In a sense, neither Visa (NYSE:V) nor Mastercard (NYSE:MA) ever stood a chance, since leveraging the global financial system looks to be the West’s key weapon in this opening phase of the Second Cold War.
Visa and Mastercard fall right into those cross-hairs in a way which Coca-Cola and McDonalds do not.
President Biden, and his precedent-setting, bank-account freezing fellow-traveller to the north, Prime Minister Trudeau, won’t get much joy out of blocking anyone’s Big Mac or Coke.
That’s nickel and dime stuff.
But your entire financial set-up? Imagine how quickly the government officials got on to the phone to Visa and Mastercard.
But just so we’re clear, this is not an entirely new tactic.
For some years now, people have been being frozen out of banking systems, even though they’ve committed no crime.
Riley Read, a famous porn star in America, had huge difficulty accessing financial services for many years, blocked by a strange Obama-era echo of the moral majority.
The Canadian truckers were financially cancelled just last month, without trial, and with questionable evidence that they’d actually committed any crime at all. What’s more, their funding through GoFundMe and GiveSendGo was also cancelled, and an attempt made on their crytpo assets.
READ: Who controls your money? - Canadian trucker protests show gold is safer than crypto
On the other hand, if the power-brokers at the top of Western governments like your cause, as they seem to like Ukraine’s, then money can flow in, through crowdfunding and crypto.
The real question, though, isn’t about the dubious morality of this freezing and unfreezing of peoples’ access to their own money.
No, the real question is: does it work?
The answers to this are complex, and certainly not clear cut.
One thing we know is that Justin Trudeau’s popularity ratings in Canada have plunged since he started beating up truckers and taking their money. But popularity isn’t everything.
Mussolini was unpopular in the West, got sanctioned, but didn’t finally get stopped until he was killed by communist partisans in 1945.
Putin’s been sanctioned before.
South Africa was sanctioned, but apartheid only withered after the cold war was safely over - the role that sanctions played was largely in the field of public relations.
In the case of South Africa, its economy was small enough that sanctions in the name of PR could be justified.
It didn’t upset the global economic order too much – at that point the world was bi-polar anyway.
But is Russia’s economy too big to push around in a similar, symbolic way?
Putin does have other options.
For one thing, his own actions have pushed up the price of oil, and much of Russia’s revenues derive from oil, so that’s a win, especially since, guess which single area of the global economy Russia is not facing sanctions on? – that’s right, its outward supply of oil and gas.
In a way, that one sanctions loophole tells you everything you need to know.
Yes, these financial sanctions are draconian in a way that the world has not seen before. And yet, because of the oil carve-out, they are still arguably PR in just the same way the South African sanctions were.
Inconvenient. People will have to adjust their behaviour. Sanctions will be the cloth face-masks of international conflict.
The real issue will be decided on the ground in Ukraine, at the point of a gun.
While in the background Chinese companies pick up much of the business the West is forsaking.