14.25 hrs: The Dow Jones has surged 182.2 points to 16,247.9 at the open on Wall Street on positive news that Western sanctions against Russia over the referendum in Crimea look relatively lame.
The European Union will shortly impose travel bans and asset freezes against 21 Russian and Ukrainian officials over the Crimean crisis. The FTSE 100 has also made gains in London, moving 56.3 points higher to 6,584.23 in early afternoon trading.
American foreign policy towards Cuba may somewhat qualify as sanctions’ most observable failure. Despite 50 years under a U.S. embargo, the Castro brothers are still in charge. This is an illustration of how sanctions are far less effective. When Libya agreed to give up its chemical and nuclear weapons programs in late 2003, officials told inspectors during their visit to Tripoli that the biggest impetus for the deal was their desire to end sanctions and send their kids to American schools. The Bush administration maintained that Libya had been spooked into compliance by the U.S. invasion of Iraq earlier that year.
In Russia’s case, the worst thing that will happen is that many Russian oligarchs will not be able to buy Penthouses in London, New York or Paris.
What will the Russian bear do?
Russia seems to be a rational country that wouldn’t do anything dramatic. They have always been in competition with the leading superpower for example France, Germany, and America. Russia has always been a strong country, the people are resistant and can tolerate hardship. But they will not wage war only when cornered, history states this. Napoleon and Hitler.
From the economic point of view, everyone should get ready for tough actions from Moscow. Sergei Glazyev, the most hardline of Putin’s advisors, has outlined the Kremlin’s retaliation strategy, firstly to drop the dollar, sell US Treasuries, tell the Russian firms to default on their American dollar debts, and seek to build an alternative currency system to replace Uncle Sam’s($) I OWE YOU’S with emerging economies of Brazil, Russia, India and China.