It took just a little over an hour for Vladimir Putin to respond to the latest, most provocative and toughest round of US sanctions yet. The response, appropriately enough, came just after the BRICS summit in Brazil, where the world's developing countries yesterday announced the formation of both a BRIC bank and a $100 billion currency reserve to provide a liquidity alternative to the insolvent developed world's central banks. Here Vladimir Putin was asked to comment on the new package of sanctions against Russia announced just minutes earlier by Obama.
Putin's response: "We aren’t the ones introducing sanctions, you should ask them."
"Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations into a dead end, and cause very serious damage, and it undermines the long term security interests of the US State and its people." he said to reporters while elaborating that said he needed to see the details of the sanctions to understand their full scope Reuters added.
And as was largely expected, Putin's next jab was right where it hurt: energy.
"This means that U.S. companies willing to work in Russia will lose their competitiveness next to other global energy companies."
Putin said the sanctions will hurt Exxon Mobil Corp which has been given the opportunity to operate in Russia. "So, do they not want it to work there? They are causing damage to their major energy companies," he said.
While we don't know for sure, we are confident that following the press conference Putin sat down with the rest of the BRICS, which command a population of just over 3 billion not to mention the world's fastest growing economies, and realized that for all the posturing, it is really a game of reserve fiat vs energy, with the US controlling the former, while the BRICS, and especially Russia, dominating the latter. And as long as the BRICS don't have their own monetary system, they will be reliant on the every swift (pun intended) whim of Janet "price-to-equity ratio" Yellen and her central planning kind.
We are just as confident that he and his peers are currently contemplating how to no longer be bound by the former ever again.
In the meantime, and to further distance itself from western reliance, Moscow ordered state officials to only use Russian-made cars. From Reuters:
Top Russian officials may soon forfeit the sleek black Mercedes limousines that speed them through the Kremlin gates in favour of home-produced cars as part of a push to protect domestic industry threatened by Western sanctions over Ukraine.
Prime Minister Dmitry Medvedev said he had signed an order limiting purchase of imported cars for state and municipal officials - a move in line with Vladimir Putin's bid to increase self-reliance from engineering to defence, but carrying more symbolic than commercial importance.
Many Western cars are now assembled in Russia, but not the Mercedes limousine, the car of choice for many government officials and often used by President Putin.
In Soviet times, homemade limousines such as the ZiL and for lesser officials, the Volga were de rigeur. These have now largely vanished from the streets, to the chagrin of some who see profligacy and a lack of patriotism in the preference.
For now it is a political decisions:
"This will not influence the market at all, it is a political decision," said Vladimir Bespalov, an analyst with Moscow-based VTB Capital, putting the share of state-funded car purchases at less that 3 percent of the market.
But how long until this too escalates to other industries and other consumers, first in Russia but in the other BRIC nations, all of whom one can safely say appear to have finally had it with western/IMF-led global hegemony.