1) The document proposes 4 economic measures against Russia: (1) removing Russia from the SWIFT banking system, (2) blocking transactions of the Russian central bank, (3) seizing overseas assets of Russian oligarchs, (4) halting gas imports from Russia. 2) It argues that each measure has drawbacks but they must be tried together to effectively pressure Putin. Blocking Russian banks is key to complement removing SWIFT. Seizing oligarch assets requires an objective legal criterion. 3) Halting gas imports would deprive Russia of much funding but requires financial support for affected countries and industries through mechanisms like the EU Recovery Fund. The measures aim to impose severe economic costs on Russia

1. Luis Garicano, MEP
Economic Warfare:
Raising the Pressure on Putin
Four implementable ideas (with very sketchy discusión of legal base)
Presentation for RenewEurope extraorinary group meeting, 02/26/2022
Luis Garicano
Professor of Economics / Member of the European Parliament,
Vice-President, Renew Europe,

2. Luis Garicano, MEP 2
Waging economic warfare on Putin
Four concrete tools
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How to pay for this? An asymmetric (Covid-like) supply shock
requires a new RRF
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INTRODUCTION
• Swift
• Going after Central bank assets
• Zucman/Piketty: going after the oligarch´s money
• Zero-gas

3. Luis Garicano, MEP
Swift
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4. Luis Garicano, MEP
What is Swift?
• Email/Whatsapp for money
• Messages between financial institutions with money transfer orders
• Right now, effectively the only way to move money around
• Market estimates 800bn russian money yearly/1,5% of all flows
• Legal status:
• “Cooperative society”
• Operating under Belgian law
• Owners are members of network, shares according to flows
• Precedent: Iran
• Removed from Swift.
• Huge economic blow
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5. Luis Garicano, MEP
Evaluation:
• Pros: imposes huge costs on entire economy
• Cons:
• Oh, but how do we pay our gas?. Answer: is this war or not?
• Oh, but what if they develop alternative system? Answer: this is a truly dumb con.
After months of public discusión, after Iran, China and Russia Will work on this
anyway.
• Badly targeted? Affects all citizens, binantional couples…Answer: True. Such is war.
• But what if the banks don´t cooperate? Answer: this is key. What is really essential is
to cut-off the Russian financial system. For this Swift is not sufficient. But it is the
stop that is most likely to achiev that.
• Conclusion: by all means FULLY BLOCK ALL RUSSIAN BANKS (up to now US blocked
only VTB) from financial systems. Then also SWIFT
• .
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6. Luis Garicano, MEP
Beyond Swift
• BLOCK ALL RUSSIAN BANKS (up to now US blocked only VTB) from
financial systems. Then also SWIFT
• Block access of all financial and non financial institutions to
international financial markets and payments
• Block all Visa and Master cards and all other means of payment for
named individuals
• Oligarcs could use the mastercards/visas etc. linked to their European
accounts even after a Swift blocked
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7. Luis Garicano, MEP
Cut-off the Central bank
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8. Luis Garicano, MEP
Key asset of Russia:
a gigantic foreign reserve stash
• Putin constantly speaks of his central bank reserves: more than
$600bn!
• Sovereign Wealth fund worth 175bn
• The USA could stop fully the transactions of the Russian central bank
in dollars (and the ECB in Euros), reducing the value of the reserves
that Putin has carefully accumulated
• All dollar clearing takes place in NYFed; all Euro clearing in Frankfurt.
• Reasons to believe Euro accounts are in Germany (@generaltheorist)
• IMF – drawing rights
• Gold untouched, hard to transact
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9. Luis Garicano, MEP
Limit: Russia has been diversying its reserves
• More reserves are in Gold, China
assets and other, non EU/NON US
currencies
(source Elina Ribakova IIF)
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10. Luis Garicano, MEP
Evaluation:
• Pros: eliminates buffer, precipitates financial crisis
• Cons:
• Puts at risk US Dollar reserve value? Not easy to replace. If rest of the world
could have finished exhorbitant privilage, would have done so
• Puts at risk Euro reserve value? Cost worth incurring
• Affects less share of the reserves after the huge diversification effort the
Central Bank of Russia has undertaken in last 8 years.
• But it is still massive (just in Europe 60bn)
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11. Luis Garicano, MEP
Going after oligarch´s money
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12. Luis Garicano, MEP
Wealth extremely concentrated in a few
billionaires… and held offshore
• According to Gabriel Zucman´s análisis, Forbes billionaries hold wealth equal to 30% of national GDP

13. Luis Garicano, MEP
Wealth extremely concentrated in a few
billionaires… and held offshore (Zucman)

14. Luis Garicano, MEP
Wealth extremely concentrated in a few
billionaires… and held offshore (Zucman)

15. Luis Garicano, MEP 15
PIketty/Zucman propose attacking the wealth of Oligarchs. Makes sense, but how to do legally?
What is the criterion (beyond nationality) that can be used? His proposal (G. Zucman personal
communication)
1. “ Each EU member states to identify and estimate the value of the wealth belonging to
Russian beneficial owners (based on existing anti-money laundering procedures and
regulations). Financial and other intermediaries that would fail to truthfully disclose and
estimate these assets should face stiff sanctions.
2. The EU Commission to add up that wealth across the 27 EU member states and (i) freeze
holdings of Russians with more than €10 million in wealth in the EU; (ii) tax at 10% Russian
wealth above €10 million, 50% Russian wealth above €100 million, and 90% Russian wealth
above €1 billion.
3. The EU Commission to coordinate with the US, the UK, and Switzerland so that they
implement a similar procedure. The goal should be that the tax be based on combined
holdings in EU + US + UK + Switzerland.”
This seems of dubious legality- discriminatory.
But instead, can use a criterion such us “oligarchs associated with a criminal regime” or sanction
all those in security council for “war of aggression”/crimes against humanity.
What to do?

16. Luis Garicano, MEP
Alternative? Personal sanctions based on -
crime against humanity
Those in security/war council that can be considered to have:
• Participated in conspiracy for the accomplishment of a crime against
peace
• Planning, initiating and waging wars of aggression and other crimes
against peace
All members in sec council agreed IN PUBLIC to war of aggression
Money seized oriented to compensate Ucranians for these crimes
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17. Luis Garicano, MEP
Restrictive measures in CFSP:
Council guidelines
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18. Luis Garicano, MEP
Evaluation
• Pro: hit the right people, massively erode support for Putin
• Con: how to do legally?
• Data protection?
• Non-discrimination?
• Need objective, public international law criterion
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19. Luis Garicano, MEP
Zero-gas
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20. Luis Garicano, MEP
How is the war being financed?
Who pays for it all?
• A war is very expensive!
• Russia has a medium-sized economy: size of SPA/ or of NL+BEL
• So who provides the cash?
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21. Luis Garicano, MEP
Us: the European Union
• Gas Bill: 70-80bn at currrent
prices, 40% Russian: 30bn year
• 75% of military Budget
• Now running at record levels ,
over 100 million cubic meters
per day, DURING the war!!
• World is sending in energy, raw
materials, every day 700mn
• NO SANCION WORTH ANYTHING
IF WE DO NOT SANCTION
ENERGY!
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22. Luis Garicano, MEP
Sanctioning energy: Zero-gas
• Can we do it? Shall we freeze?
• Winter is almost over
• Need significant financial support (more later) for households and firms
• We have gigantic idle LNG capacity (can replace 2/3s of gas exports)
• Can reconnect nuclear, other plants
• Precedents? Japan, during Fukushima, closed all nuclear reactors,
80% of own energy. Much, much worse.
• Communication? It can be done: our citizens will certainly be willing
to “wear an extra jumper at home for Ukraine”
• Seize all Gazprom assets (including 12 storage facilites) in Europe
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23. Luis Garicano, MEP
Asymmetric shock, need new RRF to help
most exposed countries
• Need to facility cash for citizens/firms
• Need to finance transition/degasification investments
• Need to finance reoponing of plants
• How? Combine
• European money: a new joint facility with similar rules as Next-Gen
• National money: a suspension of fiscal rules to allow for significant national
investment
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24. Luis Garicano, MEP
Conclusions
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25. Luis Garicano, MEP
Conclusions
• Need to include in the resolution a battery of economic sanctions that
can truly hurt Putin
• All four “tough” measures have cons, but we must try them all
• Swift has inmense economic and symbolic value
• But needs to be coupled with complete blockage of all major Russian Banks
• Reserves block is promising
• But US /NY Fed key here
• The Zucman/Piketty approach is the best politically
• But must implement in a legal way
• Zero gas: we must stop financing Putin. We are not going to do it little by little
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