The President's Daily Brief - PDB Afternoon Bulletin | June 13th, 2024: Financial Panic Hits Russia & Biden Commits To 10-Year Security Pact With Ukraine

Episode Date: June 13, 2024

In this episode of The PDB Afternoon Bulletin:    The U.S. unveiled some 300 new sanctions targeting Russia’s wartime economy on Wednesday, a move that caused Russia to immediately suspend trading in dollars and euros on the Moscow Exchange and sent panicked Russians scrambling to trade in their rubles for American currency. The Biden administration is preparing to sign a 10-year bilateral security agreement with Ukraine at the G7 summit in Italy this week. We’ll break down the details and what it all means for the ongoing war in eastern Europe. To listen to the show ad-free, become a premium member of The President’s Daily Brief by visiting PDBPremium.com. Please remember to subscribe if you enjoyed this episode of The PDB Afternoon Bulletin.  Email: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

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First, the U.S. hit Russia with a barrage of new sanctions ahead of the G7 summit in Italy this week, sending Russians scrambling to trade their rubles for U.S. dollars as confusion and panic hit the markets in Moscow. Also, the Biden administration is preparing to sign a 10-year bilateral security agreement with Ukraine at the G7 summit in Italy. We'll look at what that means for the ongoing war in Eastern Europe. But first, our afternoon spotlight. The U.S. unveiled some 300 new sanctions targeting Russia's wartime economy on Wednesday, a move that caused Russia to immediately suspend trading in dollars and euros on the Moscow Exchange, and sent panicked Russians scrambling to trade in their rubles for American currency.

The slate of sanctions are aimed at limiting the amount of money flowing in and out of Russia, with the hope of isolating Russia's financial infrastructure as Putin continues to wage war. in Ukraine. The latest sanctions target companies throughout Russia, as well as institutions in China, Turkey, and the UAE that continue to do big business with the Putin regime. Critically, the sanctions also target foreign banks and financial institutions facilitating significant transactions for Russia. A statement from the U.S. Department of Treasury said, quote, Vladimir Putin has approved a series of measures to further attract capital through the Moscow exchange from both Russian and non-Russian persons from, quote, friendly countries,

expanding opportunities for both Russians and non-Russians to profit from the Kremlin's war machine, end quote. Treasury Secretary Janet Yellen noted that the Kremlin's pivot to a wartime economy over the past year means that almost any inflow of capital to Russia is likely being used in some way to sustain the Putin regime's aggression in Ukraine. Yelan said the latest round of sanctions will help close those avenues and choke off the Russian economy from foreign support by significantly increasing the risk for companies and financial institutions. The news caused immediate chaos within Russia as institutions and the public scrambled to understand the domestic implications of the new sanctions. Russia's leading financial marketplace, the Moscow Exchange, suspended all

trading in dollars and euros within an hour of the announcement on Wednesday. Now, for the time being, banks, companies, and investors will be forced to trade over-the-counter-end deals that are done directly between two parties, according to a report by CNN. Russia's central banks said they would use those trades to determine what the new exchange rates would be going forward. While the central bank tried to reassure the Russian public that the ruble would remain stable, it appears much of the public didn't want to take any chances. Massive lines formed outside local exchanges, as panicked Russians scrambled to convert their rubles into U.S. dollars. Some reports suggested that the rubble was collapsing as a number of local exchanges reportedly jacked up their dollar exchange rates. Others said that while

the ruble would likely be more volatile going forward, and that the climate of short-term panic would persist, in the long term, Russia will simply pivot to trading in Chinese yuan. Due to pass sanctions, along with the move to cut off Russia from the international payment standard swift, Moscow has rapidly expanded their trade and political ties with China's Communist Party. The Chinese Yuan knocked the dollar off its top spot as the most traded currency in Russia over the past year. As of May, Yuan accounted for 53.6% of all foreign currency trades. An executive at a non-sanctioned Russian commodities exporter told Reuters, quote, We don't care, we have yuan. He noted that getting dollars and euros in Russia was already, quote,

practically impossible. Daily when ruble trading now tops roughly $90 million, while trading in dollars only amounts to roughly $11 million per day, and the euro only $3 million. Still, with the new sanctions targeting roughly $100 million or so in trade between Russia and their allies amid the ongoing war in Ukraine, the sanctions will definitely have some impact. All right, coming up after the break, the Biden administration is preparing to sign a 10-year bilateral security agreement with Ukraine at the G7 summit in Italy this week. We'll break down the details and what it all means for the ongoing war in Eastern Europe. I'll be right back.

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what's different about this pact with the U.S. Frankly, not too much. It's similar to other ally pledges with the U.S. committing to providing Ukraine with military assistance for the next decade, including training, equipment, and intelligence cooperation. But there's a caveat. The pact is not ratified by Congress, which means that it can be undone by any future U.S. president. As part of the pact, the U.S. pledged to hold consultations with Ukraine immediately after any future attack by Russia to determine the next steps, according to those familiar with the agreement's details. A report from The Guardian notes that this element is critical, as it gives key some assurances about what kind of assistance the U.S. would provide in the event of further Russian aggression. The agreement also reaffirms the Biden administration's pledge that no U.S. troops will fight in the war, and notably, it also does not mandate that the U.S. come to Ukraine's defense if attacked.

U.S. national security advisor Jake Sullivan said, quote, by signing this, we'll also be sending Russia a signal of our resolve. If Vladimir Putin thinks that he can outlast the coalition supporting Ukraine, well, he's wrong, end quote. It's worth remembering that Ukraine has yet to gain admittance to NATO, something the Biden administration has indicated will not be possible until Russia's war comes to an end. Until that time, bilateral defense agreements have proven essential to Ukraine's ability to maintain

unity with Europe amid Russia's invasion. Despite not being a NATO-style mutual defense pact, the new security deal signifies a long-term commitment by Washington to Ukraine. The Biden administration aims to signal to Russia that America's support for Ukraine is enduring. Now, of course, there's a question of future U.S. administrations. For instance, if Donald Trump were to when the November election, would he undo the agreement? In past statements, Trump expressed skepticism about supporting Ukraine and claimed he could end the Russia-Ukraine war within 24 hours if elected. That would be quite the trick.

Trump has insisted that Europe shoulder a greater financial burden in supporting Kiev, and if they withhold, Russia could, quote, do whatever the hell they want in Ukraine. Trump did not oppose the security package that Congress passed earlier this year after months of debate. The aid package was delayed by his allies in the House, who were against providing more security assistance to Keeve. And that, my friends, is the PDB afternoon bulletin for Thursday, 13 June. If you have any questions or comments, please reach out to me at PDB at thefirsttv.com. And of course, if you want to listen to the show ad-free, be sure to check out our premium membership at PDB premium.com. I'm Mike Baker. I'll be back tomorrow. Until then, stay informed.

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