Putin's 630 billion treasure almost completely worthless - when will his war chest be exhausted?

Created: 03/03/2022Updated: 03/03/2022 05:41

By: Lisa Mayerhofer

The Ukraine war is not going the way President Putin planned.

© Alexei Nikolsky/imago

The Ukraine war is not going the way President Putin planned.

In addition to the resistance of the Ukrainians, the EU sanctions are also making it more difficult to continue the war.

Frankfurt/Moscow – $20 billion a day – the Ukraine war* is said to cost Russia that much.

This claim goes back to the former Estonian General Riho Terras, who is a member of the European Parliament and is said to have good contacts with Russia.

Accordingly, the war is not going according to Putin's plan* - he did not count on the resistance of the Ukrainians, but on a quick capitulation.

The Russians do not have the money and raw materials to continue the war for long, writes Terras.

Ukraine war: Central bank reserves frozen by sanctions

Because the sanctions have also hit the president and his country hard - especially the restrictions on the Russian central bank.

The EU had banned transactions with the Russian central bank on Monday night and frozen all of the central bank's assets in the EU.

The United States also imposed similar sanctions.

According to its own statements, the central bank has reserves with a total value of the equivalent of a good 630 billion dollars (as of mid-February): US dollars, euros, Chinese yuan, government bonds, gold.

Theoretically, Moscow could use it to pay for its imports for more than twelve months, calculated Commerzbank chief economist Jörg Krämer.

However, this treasure is largely stored at western central banks and commercial banks.

According to the latest statistics, the Moscow Central Bank holds securities abroad with a volume of a good 311 billion dollars.

In addition, there are around $152 billion in cash or deposits with other central banks or banks outside of Russia.

Ukraine war: Lindner for further sanctions

Because of the sanctions, the central bank can no longer access a large part of the hoarded assets.

“The ruble is in free fall.

Vladimir Putin's war chest has been hit hard," said Finance Minister Christian Lindner (FDP) on Tuesday after talks between the G7 finance ministers.

The announcement of the exclusion of Russian banks from the Swift financial communication system also had a massive impact on the Russian capital market, said Lindner.

Any further sanctions would focus on "maximizing the damage to the Russian economy, Putin's supporters* and the Russian capital markets."

Russia reacted to these sanctions and from this Wednesday banned the export of foreign cash worth the equivalent of 10,000 dollars (almost 9,000 euros).

Foreign currencies are affected by the ban, according to a decree signed by Russian President Vladimir Putin.

This is to prevent an outflow of capital.

Ukraine war: "Unspeakable suffering of the Russian population"

Numerous people are also leaving Russia* because of Putin's attack on Ukraine because they are afraid of a worsening of the situation.

So they try to keep their cash safe.

They also withdraw massive amounts of money from their accounts.

For days, long queues have formed at ATMs in Moscow, for example, because of the Western sanctions against Russian banks.

“For Russia, this intervention appears to be proving catastrophic.

There is a threat of an implosion in the Russian economy, which will lead to untold suffering among the Russian population,” writes the Dutch newspaper

.

One hopes that this economic bombardment will bring Vladimir Putin to his senses.

However, it is still completely open how the Russian President will react to these developments.