Part two:
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The “lost companies” that represented “~40% of its GDP” merely sold their businesses to new Russian owners on their way out of the country—often at pennies on the dollar—and those businesses quickly reopened under local management. Starbucks is now “
Stars Coffee” and McDonald’s is now “
Vkusno i tochka,” and both menus are virtually indistinguishable from their pre-war predecessors. The sanctions simply forced a change in the equity stack of the grand Russian capital table, and in Russia's favor at that.
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Lost & found | Natalia Kolesnikova/Getty
Putin also
decreed that domestic companies no longer need to respect the intellectual property rights of so-called “unfriendly nations.” With a stroke of the pen, all manner of patented inventions—described such that anyone skilled in the art could easily replicate them—became fair game for Russian businesses to exploit without remuneration, helping domestic manufacturers leapfrog ahead in economic development.
And on it goes.
As testimony to the utter failure of the West’s efforts to punish Putin economically, consider the bizarre article that appeared in the
Financial Times last week. Circularly titled “
Russia’s new economy may end up prolonging its war,” the piece—written by someone currently employed by an economics think tank in Kyiv—is practically indistinguishable from parody:
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Good one | Getty
How did we get here? The answer is simple. Western political leaders have no earthly idea how commodity markets work and vastly underestimate the technical prowess of their adversaries. It is long past time to address both. It might be too late to win the war, but there is still time to impact the resulting peace. Consider these simple proposals:
The Western powers should coordinate and flood the world with commodities to crash global prices, thus devastating the Russian economy in ways sanctions never could. President Biden should temporarily tame or ignore the environmental wing of his progressive coalition and work directly with the fossil fuel industry to radically increase domestic production of oil, gas, and coal. Exports should be facilitated, permits fast-tracked, and excessive environmental regulations swept aside. The US government should incentivize the fossil fuel industry by covering for any losses incurred. Does Biden want to win the war or curry favor with the Sierra Club? He can’t do both, and the time for choosing has arrived.
Two global commodity giants—Canada and Australia—should be leaned on to do the same. The Netherlands should be encouraged to reopen the enormous Groningen natural gas field, and the Germans to restart their mothballed nuclear reactors. The West might lack enough artillery shells, but it has a vast capacity to produce BTUs.
Similarly, rather than impede Russian production and exports, the West should be doing everything in its power to push every fossil fuel molecule that Putin produces to market as seamlessly as possible. Heck, the US military could escort tankers carrying Russian crude! Instead of trying to sanction Russian liquefied natural gas (LNG) production, Biden should be encouraging the Russians to operate their export terminals at full capacity.
Venezuela and Iran should receive the same treatment. Sanctions should be lifted and production encouraged. If there’s oil or gas or coal in the ground somewhere in the world, get it to market as quickly as possible.
Let’s test how long the Russian economy can withstand $10 a barrel crude and $1 a million BTU LNG prices. Let’s test how disciplined OPEC would be in the face of collapsing prices. Let’s test whether the Saudis would continue to spurn senior US diplomats in the way they do now. This is how to regain the upper hand with Putin.
The best time to have implemented this strategy was two years ago when this publication first suggested it. The next best time is today.
kyivindependent.com
