Checkmate for Vladimir Putin’s Russia in Ukraine?
Economic and industrial paralysis in Russia, military defeats in Ukraine, rising protests in Russia, ... Putin has no way out.
Kremlin propaganda continues to try to make it appear that Western sanctions are not working and that Russia is emerging stronger than ever after more than six months of the war in Ukraine.
However, if you look beyond the Kremlin's manipulated figures, you will quickly understand that the Russian economy and industry are heading for total paralysis. Of course, Russia is still accumulating billions of dollars by selling its hydrocarbons, but it can't buy the spare parts needed for its industry with the currency it accumulates.
Russia would be like a billionaire rich person who is forbidden to buy anything he wants and has to live in a small studio eating bread and drinking only water...
Worse still, the Ukrainians are tipping the balance of power in their favor on the ground. Everything indicates that Putin's Russia will lose this war sooner or later. Just a matter of time. And above all, of unity! For now, the only thing that can save Putin is if his propaganda and extravagant threats end up disuniting the Europeans.
But this is not what seems to be in the offing.
The G7 countries have just agreed to cap the price of Russian oil. This is an original, even unprecedented measure, which must be taken very seriously. The member countries of this exclusive club will refuse to buy oil from Russia at a price that exceeds a certain level to be set later.
Of course, Russia could take the lead and refuse to sell to nations it considers hostile. However, this hypothesis should be ruled out immediately, as oil revenues have represented up to 40% of the Kremlin's income in recent years. This country is therefore on life support.
Putin can even less afford to interrupt its production because its infrastructure would be irreparably damaged by paralysis that would be fatal during the winter.
A halt - even a temporary one - to oil production by Russia, whose strategy would be to force a rise in prices (which would benefit it) due to a shortage of supply, would also force it to spend huge sums of money, as it would be necessary to rebuild the pipelines that would be put out of action by the rigors of winter. It is therefore understood that, despite the forthcoming price ceiling for oil, Russia will not have the luxury of stopping production.
The United States and its European allies had no other choice in adopting this drastic measure because Russia has greatly increased its sales to China, India, and other countries since the embargo, thanks to which it has been able to maintain its export volumes at a constant level. Substantial discounts of around $40-50 per barrel to motivate buyers have not affected its revenues, as the increase in oil prices has more than compensated for the loss of income.
In the context of the forthcoming cap, these same Russian oil importing countries - being far from philanthropic - will not pay Russia a dollar more per barrel than what will be defined by the G7, despite their formal protests against what they consider a Western diktat.
In addition, and all likelihood, these measures will be respected because - unlike the sanctions imposed unilaterally on Iran by the United States in 2012 and applied backward by its allies - this cap on the sale of Russian oil has been adopted in unison and unanimously by all Western nations, which gives it a formidable force and potential effectiveness.
The G7 has the means to control the entire chain: from the payment of the oil bill to the insurance of its transport to the cargo that contains it as well as its crew, and even to the brokers who mediate it...
Redhibitory sanctions are planned for the entire ecosystem of offenders who have a certain amount of time to adapt since these measures will be applied in several stages: a strict ceiling on the price of Russian oil on December 5, 2022, and then on refined products on February 5, 2023.
Final Thoughts
In short, Russia is condemned to reap less and less oil revenue in the relatively short term, in a context where its non-oil revenues have already fallen by 15% and where its GDP will fall by 5% to 8% in 2022, not yet taking into account the oil price cap.
While Putin's Russia will not be able to continue such a war effort in Ukraine for much longer, while Ukrainian counter-offensives are multiplying, and while the protest against the dictator Putin in Russia itself is growing, we can already wonder whether Putin would not be in a position of checkmate.
A formula that will undoubtedly please one of the greatest opponents of Putin, the chess champion Garry Kasparov.
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