One of the main topics of discussion right now is the impending sanctions against Russia, which Biden warned Putin about in his interview of March 17. At the moment, the U.S. government is preparing a package of restrictions. It is still unknown how tough the sanctions will be, as experts are divided in their opinions.
The adherents of strict restrictions include Victoria Nuland, who is going to take the position of deputy head of the U.S. State Department for political affairs. She suggested imposing sanctions on Russia’s national debt, which might affect all non-residents who are currently holding this debt.
The second group, less militant, includes Peter Harell (senior director at the National Security Council) and Elizabeth Rosenberg (adviser to the deputy head of the U.S. Treasury). They admit the ineffectiveness of tough sanctions against the Russian government debt. Thus, Rosenberg warns of the financial losses that may be incurred by hedge funds America, which have some OFZ of the Treasury Department. Non-residents are responsible for about 22% of Russia’s domestic debt, which in money terms is about 3 trillion rubles. Even with an immediate withdrawal from the national debt, the Russian government will be able to close the hole by restricting issuance.
“In case more stringent options on sanctions are implemented than we previously assumed (believing it to be unrealistic in the current environment), the ruble exchange rate could sag quite a bit more. Approximately by 10% at least,” says Professor of the Higher School of Economics Yevgeny Kogan.
Harell considers it expedient to impose personal sanctions against statesmen and not to stop the cooperation with Russia in some spheres. In his view, harsh restrictions would force the system liberals to abstract away from the political and economic developments in the country.
It is difficult to determine the best course of action for Russia if we rely only on the views of supporters of soft and hard restrictions. On the one hand, with strict sanctions the influence of liberals will be limited, on the other hand, attracting American capital through bonds could be a profitable move for the state. Now we just have to wait and see how things develop in the future.