Ukraine Always Get What You Want

The Russians are doing everything they can to prop up the ruble and preventing people from unloading them. That is unsustainable for a long period of time if the sanctions remain in effect. The sanctions are putting the stress on them that required them to resort to capital controls, so I'd argue that they have been pretty effective. The types of sanctions they resorted to (while avoiding others) were never magic. I posted that at the time, I think.

The main reason that the ruble has bounced back is that oil and gas prices have shot up, which has made Russia's exports rise. At the same time, the sanctions have hit their imports, plus domestic demand has dropped off. As a result, Russia's trade surpluses are increasing, which creates demand for rubles. That is why the only sanctions that would have the effect I think you want with the sarcastic "sanctions!" posts would be to somehow cut off oil and gas sales from Russia. That is Russia's whole economy, and Putin still feels like he has the leverage to demand payment from Germany, France and the rest of Europe in rubles. If they want sanctions with teeth, they have to call his bluff (or is it a bluff?) and risk that Putin cuts them off. Without those sales, the ruble will plummet.

I think Putin knew this. The dollar (and the Euro, to the extent it is used as a reserve currency) is a paper tiger. It's backed by nothing of any value. Commodities are way more valuable than fiat dollars. Which limits the ability of the U.S. to hurt Russia with sanctions, because Putin has figured all along, "Well, FU and your dollars, we have oil and gas."

If Europe isn't willing to stop giving the ruble value in exchange for that oil and gas (and it is understandable to a degree), looking at just the ruble as the measure of whether the sanctions have been effective really doesn't capture the effect they are having. Russia's economy really has gotten hit hard. Financial conditions have tightened, inflation is surging and their banks are under a lot of strain. The sanctions are having a pretty big effect, even if the pain they are causing hasn't brought about an immediate end to their invasion the way some people apparently unrealistically expected. Maybe that is Biden's fault for the typical BS messaging.

 

Those european countries have long-term supply contracts with Gazprom, and their position is that they are not going to renegotiate. We'll see what they do if Putin cuts them off. He has a lot of leverage. The markets for oil and gas are global, and Gazprom is finding buyers, especially at the discount they are selling at. India, in particular, saw a really good opportunity to buy up cheap Russian oil, and China already is the largest single buyer of Russian oil. It's not as if Europe can boycott their oil and bring the country completely to its knees.