve won’t be able to print trillions of dollars with ease anymore once USD loses its global reserve status. That's not how central banking works at all, of course the Fed will find it trivially easy to print trillions of dollars without the global reserve currency. See: Japan (BoJ) and the EU / Eurozone (ECB). They both printed more per GDP or per national assets than the Fed has, and they didn't spark a gigantic wave of consumer inflation doing so either. Neither had anything remotely close to the global reserve currency. China pours manufactured credit into its system whenever it feels like it to juice their economy, and is one of the most indebted nations (at this point it's drowning in debt). They did it all without the global reserve currency, they do not find it difficult to print at will (while leaning on a currency with far less global exposure than the Yen). Fortunately the USD as global reserve currency is only strengthened by what Russia is doing, and what China will do next in Taiwan, rather than the opposite being the case. The USD as global reserve currency is going nowhere in the next several decades at a minimum.
      - 5y ago
- wesleywt 5y ago
  Good. That is the idea.
- morelisp 5y ago
  Conversely, the reason "we" want these to be global is so they can be used to apply such pressure. If they remained "neutral" no matter what, they are weak and pointless.
- esics6A 5y ago
  Creating a parallel financial system will take decades if it's even feasible at all. The entire global economy relies on the US/UK/EU based financial system and has evolved around it for over 75 years. It's not something that can be simply torn out and have a drop in replacement like a software system. Any alternative system would likely be based in China and that would mean that currencies would be backed by China's debt. China would need to take on debt levels that would leave China in an impossible situation. It would mean crushing levels of taxation that would drain China's wealth to the benefit of nations like Russia. There would be a major imbalance in payments. Russia and other nations would make net gains and China would have net losses. Even seizing assets in these nations China would need to sell the assets internationally using the same US/UK/EU system that provides the liquidity and access to markets. It would require China to become even more reliant on business with Western nations to fund this system making the whole thing illogical and circular in structure. If the Western nations pulled out of Chinese manufacturing it would mean the US/UK/EU could collapse the whole parallel system over time and make it insolvent.
  - jl6 5y ago
    Can you explain why “owning” the financial system is such a burden? US/UK/EU do not seem to suffer for it.
    - mooreds 5y ago
      This may be a useful link: https://carnegieendowment.org/chinafinancialmarkets/56856 https://carnegieendowment.org/chinafinancialmarkets/56856 tl;dr: If you want to "own" the financial system, you need to be willing to be an importer of last resort, follow the rule of law, have deep financial markets, a freely exchangable currency, and freely tradeable debt. You also have to be willing to accept either rising debt or unemployment. These can cause pain to countries who have them. Here's a quote from the piece: "The one thing both sides agreed on, however, was that the US enjoyed an advantage because of the reserve currency status of the US dollar, with some people even assuming that the US was somehow repressing the ability of Europe, China and Japan to gain the advantage for themselves. No matter how many times the US engaged in policies that tried to shift the benefits to those countries, or these countries engaged in policies that prevented them from receiving the benefits, it was somehow clear to both sides that reserve currency status is a wonderful thing that everyone wants but only the US is allowed to have." (Emphasis mine.)
- glogla 5y ago
  If SWIFT "is not neutral", sanctions are applied and work once, the sanctions work once. If SWIFT "is neutral" and sanction aren't applied, the sanctions are applied zero times. Once is better than zero.
  - ravar 5y ago
    How short sighted.
- blunte 5y ago
  They only need to work once. Then the deterrent value is clear. It's frankly the closest thing to a nuclear scenario you could get - in fact it's worse from the perspective that you enemies continue to live on while you wither. "At least" in a nuclear scenario both sides die. Global systems don't need everyone to participate; they just need the key players to participate. It's really a special club, and if you're not allowed in the club then you'll probably never be able to climb to that level from outside.
- ckastner 5y ago
  > The strength of these types of global payments systems is that they are global and neutral. If they stop being neutral soon enough they will stop being global. Being global is far more important than being neutral, and countries will gladly sacrifice the latter if that is the cost to get the former. Any meaningful global payments system requires access to the U.S. as European financial markets, either because of direct dealing with banks situated in these countries, or because of indirect dealings (virtually any other bank needs to deal with major U.S. or European banks eventually, and one can impose restrictions on the latter). As a simple example: U.S. regulators can easily force the hands of major European banks, because every one of those banks needs access to the U.S. financial market, if only so their clients can deal there. Want to buy Apple, Google, or Microsoft stock? Then neutrality is not an option.
- tablespoon 5y ago
  > The problem with this type of sanctions is that they are only going to work once, no country on the periphery of "polite society" is going to put their faith on any of these institutions going forward. The strength of these types of global payments systems is that they are global and neutral. If they stop being neutral soon enough they will stop being global. The problem with your type of thinking is that it can lead someone to sit on its tools until they're rusty and useless, out of fear of "using them up." It's probably an inevitability that these "global payment systems" stop being global, because globalization never brought the political unity it promised. Countries will inevitably recognize the vulnerabilities created by dependence on rival's systems, and if they're big enough, they'll eventually build alternatives to solve that. Honestly, I think the main problem with sanctions is they let political leaders delude themselves into thinking they're doing something to solve a problem, when they really aren't. Sanctions aren't going to get Putin to leave Ukraine: that's an immediate military problem that requires an immediate military solution. There's a small chance they'll destabilize the Russian regime over the long term, but I think the more likely outcome is they'll push Russia deeper into Chinese orbit, solidifying an alliance of rivals. Just look what happened to Belarus very recently.
- grouchomarx 5y ago
  tyrants and warlords can no longer expect to use western (financial) infrastructure once they start shelling civilians... OK?
- mullen 5y ago
  > The strength of these types of global payments systems is that they are global and neutral. If you think Russia, China and Belarus are going to be neutral, then you are being a bit naive. The West may not be neutral but it is rules based, so you know what you are getting before you start working with it. Russia, China and Belarus are not rules based and they will retaliate against you for a whole list of things that are not written down anywhere.
- VincentEvans 5y ago
  Isn’t it what one would want anyway? I think that most countries on the periphery of “polite society” as you put it - are not there by choice and would like to join the club and enjoy the benefits (example Ukraine) as soon as possible. And the global actors of disorder and chaos do whatever it is they do with predictable consequences to their own prosperity.
- kentonv 5y ago
  I think all those countries "on the periphery of polite society" should be capable of asking themselves: "Will we ever invade another sovereign country completely unprovoked with the goal of annexing them?" If the answer is "no", they have nothing to worry about. Russia has already shown that anything less than this results in little more than a slap on the wrist. If the answer is "yes", or even "maybe", then yeah, they're going to have to stay out of international institutions. As it should be.
  - FpUser 5y ago
    >""Will we ever invade another sovereign country" Saudis have a perfect answer to that
  - watwut 5y ago
    I dont even think that is the issue. These did not happened merely because invasion, it is not like it would be first invasion happening since WWII. I think that these happen, because Russia is seen as threat to Europe and America. Had this been about who rules Ukraine in the abstract, there would be much much weaker response. The worry is that easy conquest of Ukraine would be followed by similar contest to former USSR states in NATO, then to satelite countries and then maybe Easter Germany and so on. At some point response would be forced anyway.
  - londgine 5y ago
    Punching a Nazi seemed like a nice policy. It was a popular meme of 2017 [1] . Of course, then the definition of Nazi was widened to include many people who where unliked (on the periphery of polite society) such as Jewish conservative commentators [2] and even Ukraine with a Jewish president [3] . If it was clear that the only time neutral banks will deplatform you was if they "ever invade another sovereign country completely unprovoked with the goal of annexing them" then that may be fine. However, if the principle is to be neutral until someone does whatever polite society has deemed unacceptable, it is riskier for those countries to use. [1] https://www.washingtonpost.com/news/the-intersect/wp/2017/01/23/a-step-by-step-guide-to-a-meme-about-punching-a-nazi-in-the-face/ https://www.washingtonpost.com/news/the-intersect/wp/2017/01... [2] https://www.thewrap.com/vox-media-co-founder-ben-shapiro-is-the-jew-who-helps-other-jews-onto-the-train/ https://www.thewrap.com/vox-media-co-founder-ben-shapiro-is-... [3] https://www.npr.org/2022/03/01/1083677765/putin-denazify-ukraine-russia-history https://www.npr.org/2022/03/01/1083677765/putin-denazify-ukr...
- vanusa 5y ago
  If they stop being neutral soon enough they will stop being global. Right, but then situations emerge when it is no longer possible to be neutral.
- jdrc 5y ago
  they can always trace in some kind of mathematically-supported ledger, which is neutral, but also globally transparent
- kvathupo 5y ago
  This was echoed in a recent interview with Ken Griffin [1]. Even for Democrats such as myself, when Griffin speaks, people listen. [1] - https://youtu.be/AyEORjgaaNc https://youtu.be/AyEORjgaaNc
- deleted 5y ago
  [deleted]
- paxys 5y ago
  If that was the case then Russia would already be fully self sufficient by now since the first western sanctions on them showed up almost a decade ago. And the concept of modern economic sanctions has existed and has been implemented routinely since well before that. So why is every country still on board with the current system? The truth is that the global economy is simply too interconnected for a single country (or even group of countries) to break away and do their own thing. Trade is good. Unprovoked wars are bad. This is something literally the entire planet agrees on.
- stjohnswarts 5y ago
  Not really, there is a reason we have a Geneva convention and treaties. They aren't really that hard to follow. Don't vacuum bomb, gas, and invade your neighbors and you're basically going to be okay. Look at China, currently committing a genocide on the Uighurs and nothing is happening to them. You have to be a gigantic dick (read Putin) to get kicked out of the financial institutions.
lioeters 5y ago
> The bank said it was no longer able to supply liquidity to European subsidiaries following an order from Russia's central bank, which is seeking to preserve foreign currency. But it said capital and assets were sufficient to pay all depositors. I wonder if customers of their European subsidiaries are protected by an EU-equivalent of FDIC, guaranteeing their deposits? (I accidentally wrote "despots", haha..) EDIT: I suppose it's the European Banking Union. https://en.wikipedia.org/wiki/European_Banking_union https://en.wikipedia.org/wiki/European_Banking_union
- jacquesm 5y ago
  Typically if the bank operated with a license from the local CB (as they should) the accounts will be insured up to 100K or thereabouts.
  - pfg 5y ago
    That's correct. Sberbank Europe is registered as an Austrian bank, so the Austrian equivalent of the FDIC has to cover deposits of up to 100K per client.
    - jacquesm 5y ago
      Here is the exact insurance scheme for Austria: https://www.fma.gv.at/en/bank-accounts/deposit-protection/ https://www.fma.gv.at/en/bank-accounts/deposit-protection/
steve76 5y ago
marktangotango 5y ago
It seems clear Putin didn't think the West would "go there" re SWIFT. As most of us are learning about this all in real time, it's really quite remarkable from the perspective that yes, the West is militarizing banking and sanctions in a new way. Putin had become a master of manipulating with armed conflict, and now the West has changed the rules. This is economic war. What are the acceptable or "allowed" reactions to an opponent on the recieving end? This is all new territory we're in here.
- mc32 5y ago
  It’s not new. Embargoes and sanctions have always been a thing though mostly against smaller adversaries in recent times but with Germany and Japan in WWII.
- Melatonic 5y ago
  I think they did - otherwise they would not have invented their own SWIFT alternative a few years back
squarefoot 5y ago
Now it appears the only Russian bank left operating in the EU is, predictably, Gazprombank which as the name suggests is owned by Gazprom, the Russian corporation the EU purchases energy supplies from. With Sberbank abandoning activities in the EU, now I believe there's no more room for maneuver for further similar sanctions. In theory they could block Gazprombank too, although it is an extreme measure that would result in immediate retaliation from the Russian govt (which controls Gazprom) in the form of no more or further overpriced supplies. Here are some numbers just to give an idea of how much this situation affects our heating/energy bills here in the EU: https://tradingeconomics.com/commodity/eu-natural-gas https://tradingeconomics.com/commodity/eu-natural-gas Then there's wheat (read: food), of which Ukraine is one of the biggest producers and top exporters to the EU: https://tradingeconomics.com/commodity/wheat https://tradingeconomics.com/commodity/wheat
- mint2 5y ago
  > Then there's wheat (read: food), of which Ukraine is one of the biggest producers and top exporters to the EU I guess the farms aren’t in cities but is it realistic that Ukraine will be in any shape to export much wheat this year at this point.
  - bombcar 5y ago
    The ground hasn't even thawed yet - there's still time for the battle lines to solidify and the farmers to go on farming and planting. Had this happened during harvest time likely large amounts of wheat would have been lost.
- kibwen 5y ago
  Looking beyond the EU: "China leapfrogged Russia to become Ukraine's biggest single trading partner in 2019, with overall trade totalling $18.98 billion last year, a nearly 80% jump from 2013, according to data from the State Statistics Service of Ukraine. [...] China became the largest importer of Ukrainian barley in the 2020-21 marketing year. About 30% of China's corn imports last year, more than 8 million tonnes, came from Ukraine, Chinese customs data showed." https://www.reuters.com/business/autos-transportation/chinas-business-economic-interests-ukraine-2022-02-23/ https://www.reuters.com/business/autos-transportation/chinas... If the war starts impacting the price of staples in China, that's going to strain Russia's relations with its only significant remaining ally.
eezurr 5y ago
IMO, what the West has done is shown an incredible display of power, killing multiple birds with one stone: 1.) Attempt to prevent Russia from accessing new found gas/oil reserves. [3] 2.) Continue to press Russia into a corner as the West continues to expand its influence. [1] 3.) Show and tell China the consequences of economic sanctions and economic war, and our willingness and ability to do so. [speculation] For one, the Ukraine invasion is the US's fault. This has been covered in depth by John Mearsheimer in 2015 in his lecture "Why is Ukraine the West's Fault?" after the Orange Revolution and Russia capturing of Crimea [1]. And there is also some rational speculation here regarding the discovery of natural resources. [3] What the US (which has major influence over Europe/NATO, so it's not clear how much of a choice Europe had here)[2] has essentially done is shown the world that we can manipulate and control the status quo (i.e. win a "war") without firing a shot or dropping a bomb. The new tools of war are economic control, and we're the heaviest guerilla in the room [4]. What's brilliant is the US's ability to make Putin appear much more evil than he really is. Yes, he is a dictator and isn't a good person, but he's been bringing back Russia from the dead and lifting its people out of poverty. Some of Putin's invasions occurred because we, the West/NATO, offered membership to those countries, when Russia made it clear that was a big no-no [1]. Forcing Russia to invade Ukraine is brilliant because Putin is evil in the West's eyes, but it was 100% necessary for Putin to invade because having that much of his boarder exposed to NATO is an incredibly vulnerable position to be in, and he made that clear to us years ago [1]. Note, the US would react just the same. We have the Monroe Doctrine and the Cuban Missile Crisis to show for it. [5][6]. So Putin is forced to play the worst hand, invading his sibling country (which makes him appear more evil), spend billions of dollars to do so, and lose many of his economic connections to the world. I think the West's goal here is to deliver the final blow to Putin and topple his regime, even if it requires killing innocent people along the way. Other notes: Russia's economy is strongly linked to natural gas and oil, and earlier this century a huge deposit of both was found in Ukraine and in their economic coastal zone/area. [3] Mearsheimer notably distinguishes the West and East's methods of international politics into "21st century 'walk in and do whatever we please'" and "19th century 'balance of power politics'". The US is such a powerful country that it wont face any negative repercussions for interfering with the world order nor invading smaller countries. [1] https://www.youtube.com/watch?v=JrMiSQAGOS4 https://www.youtube.com/watch?v=JrMiSQAGOS4 [2] The US contributes over 10x the funds of the 2nd largest contributor (Germany) to NATO, and represents about 70% of the total pot. https://www.visualcapitalist.com/this-is-how-much-nato-countries-spend-on-defense/ https://www.visualcapitalist.com/this-is-how-much-nato-count... [3] https://www.youtube.com/watch?v=If61baWF4GE https://www.youtube.com/watch?v=If61baWF4GE . Note, this video is a bit too pro-western to be fair/balanced. It does not consider the possibility that the US wants to get into Ukraine for oil/gas. [4] https://www.worldometers.info/gdp/gdp-by-country/ https://www.worldometers.info/gdp/gdp-by-country/ [5] https://en.wikipedia.org/wiki/Monroe_Doctrine https://en.wikipedia.org/wiki/Monroe_Doctrine [6] https://en.wikipedia.org/wiki/Cuban_Missile_Crisis https://en.wikipedia.org/wiki/Cuban_Missile_Crisis </armchair> Edit: Wow, people are flagging my sourced backed, neutral view comment? Can someone at HN please unflag the comment? @dang
UnpossibleJim 5y ago
So, and I realize all answers will be pure conjecture, what happens if the sanctions work? What's the end game? Can the proverbial tiger be put back in the cage? Russia has invaded Ukraine and Europe has responded in a unified manor. China gave muted support, but largely stayed out of it (at least vocally - but still traded with them). China is, of course, watching very closely, as they have their own expansionist interests. How does/can Russia get out of this and save face? Where will this go with social/cyber warfare - it has to ramp-up dramatically, no? Now that western Europe has increased its military spending, what does that mean for the "World Police" American stance that has been so prevalent since the late 40's? Does this, in fact push forward clean technology, or will it hinder it as now America and Canada sit in a prime spot to export fuel and make record profits for decades - environment be damned? I know, a lot of questions and I apologize =) Some I have my own "answers" to, but, like I said, all conjecture.
- CabSauce 5y ago
  Hopefully with Russian citizens (peacefully) ousting Putin.
  - tomp 5y ago
    What probably do you assign to that? I assign non-trivial probability to “ousting” but practically 0% chance of “peacefully” - more like “go out with a bang”.
    - watwut 5y ago
      Given that their only source of info is state media, I don't think it is realistic to expect uprising
      - Exmoor 5y ago
        Utter speculation on my part, but I see this as both a weakness and a strength for Putin. On one hand, as long as the government and whoever controls what goes out on state media are on his side it helps Putin. If, however, that control breaks down and the people in those positions lose confidence in Putin than the leverage reverses and they can easily use their media in the opposite direction.
IYasha 5y ago
Dreadful bank, a default one for russian pensions and salaries (for state-owned organisations). Almost a monopoly. But will cause lots struggle for people abroads...
jdrc 5y ago
i really dont understand this economic suicide while burning a country
- liuliu 5y ago
  There are a lot of noises. But probably not really felt in Russia for every day lives. At least for food and staple goods, the prices are not changed from what I can gather. Given time though, not sure. Especially China / India.
- danans 5y ago
  Arguably, a large motivation for this war isn't about economics. The Russian government seems to have determined that the economic pain and pariah status is worth it if autocracy makes gains against democracy, the Western alliance is destabilized (that may have backfired), and the Soviet sphere of influence is restored. However deplorable, the invasion has historical motivations.
  - jdrc 5y ago
    what does historical motivations mean? nationalist maybe, although ultimately even that aims at economic growth.
    - danans 5y ago
      > what does historical motivations mean? Being known and remembered as the person/people who changed the course of history or shifted the global narrative in one way or another. That's a pretty powerful motivation, that drives a lot of people who have tremendous power, not just the Russian president.
      - jdrc 5y ago
        Interesting. Though, after the 20th century i m not sure which person/people would believe there is anything left to try. the USSR had a teleology, communism. Putin's russia dream is a vengeful restoration of nationalist glory. the russian society is poor though, dispersed in a huge country, not motivated, not a "fascio", not very united, it s hard to imagine them rallying behind putin to conquer the world like hitler did. He does command a very very large army, but disconnected from people.
LightG 5y ago
Forgive me this one, but .... bye b!tches!
every 5y ago
It's a very simple formula. You do a stupid, egregious and immoral thing and we shut down your entire economy. Any questions?

117 points by awb 5y ago

That's backwards: They got ordered out. > The exit does not affect Sberbank's business in Switzerland Let's hope that changes. This is one the Swiss won't be able to sit out.

deleted 5y ago
[deleted]
ausudhz 5y ago
They've been independent forever I don't understand why they need to take a side on this one. We all know dirty money go there eventually

s_dev 5y ago

It's kind of like quitting after you've been fired? No?

Ambolia 5y ago

The problem with this type of sanctions is that they are only going to work once, no country on the periphery of "polite society" is going to put their faith on any of these institutions going forward. The strength of these types of global payments systems is that they are global and neutral. If they stop being neutral soon enough they will stop being global.

ipython 5y ago
So you’re saying that Russia has the choice to invade a sovereign nation but the coalition of banks have no right to kick out the aggressor nation? If I punch you in the nose, I don’t care what institution you represent. You won’t remain “neutral” for long.
JamesBarney 5y ago
I don't necessarily think this is true. There are a ton of disadvantages to closing yourself off to the world, and unless you're planning an invasion it doesn't make sense to pay that cost.
- Ambolia 5y ago
  I'm not saying countries will leave SWIFT in mass, but they will prioritize joining and developing alternatives. There's a lot of hunger to absorb natural resources and fertilizers [1] [2] from Russia and Belarus, so countries will find a way to do it, and once it's in place it will be user for other transactions and be a permanent alternative. [1] https://blog.nationalbulkbag.com/produce-packaging/how-is-the-fertilizer-shortage-impacting-the-agriculture-industry https://blog.nationalbulkbag.com/produce-packaging/how-is-th... [2] https://investingnews.com/daily/resource-investing/agriculture-investing/potash-investing/top-potash-countries-by-production/ https://investingnews.com/daily/resource-investing/agricultu...
  - toomuchtodo 5y ago
    Negotiations are won by those with the least to lose. Russia's economy is predominately oil and gas based, which the world is rapidly transitioning away from, so their remaining economic activity requires the rest of the world more than the rest of the world requires Russia.
    - withinboredom 5y ago
      Maybe in a few decades. But for today, we still need it to make tiny booms in little metal boxes to move big boxes with rubber tubes.
      - toomuchtodo 5y ago
        The more painful it is in the short term, the faster we get to an oil free (realistically, a greatly reduced oil future) future. No one is getting off of cheap oil. It should be as painful as possible to use petroleum.
jacquesm 5y ago
There is no free pass for money in wartime. That's one of the first things that gets curbed. Even the Russians do this, they just restricted the amount of money you can take out of Russia.
raxxorrax 5y ago
I think the message was received. Will take a few years, but I bet we see other channels being conceived. Swift has to comply, because they get threatened with sanctions themselves. But countries outside the western sphere of influence very likely noticed the problem.
- jacquesm 5y ago
  I think it will be a good indicator of which countries are secretly harboring imperialist ideas.
  - andreilys 5y ago
    Or any country seeking to displace the US dollar as the global reserve currency, this’ll be the perfect wedge to do so. I expect the federal reserve won’t be able to print trillions of dollars with ease anymore once USD loses its global reserve status.
    - adventured 5y ago
      > I expect the federal reserve won’t be able to print trillions of dollars with ease anymore once USD loses its global reserve status. That's not how central banking works at all, of course the Fed will find it trivially easy to print trillions of dollars without the global reserve currency. See: Japan (BoJ) and the EU / Eurozone (ECB). They both printed more per GDP or per national assets than the Fed has, and they didn't spark a gigantic wave of consumer inflation doing so either. Neither had anything remotely close to the global reserve currency. China pours manufactured credit into its system whenever it feels like it to juice their economy, and is one of the most indebted nations (at this point it's drowning in debt). They did it all without the global reserve currency, they do not find it difficult to print at will (while leaning on a currency with far less global exposure than the Yen). Fortunately the USD as global reserve currency is only strengthened by what Russia is doing, and what China will do next in Taiwan, rather than the opposite being the case. The USD as global reserve currency is going nowhere in the next several decades at a minimum.
    - 5y ago
wesleywt 5y ago
Good. That is the idea.
morelisp 5y ago
Conversely, the reason "we" want these to be global is so they can be used to apply such pressure. If they remained "neutral" no matter what, they are weak and pointless.
esics6A 5y ago
Creating a parallel financial system will take decades if it's even feasible at all. The entire global economy relies on the US/UK/EU based financial system and has evolved around it for over 75 years. It's not something that can be simply torn out and have a drop in replacement like a software system. Any alternative system would likely be based in China and that would mean that currencies would be backed by China's debt. China would need to take on debt levels that would leave China in an impossible situation. It would mean crushing levels of taxation that would drain China's wealth to the benefit of nations like Russia. There would be a major imbalance in payments. Russia and other nations would make net gains and China would have net losses. Even seizing assets in these nations China would need to sell the assets internationally using the same US/UK/EU system that provides the liquidity and access to markets. It would require China to become even more reliant on business with Western nations to fund this system making the whole thing illogical and circular in structure. If the Western nations pulled out of Chinese manufacturing it would mean the US/UK/EU could collapse the whole parallel system over time and make it insolvent.
- jl6 5y ago
  Can you explain why “owning” the financial system is such a burden? US/UK/EU do not seem to suffer for it.
  - mooreds 5y ago
    This may be a useful link: https://carnegieendowment.org/chinafinancialmarkets/56856 https://carnegieendowment.org/chinafinancialmarkets/56856 tl;dr: If you want to "own" the financial system, you need to be willing to be an importer of last resort, follow the rule of law, have deep financial markets, a freely exchangable currency, and freely tradeable debt. You also have to be willing to accept either rising debt or unemployment. These can cause pain to countries who have them. Here's a quote from the piece: "The one thing both sides agreed on, however, was that the US enjoyed an advantage because of the reserve currency status of the US dollar, with some people even assuming that the US was somehow repressing the ability of Europe, China and Japan to gain the advantage for themselves. No matter how many times the US engaged in policies that tried to shift the benefits to those countries, or these countries engaged in policies that prevented them from receiving the benefits, it was somehow clear to both sides that reserve currency status is a wonderful thing that everyone wants but only the US is allowed to have." (Emphasis mine.)
glogla 5y ago
If SWIFT "is not neutral", sanctions are applied and work once, the sanctions work once. If SWIFT "is neutral" and sanction aren't applied, the sanctions are applied zero times. Once is better than zero.
- ravar 5y ago
  How short sighted.
blunte 5y ago
They only need to work once. Then the deterrent value is clear. It's frankly the closest thing to a nuclear scenario you could get - in fact it's worse from the perspective that you enemies continue to live on while you wither. "At least" in a nuclear scenario both sides die. Global systems don't need everyone to participate; they just need the key players to participate. It's really a special club, and if you're not allowed in the club then you'll probably never be able to climb to that level from outside.
ckastner 5y ago
> The strength of these types of global payments systems is that they are global and neutral. If they stop being neutral soon enough they will stop being global. Being global is far more important than being neutral, and countries will gladly sacrifice the latter if that is the cost to get the former. Any meaningful global payments system requires access to the U.S. as European financial markets, either because of direct dealing with banks situated in these countries, or because of indirect dealings (virtually any other bank needs to deal with major U.S. or European banks eventually, and one can impose restrictions on the latter). As a simple example: U.S. regulators can easily force the hands of major European banks, because every one of those banks needs access to the U.S. financial market, if only so their clients can deal there. Want to buy Apple, Google, or Microsoft stock? Then neutrality is not an option.
tablespoon 5y ago
> The problem with this type of sanctions is that they are only going to work once, no country on the periphery of "polite society" is going to put their faith on any of these institutions going forward. The strength of these types of global payments systems is that they are global and neutral. If they stop being neutral soon enough they will stop being global. The problem with your type of thinking is that it can lead someone to sit on its tools until they're rusty and useless, out of fear of "using them up." It's probably an inevitability that these "global payment systems" stop being global, because globalization never brought the political unity it promised. Countries will inevitably recognize the vulnerabilities created by dependence on rival's systems, and if they're big enough, they'll eventually build alternatives to solve that. Honestly, I think the main problem with sanctions is they let political leaders delude themselves into thinking they're doing something to solve a problem, when they really aren't. Sanctions aren't going to get Putin to leave Ukraine: that's an immediate military problem that requires an immediate military solution. There's a small chance they'll destabilize the Russian regime over the long term, but I think the more likely outcome is they'll push Russia deeper into Chinese orbit, solidifying an alliance of rivals. Just look what happened to Belarus very recently.
grouchomarx 5y ago
tyrants and warlords can no longer expect to use western (financial) infrastructure once they start shelling civilians... OK?
mullen 5y ago
> The strength of these types of global payments systems is that they are global and neutral. If you think Russia, China and Belarus are going to be neutral, then you are being a bit naive. The West may not be neutral but it is rules based, so you know what you are getting before you start working with it. Russia, China and Belarus are not rules based and they will retaliate against you for a whole list of things that are not written down anywhere.
VincentEvans 5y ago
Isn’t it what one would want anyway? I think that most countries on the periphery of “polite society” as you put it - are not there by choice and would like to join the club and enjoy the benefits (example Ukraine) as soon as possible. And the global actors of disorder and chaos do whatever it is they do with predictable consequences to their own prosperity.
kentonv 5y ago
I think all those countries "on the periphery of polite society" should be capable of asking themselves: "Will we ever invade another sovereign country completely unprovoked with the goal of annexing them?" If the answer is "no", they have nothing to worry about. Russia has already shown that anything less than this results in little more than a slap on the wrist. If the answer is "yes", or even "maybe", then yeah, they're going to have to stay out of international institutions. As it should be.
- FpUser 5y ago
  >""Will we ever invade another sovereign country" Saudis have a perfect answer to that
- watwut 5y ago
  I dont even think that is the issue. These did not happened merely because invasion, it is not like it would be first invasion happening since WWII. I think that these happen, because Russia is seen as threat to Europe and America. Had this been about who rules Ukraine in the abstract, there would be much much weaker response. The worry is that easy conquest of Ukraine would be followed by similar contest to former USSR states in NATO, then to satelite countries and then maybe Easter Germany and so on. At some point response would be forced anyway.
- londgine 5y ago
  Punching a Nazi seemed like a nice policy. It was a popular meme of 2017 [1] . Of course, then the definition of Nazi was widened to include many people who where unliked (on the periphery of polite society) such as Jewish conservative commentators [2] and even Ukraine with a Jewish president [3] . If it was clear that the only time neutral banks will deplatform you was if they "ever invade another sovereign country completely unprovoked with the goal of annexing them" then that may be fine. However, if the principle is to be neutral until someone does whatever polite society has deemed unacceptable, it is riskier for those countries to use. [1] https://www.washingtonpost.com/news/the-intersect/wp/2017/01/23/a-step-by-step-guide-to-a-meme-about-punching-a-nazi-in-the-face/ https://www.washingtonpost.com/news/the-intersect/wp/2017/01... [2] https://www.thewrap.com/vox-media-co-founder-ben-shapiro-is-the-jew-who-helps-other-jews-onto-the-train/ https://www.thewrap.com/vox-media-co-founder-ben-shapiro-is-... [3] https://www.npr.org/2022/03/01/1083677765/putin-denazify-ukraine-russia-history https://www.npr.org/2022/03/01/1083677765/putin-denazify-ukr...
vanusa 5y ago
If they stop being neutral soon enough they will stop being global. Right, but then situations emerge when it is no longer possible to be neutral.
jdrc 5y ago
they can always trace in some kind of mathematically-supported ledger, which is neutral, but also globally transparent
kvathupo 5y ago
This was echoed in a recent interview with Ken Griffin [1]. Even for Democrats such as myself, when Griffin speaks, people listen. [1] - https://youtu.be/AyEORjgaaNc https://youtu.be/AyEORjgaaNc
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paxys 5y ago
If that was the case then Russia would already be fully self sufficient by now since the first western sanctions on them showed up almost a decade ago. And the concept of modern economic sanctions has existed and has been implemented routinely since well before that. So why is every country still on board with the current system? The truth is that the global economy is simply too interconnected for a single country (or even group of countries) to break away and do their own thing. Trade is good. Unprovoked wars are bad. This is something literally the entire planet agrees on.
stjohnswarts 5y ago
Not really, there is a reason we have a Geneva convention and treaties. They aren't really that hard to follow. Don't vacuum bomb, gas, and invade your neighbors and you're basically going to be okay. Look at China, currently committing a genocide on the Uighurs and nothing is happening to them. You have to be a gigantic dick (read Putin) to get kicked out of the financial institutions.

lioeters 5y ago

> The bank said it was no longer able to supply liquidity to European subsidiaries following an order from Russia's central bank, which is seeking to preserve foreign currency. But it said capital and assets were sufficient to pay all depositors. I wonder if customers of their European subsidiaries are protected by an EU-equivalent of FDIC, guaranteeing their deposits? (I accidentally wrote "despots", haha..) EDIT: I suppose it's the European Banking Union. https://en.wikipedia.org/wiki/European_Banking_union https://en.wikipedia.org/wiki/European_Banking_union

jacquesm 5y ago
Typically if the bank operated with a license from the local CB (as they should) the accounts will be insured up to 100K or thereabouts.
- pfg 5y ago
  That's correct. Sberbank Europe is registered as an Austrian bank, so the Austrian equivalent of the FDIC has to cover deposits of up to 100K per client.
  - jacquesm 5y ago
    Here is the exact insurance scheme for Austria: https://www.fma.gv.at/en/bank-accounts/deposit-protection/ https://www.fma.gv.at/en/bank-accounts/deposit-protection/

steve76 5y ago

marktangotango 5y ago

It seems clear Putin didn't think the West would "go there" re SWIFT. As most of us are learning about this all in real time, it's really quite remarkable from the perspective that yes, the West is militarizing banking and sanctions in a new way. Putin had become a master of manipulating with armed conflict, and now the West has changed the rules. This is economic war. What are the acceptable or "allowed" reactions to an opponent on the recieving end? This is all new territory we're in here.

mc32 5y ago
It’s not new. Embargoes and sanctions have always been a thing though mostly against smaller adversaries in recent times but with Germany and Japan in WWII.
Melatonic 5y ago
I think they did - otherwise they would not have invented their own SWIFT alternative a few years back

squarefoot 5y ago

Now it appears the only Russian bank left operating in the EU is, predictably, Gazprombank which as the name suggests is owned by Gazprom, the Russian corporation the EU purchases energy supplies from. With Sberbank abandoning activities in the EU, now I believe there's no more room for maneuver for further similar sanctions. In theory they could block Gazprombank too, although it is an extreme measure that would result in immediate retaliation from the Russian govt (which controls Gazprom) in the form of no more or further overpriced supplies. Here are some numbers just to give an idea of how much this situation affects our heating/energy bills here in the EU: https://tradingeconomics.com/commodity/eu-natural-gas https://tradingeconomics.com/commodity/eu-natural-gas Then there's wheat (read: food), of which Ukraine is one of the biggest producers and top exporters to the EU: https://tradingeconomics.com/commodity/wheat https://tradingeconomics.com/commodity/wheat

mint2 5y ago
> Then there's wheat (read: food), of which Ukraine is one of the biggest producers and top exporters to the EU I guess the farms aren’t in cities but is it realistic that Ukraine will be in any shape to export much wheat this year at this point.
- bombcar 5y ago
  The ground hasn't even thawed yet - there's still time for the battle lines to solidify and the farmers to go on farming and planting. Had this happened during harvest time likely large amounts of wheat would have been lost.
kibwen 5y ago
Looking beyond the EU: "China leapfrogged Russia to become Ukraine's biggest single trading partner in 2019, with overall trade totalling $18.98 billion last year, a nearly 80% jump from 2013, according to data from the State Statistics Service of Ukraine. [...] China became the largest importer of Ukrainian barley in the 2020-21 marketing year. About 30% of China's corn imports last year, more than 8 million tonnes, came from Ukraine, Chinese customs data showed." https://www.reuters.com/business/autos-transportation/chinas-business-economic-interests-ukraine-2022-02-23/ https://www.reuters.com/business/autos-transportation/chinas... If the war starts impacting the price of staples in China, that's going to strain Russia's relations with its only significant remaining ally.

eezurr 5y ago

IMO, what the West has done is shown an incredible display of power, killing multiple birds with one stone: 1.) Attempt to prevent Russia from accessing new found gas/oil reserves. [3] 2.) Continue to press Russia into a corner as the West continues to expand its influence. [1] 3.) Show and tell China the consequences of economic sanctions and economic war, and our willingness and ability to do so. [speculation] For one, the Ukraine invasion is the US's fault. This has been covered in depth by John Mearsheimer in 2015 in his lecture "Why is Ukraine the West's Fault?" after the Orange Revolution and Russia capturing of Crimea [1]. And there is also some rational speculation here regarding the discovery of natural resources. [3] What the US (which has major influence over Europe/NATO, so it's not clear how much of a choice Europe had here)[2] has essentially done is shown the world that we can manipulate and control the status quo (i.e. win a "war") without firing a shot or dropping a bomb. The new tools of war are economic control, and we're the heaviest guerilla in the room [4]. What's brilliant is the US's ability to make Putin appear much more evil than he really is. Yes, he is a dictator and isn't a good person, but he's been bringing back Russia from the dead and lifting its people out of poverty. Some of Putin's invasions occurred because we, the West/NATO, offered membership to those countries, when Russia made it clear that was a big no-no [1]. Forcing Russia to invade Ukraine is brilliant because Putin is evil in the West's eyes, but it was 100% necessary for Putin to invade because having that much of his boarder exposed to NATO is an incredibly vulnerable position to be in, and he made that clear to us years ago [1]. Note, the US would react just the same. We have the Monroe Doctrine and the Cuban Missile Crisis to show for it. [5][6]. So Putin is forced to play the worst hand, invading his sibling country (which makes him appear more evil), spend billions of dollars to do so, and lose many of his economic connections to the world. I think the West's goal here is to deliver the final blow to Putin and topple his regime, even if it requires killing innocent people along the way. Other notes: Russia's economy is strongly linked to natural gas and oil, and earlier this century a huge deposit of both was found in Ukraine and in their economic coastal zone/area. [3] Mearsheimer notably distinguishes the West and East's methods of international politics into "21st century 'walk in and do whatever we please'" and "19th century 'balance of power politics'". The US is such a powerful country that it wont face any negative repercussions for interfering with the world order nor invading smaller countries. [1] https://www.youtube.com/watch?v=JrMiSQAGOS4 https://www.youtube.com/watch?v=JrMiSQAGOS4 [2] The US contributes over 10x the funds of the 2nd largest contributor (Germany) to NATO, and represents about 70% of the total pot. https://www.visualcapitalist.com/this-is-how-much-nato-countries-spend-on-defense/ https://www.visualcapitalist.com/this-is-how-much-nato-count... [3] https://www.youtube.com/watch?v=If61baWF4GE https://www.youtube.com/watch?v=If61baWF4GE . Note, this video is a bit too pro-western to be fair/balanced. It does not consider the possibility that the US wants to get into Ukraine for oil/gas. [4] https://www.worldometers.info/gdp/gdp-by-country/ https://www.worldometers.info/gdp/gdp-by-country/ [5] https://en.wikipedia.org/wiki/Monroe_Doctrine https://en.wikipedia.org/wiki/Monroe_Doctrine [6] https://en.wikipedia.org/wiki/Cuban_Missile_Crisis https://en.wikipedia.org/wiki/Cuban_Missile_Crisis </armchair> Edit: Wow, people are flagging my sourced backed, neutral view comment? Can someone at HN please unflag the comment? @dang

UnpossibleJim 5y ago

So, and I realize all answers will be pure conjecture, what happens if the sanctions work? What's the end game? Can the proverbial tiger be put back in the cage? Russia has invaded Ukraine and Europe has responded in a unified manor. China gave muted support, but largely stayed out of it (at least vocally - but still traded with them). China is, of course, watching very closely, as they have their own expansionist interests. How does/can Russia get out of this and save face? Where will this go with social/cyber warfare - it has to ramp-up dramatically, no? Now that western Europe has increased its military spending, what does that mean for the "World Police" American stance that has been so prevalent since the late 40's? Does this, in fact push forward clean technology, or will it hinder it as now America and Canada sit in a prime spot to export fuel and make record profits for decades - environment be damned? I know, a lot of questions and I apologize =) Some I have my own "answers" to, but, like I said, all conjecture.

CabSauce 5y ago
Hopefully with Russian citizens (peacefully) ousting Putin.
- tomp 5y ago
  What probably do you assign to that? I assign non-trivial probability to “ousting” but practically 0% chance of “peacefully” - more like “go out with a bang”.
  - watwut 5y ago
    Given that their only source of info is state media, I don't think it is realistic to expect uprising
    - Exmoor 5y ago
      Utter speculation on my part, but I see this as both a weakness and a strength for Putin. On one hand, as long as the government and whoever controls what goes out on state media are on his side it helps Putin. If, however, that control breaks down and the people in those positions lose confidence in Putin than the leverage reverses and they can easily use their media in the opposite direction.

IYasha 5y ago

Dreadful bank, a default one for russian pensions and salaries (for state-owned organisations). Almost a monopoly. But will cause lots struggle for people abroads...

jdrc 5y ago

i really dont understand this economic suicide while burning a country

liuliu 5y ago
There are a lot of noises. But probably not really felt in Russia for every day lives. At least for food and staple goods, the prices are not changed from what I can gather. Given time though, not sure. Especially China / India.
danans 5y ago
Arguably, a large motivation for this war isn't about economics. The Russian government seems to have determined that the economic pain and pariah status is worth it if autocracy makes gains against democracy, the Western alliance is destabilized (that may have backfired), and the Soviet sphere of influence is restored. However deplorable, the invasion has historical motivations.
- jdrc 5y ago
  what does historical motivations mean? nationalist maybe, although ultimately even that aims at economic growth.
  - danans 5y ago
    > what does historical motivations mean? Being known and remembered as the person/people who changed the course of history or shifted the global narrative in one way or another. That's a pretty powerful motivation, that drives a lot of people who have tremendous power, not just the Russian president.
    - jdrc 5y ago
      Interesting. Though, after the 20th century i m not sure which person/people would believe there is anything left to try. the USSR had a teleology, communism. Putin's russia dream is a vengeful restoration of nationalist glory. the russian society is poor though, dispersed in a huge country, not motivated, not a "fascio", not very united, it s hard to imagine them rallying behind putin to conquer the world like hitler did. He does command a very very large army, but disconnected from people.

LightG 5y ago

Forgive me this one, but .... bye b!tches!

every 5y ago

It's a very simple formula. You do a stupid, egregious and immoral thing and we shut down your entire economy. Any questions?