WASHINGTON: A full-scale, no-holds-barred economic war pitting America and its European allies against Russia has begun. US President Joe Biden announced on Friday that Washington and its allies are ending normal trade relations with Russia,
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“Putin is an aggressor…And Putin must pay the price,” Biden said in his remarks, adding, “We will not let autocrats and would-be emperors dictate the direction of the world.” The totality of western sanctions, he said, is crushing the Russian economy, which has now been downgraded to “junk status” by western rating agencies.
The enhanced measures came even as the US President pledged $ 13.6 billion in economic, humanitarian, and military assistance to Ukraine, while at the same time asserting that the US will not fight Russia directly in Ukraine because such as a direct confrontation could lead to World War Three “that we must avoid.” But he warned that Russia would face “severe consequences” if it used chemical weapons in Ukraine.
The US steps came even as dozens of American companies, under pressure from public opinion, shuttered operations in Russia, leading Moscow to warn that their assets would be seized and operations nationalized in some sectors. Also bolting from Russia are major western banks such as Goldman Sachs and JPMorgan Chase, which risk losing billions of dollars in Russian borrowing. By one account, international banks are owed more than $121 billion by Russian entities.
The US hopes that by squeezing the Russian economy and bringing it to its knees, it will cause the Russian people to turn against Putin, even if in the process it results in pain for the American people and losses for US businesses. A test case is McDonald‘s, which under American public pressure has had to close 850 outlets in Russia, resulting in 30 years of investment and growth going down the drain.
While some western media outlets carried graphic stories and pictures of how young Russians would miss McDonald’s (one photo showed a Russian stowing 100s of burgers in his fridge), the narrative out of Russia is quite different: They are quite happy to revert to home-cooked food.
In the US meanwhile, average gas prices ticked up on Thursday to $ 4.31 per gallon (approx Rs 88 per liter), the highest in the country’s history, fueling a 7.9 per cent inflation in February, a 40-year high.