‘Big Holes’ Undermine Russia Sanctions – And It’s Not Crypto (Psst! It’s Traditional Politics & Finance)

A man in Mariupol, a city in Ukraine besieged and almost completely destroyed by Russian troops. Source: Twitter/SputnikATO

An opinion columnist writing for Bloomberg has identified two flaws that “fundamentally undermine” the United States and EU-led “sanctions regime” against Russia – and neither have anything to do with the use of crypto

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Since the start of the conflict in Ukraine, senior lawmakers in the USA and elsewhere have claimed that wealthy Russians will look to crypto to sidestep sanctions.

But the columnist, Paul J. Davis, appears to believe that conventional finance (aka tradfi) and politics provide far more effective loopholes than crypto transactions.

The first major failing with the sanctions is that “Russia is still allowed to sell all the fossil fuels it likes.” And secondly, Davis wrote Moscow “seems able to use the dollar earnings from those sales to support the ruble.” (Ruble is now down around 17% against USD since the invasion started one month ago, but it jumped over 50% since March 7.)

Doing this, he noted, allows Moscow not only to pump USD into propping up the RUB, but also pay directly for the import “of the tools of war” from countries that “haven’t signed on to the sanctions.”