Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Sensemaker: Funding Putin’s war

Sensemaker: Funding Putin’s war

What just happened

Long stories short

  • Russian forces shelled and set fire to the Zaporizhzhya nuclear power station in southeastern Ukraine, then took control of it. 
  • In a phone call with Macron, Putin ruled out a ceasefire and expressed “very great determination” to take the whole of the country.
  • Refugees arriving at Berlin’s main station were outnumbered by private German citizens offering them free accommodation.

Invaded: Voicemails from Ukraine

“The joke of the day is my wife was frying crackers. She went into the corridor and forgot to turn off the stove, because of this the crackers were burnt to coal on one side. Now we call the burnt side Putin’s side of the cracker.” Listen to Oleksandr and others today and every day in Invaded – Voicemails from Ukraine.

Funding Putin’s war

“No country is sanction-proof,” writes Chrystia Freeland, Canada’s deputy prime minister, whose mother was Ukrainian and who speaks Ukrainian with her children. This is true, and yet the war grinds on. How is Putin paying for it?

Money out

  • The Ukraine-based Centre for Economic Recovery reckons the first five days of the invasion cost Russia $7 billion in direct military expenses. Other estimates of the cost of the war to Russia range from £500 million to £15 billion a day. 
  • At least half Putin’s $630 billion war chest consists of foreign currency reserves that have been frozen.
  • Russia’s central bank has used what reserves it can – held mainly in China – to prop up the ruble by buying it abroad, but this hasn’t worked. The ruble is down 30 per cent against the dollar since last week, making imports 30 per cent more expensive.
  • Russia can no longer borrow anywhere in the West. Whether China will go on lending is therefore a $300 billion question, and yesterday two big China-backed development banks suspended business with Russia and Belarus.

Money in

  • Oil and gas are still big earners even if other commodities are getting harder for Russia to sell. 
  • By one estimate Russia took in more than $700 million in routine commodities payments in the 24 hours after Putin “recognised” Luhansk and Donetsk last week. 
  • About $200 million of that will now be blocked by Russian banks’ suspension from Swift, but without a Russian oil and gas embargo most of the money will keep rolling in. 
  • Fossil fuel exports earned Russia $119 billion last year at a rate rising to nearly $500 million a day by October. That rate has since gone up. The threat of war pushed oil prices from $75 to $100 a barrel. Actual war has pushed it to $114. 

“So he is basically covered,” says Adnan Vatansever of King’s College, London. High gas prices have meanwhile paid off Russia’s €9.5 billion investment in the Nord Stream 2 pipeline, so its non-use is no fiscal disaster for the Kremlin.

To ask: can the world agree on a Russian oil and gas embargo? Senators Joe Manchin and Lisa Murkowski are pushing a bill in Congress that would ban US imports of Russian oil and petroleum products. The EU is considering something similar but is unlikely to try to force Poland and Germany to kick their Russian gas habits even as they take in hundreds of thousands of Ukrainian refugees. More on this in next week’s NZ Sensemaker. 

To note: even if there were a formal global embargo, Russia would go on selling oil – on the grey and black markets, as Iran has for years. It would have to be sold at a discount to compensate buyers and shippers for the risk of US sanctions enforcement, but with oil at $114 a barrel Russia can afford that too. Its budget balances with oil at $45 a barrel.

Know more

Putin may not be satisfied with Ukraine, even if he takes it all. So where might he go next?

Ella Hill 

The crisis caused by Russia’s invasion will not be contained within Ukraine’s borders. Sir Roderic Lyne, a former UK ambassador to Moscow, warned in a ThinkIn this week that Putin could also menace the Baltics, cause havoc in the Balkans and even make trouble in Libya.

Our planet environment, natural resources, geopolitics

“Nuclear terrorism”
Ukraine’s President Zelensky is well within his rights to call the attack on the Zaporizhzhya power station nuclear terrorism. A direct hit on any of its six reactors could have destroyed their cooling systems, leading to another meltdown in a country still scarred by Chernobyl. But it’s worth noting the reactors were not shelled. What burned was a five-story training centre nearby. A local paper blamed the fire on Chechens. Russia’s defence ministry had the gall to blame Ukrainian saboteurs. Video footage apparently from the scene shows it wasn’t saboteurs, but shells. They could so easily have missed the training centre and hit a reactor.

Wealth investment, fairness, prosperitY

UK plays catch-up
Alisher Usmanov’s money has been making waves in Britain for years – he was a big investor in Arsenal before Everton – and his cordial relationship with Putin has been evident for as long. He was photographed receiving a medal from the president in the Kremlin in 2018 and according to the EU has “fronted for Putin and solved his business problems”. He wasn’t sanctioned by the UK, however, until after reports that his monster yacht, Dilbar, had been impounded in Hamburg, and after more than a week of war. Belated UK sanctions on him and other oligarchs form part of an effort by the government to show that London no longer welcomes their money, having profited so handsomely from it for 30 years. The effort includes an anti-money laundering bill due before the Commons next week, which Margaret Hodge MP, former chair of the Public Accounts Committee, said last night at a ThinkIn was “so badly drafted” and so full of loopholes that the government needs to start again. 

belonging identity, society, beliefs, countries

Who backs Russia?
141 countries backed a UN resolution this week condemning the Russian invasion. But the combined population of the 5 countries that voted against and the 35 that abstained – including India and China – was more than half the global total. 

New things technology, science, engineering

Deutsche Bank’s tech trouble
Who knew that a quarter of Deutsche Bank’s IT specialists were in St Petersburg and Moscow? “Were” seems the operative word here. Technically the bank still employs 1,500 specialists in Russia but they can no longer do their jobs. Sanctions mean no trade-related communications can get in or out. Two questions: after being fined hundreds of millions of dollars for helping Russians launder around $10 billion, as Deutsche has been, was it really smart to maintain such a large operation on Russian soil? And when the bank says with a straight face it has “no code and no data housed in the Russia tech centre”, can it be serious?

covid by numbers

5 million – Covid vaccine doses the UK has donated – and delivered – to Bangladesh, with a shipment of one million Oxford-AstraZeneca doses arriving last week.

The 100-year life health, education, living, public poliCY

Ukraine’s child cancer patients
Hospitals across Eastern Europe – but mainly in Poland – are handling a huge and sudden influx of Ukrainian patients, some of them toddlers transferred from cancer units that were running out of drugs or too unsafe to continue using. There were reports this week that one, in Melitopol, had been shelled. Poland says it has 7,000 beds ready in 120 hospitals, and expects most of them to be used by children, women giving birth, the exhausted elderly and people with chronic conditions. Acute cancer patients will be treated in Poland but also transferred to Germany and elsewhere in Europe. There is at least capacity. Poland’s Covid case numbers have fallen by three quarters since the start of February. 

Thanks for reading. Please share this around and tell us what we’ve missed. News tips and story ideas are welcome. Email them to sensemaker@tortoisemedia.com.

Giles Whittell

Photographs Getty Images

in the tortoise app today