New Delhi-As US President Joe Biden unveiled new sanctions against Russia on Friday, he made it clear that the total sanctions and export controls were “crushing the Russian economy”.

“The ruble has lost more than half of its value. They tell me it takes about 200 rubles to equal 1 dollar these days. The Moscow stock exchange has been completely closed for two weeks because they know that by the time it opens it will likely collapse,” Biden said.

Rating agencies downgraded Russia to junk status.

The list of international businesses and corporations leaving Russia is growing day by day, Biden said while listing the dramatic consequences for Russia and its economy that have unfolded since the war in Ukraine.

“We will not wage a war against Russia in Ukraine. The direct confrontation between NATO and Russia is World War III, something we must work to prevent,” Biden said of not sending troops to Ukraine.

“And we will continue to press (Vladimir) Putin. The G7 will seek to deprive Russia of the possibility of borrowing from leading multinational institutions, such as the International Monetary Fund and the World Bank. Putin is an aggressor… And Putin must pay the price,” Biden said.

Zoltan Pozsar of Credit Suisse said in a report: “We are witnessing the birth of Bretton Woods III – a new (monetary) world order centered on commodity-based currencies in the East that will likely weaken the system of eurodollar and will also contribute to inflationary forces in the west.”

“A crisis is brewing. A commodity crisis. Commodities are collateral, and collateral is money, and this crisis is about the growing attraction of external money over internal money. Bretton Woods II was built on internal money, and its foundations crumbled a week ago when the G7 seized Russia’s foreign exchange reserves,” Credit Suisse said.

Pozsar said it was a perfect storm, but that’s precisely what happens when the West sanctions the world’s largest commodity producer, which sells virtually everything.

“What we see on the 50th anniversary of the 1973 OPEC supply shock is something similar but much worse – the 2022 Russian supply shock, which is not caused by the supplier but by the consumer.

“The aggressor in the geopolitical arena is punished by sanctions, and sanctions-induced commodity price movements threaten financial stability in the West. The commodity market is far more financialized and indebted today than it was during the OPEC supply crisis of 1973, and today’s Russian supply crisis is much bigger, much broader and much more correlated. It’s scarier,” Pozsar said.

There are Russian commodities collapsing in price and there are non-Russian commodities rallying – this rally is due to Russia’s supply shock in 2022.

“It’s a buyers’ strike. Not a sellers’ strike, to make it even more absurd… Russian commodities today are like subprime CDOs were in 2008. Conversely, non-Russian commodities are like what securities were of the US Treasury in 2008. One is collapsing and the other is soaring. in price, with margin calls on either side, regardless of your side,” he added.

The ban on technology exports to Russia, in response to the war in Ukraine, could backfire on global manufacturers of computer processors and semiconductors, as many components crucial to their production are made exclusively in Russia, said warned an industry expert.

“The ban on finished products for Russia will lead to a retaliatory ban on the supply of production components and will lead to an acute shortage of microprocessors for the whole world. In comparison, the situation of supply disruption at the end of 2021 will appear relatively light,” said Oleg Izumrudov, head of the Consortium of Russian Developers of Data Storage Systems (RosSHD), according to RT.

Following the sanctions, Russia could default on sovereign bonds for the first time since the Bolshevik Revolution of 1917.

A leading ratings agency has warned that Russia may soon risk defaulting on its debts as it further downgrades the country’s bonds to “junk” territory, the BBC reported.

Fitch Ratings slashed its assessment of Russia almost to the bottom of its scale, just days after downgrading it from investment status.

If Russia fails to repay its debt, it raises the possibility of the country’s first major sovereign bond default since the wake of the 1917 Bolshevik Revolution, the BBC reported.

This is the latest blow to the country’s solvency following its invasion of Ukraine. This week, Moscow said its bond payments could be affected by sanctions.

“The further increase in sanctions and proposals that could limit energy trade increase the likelihood of a policy response from Russia that includes at least a selective nonpayment of its sovereign debt obligations,” Fitch said, according to the BBC.

Pulling Russian oil from the market would skyrocket energy prices to more than $300 a barrel of oil, Russian Deputy Prime Minister Aleksandr Novak said, adding that Russia is not dependent on the West and can “re-route” its supplies elsewhere.

European officials are “once again seeking to blame Russia for their recent energy policy shortcomings,” Novak told reporters, adding that “Russia has nothing to do with the current rise in price on market volatility,” RT reported.

There are also serious implications for food prices. Energy and commodity prices – including wheat and other grains – have surged due to the war in Ukraine, adding to inflationary pressures from supply chain disruptions and the rebound from the pandemic of Covid-19, the IMF said.

Price shocks will have an impact around the world, especially on poor households for whom food and fuel represent a higher proportion of expenditure.

Should the conflict escalate, the economic damage would be all the more devastating. Sanctions against Russia will also have a substantial impact on the global economy and financial markets, with significant spillovers to other countries, the IMF said.

In many countries, the crisis is creating a negative shock to both inflation and activity, in a context of already high pressures on prices.

Added to this are the tensions around nuclear power plants. Ukrainian intelligence has information that the Russian aggressors are planning a terrorist attack on the Chernobyl “exclusion zone” and plan to blame Ukraine.

Ukrainian Defense Ministry officials said: “According to available information, Vladimir Putin ordered the preparation of a terrorist attack against the Chernobyl nuclear power plant.

The Russian-controlled Chernobyl nuclear power plant plans to create a man-made disaster, the occupants of which will try to blame Ukraine, Ukrayinska Pravda reported.

To make matters worse, Russia accused the United States of supporting biological laboratories on Ukrainian territory, experiments were carried out with bat coronavirus samples, the official representative of the Russian Ministry of Defense said, Major General Igor Konashenkov.

“In the biolaboratories created and funded in Ukraine, as the documents show, experiments were carried out with bat coronavirus samples,” he said, RT reported.

Konashenkov said that the department will soon release another package of documents on secret US military biological activities on the territory of Ukraine and present the results of their examination. (IANS)

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