Bank Run Starting?

Hi Global Recap readers,

As we approach the weekend, a conflict is escalating, but it’s not happening on the front lines.

The timing couldn’t be more appropriate.

Amid global economic difficulties resulting from the COVID era, the U.S. is flexing its power against Russia to apply pressure.

However, it’s not Putin who’s bearing the brunt of this pressure, but rather the average Russian citizen.

🇷🇺 Russia
U.S. Expands Sanctions

Moscow faces a new wave of U.S. sanctions, sparking a scramble for dollars and euros as currency trading halts.

What’s the ripple effect? A possible bank run.

🔘 Sanctions: The U.S. is ramping up pressure on Russia with a fresh wave of sanctions. This time, they’re clamping down on China-based companies funneling semiconductors to Russia, aiming to cripple the Russian military’s capabilities.

• The Treasury is raising the stakes for foreign banks dealing with Russia’s war economy, threatening their access to the US financial system.

• That’s not all. It is also targeting Russia’s financial nerve center, the Moscow Exchange. The Moscow Exchange (MOEX) is accused of helping to hide identities in transactions, facilitating sanction evasion.

🔘 Technology: It’s not just about chips; the U.S. is also restricting Russia’s use of certain American software and IT services. Over 300 individuals and entities across Asia, Europe, and Africa are in the crosshairs.

• Why? U.S.-made tech has been found in Russian military gear.

🔘 Suspension: The Moscow Exchange abruptly stopped dollar and euro trades, a direct hit from U.S. sanctions.

• Russians rushed to exchange offices, lines spilling onto the streets.

• The central bank froze these trades, using over-the-counter rates for currency valuation.

• The ruble’s value plummeted, and panic set in. This means instead of trading around 90 rubles/dollar, it went as high as 200/dollar to sell.

🔘 Beginning? Reportedly, the websites of several large Russian banks are inaccessible.

🇷🇺 Russia
Nuclear Drill Escalation

In addition to the military vessels stationed in Cuba, Moscow is flexing its military might with a nuclear drill that’s more than just a routine exercise.

Is this a warning shot?

🔘 Preparation: Russia’s recent tactical nuclear weapons drill wasn’t your average military maneuver. It involved transporting dummy nuclear warheads to strategic points and loading them onto bombers.

• The drills included various military branches and were conducted in areas bordering Ukraine.

🔘 Signal: By linking these drills to the ongoing Ukraine crisis, Russia is broadcasting a stark warning. They’re telling the world, especially the U.S. and Europe, that escalating military aid to Ukraine could have dire consequences.

• The U.S., while noting these developments, hasn’t observed any changes in Russia’s strategic nuclear stance.

• This move is largely perceived as saber-rattling, but if there’s anything to learn from the past, a slight misunderstanding may start a fuse to a much larger world conflict.

🔘 Arsenal: Let’s talk numbers. Russia boasts about 1,558 non-strategic nuclear warheads, dwarfing the U.S.’s 100 in Europe.

• Putin’s revelation? Many of Russia’s tactical nukes pack a punch five times that of the Hiroshima bomb.

🇺🇸 United States
Campus Blockade Protest

At Cal State Los Angeles, a night of protest left a trail of destruction and a community in disarray.

What sparked this intense standoff?

🔘 Protest: Pro-Palestinian demonstrators at Cal State LA turned the campus into a fortress of dissent.

• They barricaded themselves inside a building, causing extensive damage and leaving behind a scene of havoc.

• Furniture and golf carts were piled up to create barriers.

• The protest escalated after nearly six weeks of peaceful encampment.

• The university president was reportedly forced to shelter in place.

🔘 Response: The school’s reaction to the unauthorized protest was measured.

• There was a notable absence of police presence, and the LAPD remained uninvolved, raising questions about the handling of the situation.

• The protesters demanded divestment from what they call “a genocide.”

🔘 Aftermath: The aftermath of the protest is a campus on pause.

• Classes have moved online, events are canceled, and the administration is left to address the protesters’ grievances and the significant property damage.

• The protesters’ actions reflect a deep frustration with being ignored by the university leadership.

🇦🇲 Armenia
Exiting Russian Alliance

🔘 Decision: Armenia has decided to exit the Collective Security Treaty Organization (CSTO), a Russia-led security alliance, marking a significant turn in its foreign policy.

• Prime Minister Nikol Pashinyan confirmed the departure, citing a lack of reliable commitment from the bloc to Armenia’s security.

• Pashinyan’s frustration stems from the CSTO’s inaction during Azerbaijan’s forceful retaking of a breakaway region Nagorno-Karabakh, despite Russian peacekeepers’ presence.

🔘 Disenchantment: The move reflects Armenia’s growing disillusionment with the CSTO and Russia.

• Pashinyan has openly criticized the alliance and accused unnamed CSTO members of planning a war against Armenia with Azerbaijan.

• Consequently, Armenia is seeking closer ties with the United States and European Union, moving away from its traditional ally, Russia.

🇦🇷 Argentina
Economic Reform Riot

🔘 Legislation: Argentina’s Senate has just tipped the scales in favor of President Javier Milei’s controversial economic reform bill.

• With a razor-thin margin of 37 to 36, Vice President Victoria Villarruel’s decisive vote pushed the bill forward, amidst fiery demonstrations outside the National Congress.

• The bill aims to overhaul state entities, attract foreign investment, and revise labor rights, marking a bold stride in Milei’s plan to resuscitate Argentina’s faltering economy with drastic yet necessary measures.

🔘 Protests: As lawmakers deliberated, the streets of Buenos Aires witnessed a huge riot.

• Protesters found themselves in a confrontation with riot police, facing water cannons and tear gas. A car, swallowed by flames, emerged as a powerful emblem of the day’s turmoil.

• While the majority protested peacefully, the chaos led to 18 arrests, highlighting the deep divide over Milei’s austerity measures.

🔘 Polarization: Argentina stands at a crossroads, split between the vision of change voted for and the visceral reaction to it.

• Vice President Villarruel encapsulates this dichotomy, contrasting the “violent Argentina” with the “Argentina with workers waiting with great pain and sacrifice for the change that they voted for.”

• This schism is further deepened by the opposition from leftist parties and labor unions, setting the stage for a nation’s ideological tug-of-war.

🇺🇦 Ukraine
Ukraine’s Financial Lifeline

🔘 Assistance: At the G7 summit in Italy, G7 nations agreed on a substantial $50 billion loan for Ukraine, using Russia’s frozen assets as collateral.

• This financial maneuver could inject the funds into Kyiv’s economy by year’s end.

• The loan, primarily backed by the U.S., may include additional European contributions.

• The summit’s dates: June 13 - June 15.

🔘 Legalities: The complexity of international law has sparked debates over the legality of using Russia’s immobilized assets.

• While freezing assets is straightforward, converting them for Ukraine’s benefit involves intricate legal procedures.

• The EU has earmarked interest profits earned on these assets of around $260 billion, sidestepping legal hurdles.

🔘 Urgency: The swift disbursement of funds underscores the urgency of Ukraine’s needs.

• With a World Bank estimate of $486 billion required for a decade-long recovery, the G7’s commitment is a critical step.

• Experts are working out the technicalities to ensure Ukraine’s economic stability and defense capabilities.