Didn’t the US freeze Russia’s dollar reserves in American banks weeks ago? Yes, the Biden administration did that, but it wasn’t a freeze-freeze — until today. Now Vladimir Putin finds his country on the brink of default, and faces more stark choices about its future … and his:

The United States stopped the Russian government on Monday from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks, in a move meant to ratchet up pressure on Moscow and eat into its holdings of dollars.

Under sanctions put in place after Russia invaded Ukraine on Feb. 24, foreign currency reserves held by the Russian central bank at U.S. financial institutions were frozen.

But the Treasury Department had been allowing the Russian government to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.

Er … why? Wasn’t the point of the freeze to force Putin into these bad choices at the start of the war? It’s been seven weeks since Russian forces invaded Ukraine and nearly as long since Joe Biden finally incremented sanctions enough to freeze Russia’s dollar reserves. Why freeze the dollar reserves only to allow Russia to keep using them? One has to wonder whether the payments due in these “exceptions” were to creditors with particular leverage in the US or with the Biden administration specifically.

Weeks after the pressure might have had a bigger impact on Putin’s sputtering and incompetent war machine, though, the day of reckoning has finally arrived. Perhaps the exposure of widespread war crimes had something to do with a sudden burst of intestinal fortitude in the Biden administration, or maybe the fact that Putin’s propaganda machine has begun issuing white papers on Putin’s planned genocide in Ukraine tipped the scales.

What does this do to Putin? It doesn’t send Russia into a default — yet, anyway. Putin has dollar reserves at home that he sheltered for rainy days such as these, but this rain has gotten biblical. If Putin has to use those reserves to make Russia’s bond payments, he can’t use those dollars for other purposes, such as raw materials for war production. That was the point of freezing Russia’s dollar reserves in the West, which the US only now is actually enforcing. It’s doubtful that Russia can buy much with its rubles, and Putin is trying to reserve those anyway in a desperate bid to keep the currency from collapsing. Russia has $40 billion in outstanding international debt and probably nowhere near that much in dollars in reserves it can access.

And that will be a big problem for Putin or whoever succeeds him, since both Russia and Ukraine will need massive outside investments for rebuilding when the war is over. Ukraine will likely get grants for that, assuming it survives as an independent nation, but Russia will pay through the nose for bonds even if it doesn’t default. If it does default, Russia will face ruinous interest rates that will keep foreign money out for a generation or more.

Meanwhile, our allies in the EU are also finding some stones, incrementally as well:

The European Commission is set to propose broad new sanctions on Russia on Tuesday, European officials said, including a ban on imports of Russian coal, slashing the access of Russian road and shipping goods carriers into the bloc, targeting oligarchs and their families and blocking some machinery exports.

The measures, which will need backing from the bloc’s 27 member states, come after reports this weekend from Ukraine of potential war crimes against civilians by Russian forces, which has galvanized a push for tougher European measures against the Kremlin.

The proposed ban on Russian coal, confirmed Tuesday afternoon by European Commission Vice President Valdis Dombrovskis, would be the first time the EU has agreed to block imports of one of Russia’s main energy supplies. EU capitals remain divided on whether to impose a ban on Russian oil and gas imports, although the momentum behind introducing a phased-in embargo of Russian oil supplies is gathering.

The measures will also include a complete ban on transactions with several additional Russian banks, three of which have already been removed from the SWIFT financial transactions network, including VTB, Russia’s second biggest lender, the officials said.

Imagine if the US and EU had taken these kinds of serious steps in the last week before the war, when we knew Putin planned to invade Ukraine. Imagine if we had applied these sanctions in the week following the invasion. And even at that, the West is still acting incrementally, apparently hoping that Putin recovers his sanity at some point before breaking off all dependency on Russian economic engagement. Those days are over; they ended on February 25th, killed in their sleep by Putin himself. Everyone else seems to have a lot of difficulty in waking up to that cold, hard fact.

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