How to overthrow Putin's regime - 10 financial steps

27 February 2022, 12:05 PM

Ukraine is fighting on its territory for peace at home and throughout Europe, among other things, by showing the world that our system of values and aspirations for freedom are European.

The world must help us in this struggle by making the costs of Russia and Belarus unbearable. Then, not only incurring 10-20 billion dollars per day costs for the war but also suffering losses in the economy and financial sphere, the aggressor countries will get a breach that will drag them down. Then Russians themselves (hopefully) will come into play and overthrow such a regime. After all, such losses were not the basis of the modern social contract in Russia.

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Therefore, I see those ten steps that our partners need to take:

1. While I hope the blocking SWIFT access for Russia has been mostly agreed (it would be a significant blow to the Russian economy), the further sanctions should address the Russian state assets, including banks, the Russian Central Bank (the RCB still has many assets in hard currency in the West), and Russian investment funds - their assets must be frozen, transactions prohibited, incl. gold and swaps.

2. Blocking (banning) financial transactions which can help Russia and Belarus (i.e., no insurance for the Russian operations, no leasing for the Russian aircraft, it can also be extended to the sea cargo and passenger companies, etc. Also, we should find ways to block the access of the Russian ships to the foreign ports - it isolates Russian trade and travel.

3. Freezing the Russian and close-circle Russian oligarchs' assets and money accounts of companies close to the Kremlin in each country; also for Belarusian officials close to Lukashenko;

4. Central banks may increase the weight of the Russian assets (such as loans, government securities, securities of state banks, and securities of enterprises) to like 200-300% of RwA for the capital adequacy calculation. And in parallel, to require the Russian assets as collateral to be counted as zero – some Swiss banks already did it; this will make Russian assets unattractive. Moreover, it will create a situation of margin calls on loans that use such assets as collateral (hypothesis - margin calls primarily for Russians abroad);

5. It may be considered to include Russia and Belarus in the FATF black list since they are acting like terrorist states/organizations; it will make it impossible for most financial institutions to work with them;

6. We need to push JP Morgan as well as Bank of America and BofA Securities to kick Russian assets out of their EMBI and MSCI indices – I think it is inappropriate for those investment banks to encourage international clients to invest in Russia by inclusion in their indices, so it will significantly reduce demand on Russian assets abroad for investors in index funds; and I think that in general, Western state pension funds should ban every country from investing in Russian assets - it's big money, if Russia stays, it will not be able to finance the war;

7. We need to approach Visa and Mastercard + other payment systems like Paypal, Western Union, MoneyGram, Paysend, Transferwise with the request to ban operations with the Russian cards, including their usage in e-commerce. Card transactions in Russia should not be possible. The remittances to the cards should not be allowed.

8. Revoking visas for Russians and closing the visa-free regime is also a solution, likewise personal sanctions for many people in the close circle to Putin. This will not allow Russians to go abroad and withdraw cash from their bank accounts; well, adding to already classic – "no more shopping in Milan, no vacation in St. Tropez and diamonds in Antwerp";

9. Ideally, global IT companies and startups should stop supporting Russian state-owned companies. They need to be disconnected from their support, especially in large industrial solutions;

10. And last but not least – probably the most painful so far for Europe – sanction on the Russian oil export – impose the special restrictive penalties and use that money to support Ukraine.

Slava Ukraine!

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