Day #18 China mulls its options
Russia's Central Bank faces insolvency, China debates next steps and human catastrophe in Mariupol
Robbing the Kleptocracy
Some clarity on the scale of Russia’s economic woes emerged today, and the outlook appears worse than previously speculated. The Russian economy has enjoyed a reputation of comparative resilience thanks to the level-headed stewardship of Russia’s Central Bank by Elvira Nabiullina, who stabilised the precarious economic situation in the turbulent days in 2014 when Western sanctions were first rolled out.
Eight years hence, the forces at play seem overwhelming for even Nabiullina. The Western sanctions imposed in the first hours of the full-scale invasion of Ukraine blocked Russia’s access to 60% of its $643Bn FX reserves. Modern global finance permitted these assets to be held outside Russian territory — a foolhardy mistake considering Russia’s insistence on aggressive mobster diplomacy towards those countries where the assets were kept. This is money Russia needs if it is to insulate itself from the worst impacts of sanctions.
The FT reports today that the situation is even worse than the 60% loss of access to reserves initially diagnosed[1]. Of the remaining 40%, most is in gold, which Russia is banned from trading for USD and EUR. Furthermore China has refused to trade Russia’s securities held in Yuan, leaving the Central Bank a mere $30Bn in liquid cash reserves — less than 5% of its total before invasion. The FT proposes a cash for peace deal with Russia, in which FX reserves are released in instalments in exchange for an enduring cessation of hostilities.
China’s pivotal role
An article by influential Shanghai-based foreign policy thinker Hu Wei, caused ripples of hope among Western observers that China’s strategic interests might be served by ending its alliance with Russia [2]. He argues that continued support of Russia would lead to a global consensus forming against Russia and China and to the isolation of both.
However, a rebuttal by a more conformist foreign policy thinker Dr Chen [3] warned Wei that expressing such views might bring him “unnecessary trouble”. Dr Chen argues that there can be no expectation of normalisation of relations with the US and that China’s place is to play a mediation role with the EU.
Dawn missile attack strikes target in far West of Ukraine
The Peacekeeping Center in Yavoriv, 15 miles from the Polish border was struck in a dawn missile attack by Russia killing 35 by the latest count and leaving scores wounded[4]. This is where US and UK and other Western military trainers were stationed before Russia’s invasion and is believed to be where Western military aid is delivered[5]. Reports suggest Russian fighter jets launched 30 cruise missiles, many of which were intercepted by air defences.
Humanitarian catastrophe unfolding in Mariupol
The city council of Mariupol has reported that a harrowingly large 2,187 peaceful residents have been killed by advancing Russian forces[6]. Arresting images of victims being laid to rest in mass graves are circulating. Those left alive are without food, water or warm shelter, with no electricity or internet. Russian forces are relentlessly shelling residential areas, in one infamous incident targeted a maternity hospital with a high-yield explosive and are preventing aid from reaching the desperate, besieged men, women and children caught in the barbarous onslaught[7].
The overwhelming percentage of Mariupol residents are native Russian speakers. Putin’s given causus belli that Russians “своих не бросают” (don’t abandon their own) is no salve to the thousands of Russian mother-tongue speakers he has killed, maimed and starved in this campaign.
US filmmaker killed by Russian forces near checkpoint
Three journalists were shot in Irpin near Kyiv today, one fatally. American filmmaker, Brent Renauld, was killed as his team were “across one of the first bridges in Irpin, going to film other refugees leaving” according to Juan Arredondo, a fellow US journalist injured in the incident[8].