A well-connected Russian billionaire, who spoke on condition of anonymity for fear of reprisals, said Putin “believes the West is going to be exhausted.” The billionaire said Putin was not expecting the West’s strong and united response at first, “but now he is trying to reshape the situation believing he will win in the long run.” Western leaders are prone to electoral cycles, and he “believes that public opinion can be overturned in one day.”
The ban on seaborne Russian oil exports announced this week by the European Union — hailed by Charles Michel, president of the European Council, as putting maximum “pressure on Russia to end the war” — “will have little effect in the short term,” an official said. A Russian, close to diplomatic circles in Moscow, also spoke on condition of anonymity for fear of retribution. “The mood of the Kremlin is that we can’t lose – no matter the price.”
Noting that the EU’s move has only led to another increase in global energy prices, the Kremlin says it will seek to divert supplies to other markets in Asia, despite a ban imposed by the European Union and Britain on securing Russian shipments.
Kremlin spokesman Dmitry Peskov said in an interview with the Washington Post that residents of the European Union “are feeling the impact of these sanctions more than we do.” “The West has made one mistake after another, leading to more crises, and saying that it’s all because of what’s going on in Ukraine and what Putin is doing is wrong.”
This position indicates that the Kremlin believes that it can withstand the impact of economic sanctions more than the West. Sergei Guriev, a former chief economist at the European Bank for Reconstruction and Development, said Putin had no choice but to continue the war in the hope that the grain blockade in Ukraine would “destabilize the Middle East and trigger a new influx of refugees”.
The Kremlin’s aggressive stance appears to reflect the thinking of Nikolai Patrushev, the hard-line head of Russia’s Security Council, who served with Putin in the Leningrad KGB and is increasingly seen as a hard-line ideologist driving Russia’s war in Ukraine. He is one of a handful of close security advisers that Moscow insiders believe can reach Putin. In three fiercely anti-Western interviews with Russian newspapers since the invasion, a propaganda-shy Patrushev declared that Europe was on the brink of a “deep economic and political crisis” in which rising inflation and already falling living standards had taken a toll on the mood. Europeans, while the new migrant crisis will create new security threats.
“The world is gradually falling into an unprecedented food crisis. It will become clear that tens of millions of people in Africa or in the Middle East are on the brink of starvation – because of the West. In order to survive, they will flee to Europe. I am not,” Patrushev told the state newspaper Rossiyskaya Gazeta in an interview. I am sure that Europe will survive the crisis.”
In another interview last week with the popular Argumenty and Fakty newspaper, Patrushev said that Russia is “in no rush to meet deadlines” in its military campaign in Ukraine.
The Russian billionaire said the Russian military is making incremental gains in the Donbass region of eastern Ukraine, and instead of seeking an immediate and decisive battle, Putin believes time is on his side. Putin is “a very patient man. He can wait six to nine months,” the billionaire said. “He can control Russian society much more tightly than the West can control its own.”
Economists and a Russian official said weeks of diplomatic haggling over the terms of the European Union’s oil embargo was seen by the Kremlin as a sign of faltering Western resolve. Phone calls over the weekend by French President Emmanuel Macron and German Chancellor Olaf Scholz to Putin about ways to lift the blockade of Ukraine’s ports will reinforce this view further. “It means he thinks he has influence,” said a former US government official, when Western leaders contact Putin and seek a deal.
The Kremlin insisted the blockade of Ukraine’s grain exports was due to Ukrainian mining in the Black Sea – which Kyiv denied – while Peskov said Western sanctions were also preventing grain shipments.
Sergei Aleksachenko, a former deputy head of the Russian Central Bank, who is now living in exile in the United States, said Russia’s potential losses due to the European Union’s embargo on its offshore oil exports may be minimal. He said that if Russia is able to shift the entire naval volume to India and China, the Russian losses as a result of the embargo could reach only $10 billion.
Aleksachenko said Putin’s economic advisers “will tell him about the estimated loss from the embargo, and he will laugh quietly.” “It doesn’t change course.”
Edward Fishman, associate professor of international and public affairs at Columbia University and a former US State Department official, said the EU ban should be seen as “just a first step” in efforts to cut off the Kremlin’s hard currency earnings.
Several current and former senior Western officials have discussed proposals for the United States and the European Union to form a cartel and cap the price of Russian oil, perhaps at $30 or $40 a barrel. Guriev and Fishman said the move could be more effective than the European ban and help lower global prices. Under the proposal, they said, the US could impose secondary sanctions on anyone buying Russian oil at a price above the cap.
Italian Prime Minister Mario Draghi first floated the idea of creating a cartel for oil consumers in a meeting with President Biden, while the European Commission is now considering Draghi’s proposal on a possible cap on gas prices.
Putin declared that an “economic blitzkrieg” against Russia had failed, and on the surface, the economy was shielded from the initial shock of Western sanctions by the influx of nearly $1 billion in revenue per day from oil and gas exports to Europe before. The European Union embargo on seaborne oil. Thanks to capital controls and orders that Russian exporters sell half of their hard currency earnings to the state, the ruble rose to its pre-war highs.
But the head of the Russian Central Bank, Elvira Nabiullina, warned that the full impact of Western sanctions was not yet being felt. The ban on high-tech imports is just beginning to emerge, while shortages of some goods are only now beginning to emerge. Inflation is set to exceed 20 percent, and Russia faces its deepest recession in 30 years. Putin’s attempt to protect the population from inflation, estimated at 18 percent, by ordering a 10 percent increase in pensions and a much lower minimum wage.
With increasing risks for all sides, the Russian official said, “It will be a war of attrition from an economic, political and moral point of view.” “Everyone is waiting for autumn,” when the impact of sanctions will be most severe, he said.
So far, with Ukrainian President Volodymyr Zelensky estimating that Kyiv needs $7 billion in aid a month just to keep the country going, a former US government official said, Putin appears to be betting on the West blinking first. Putin’s goal of subjugating Ukraine and eventually placing the Russian flag in Kyiv remains unchanged.”
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