Whatever western capital may be liquified, may very well flee Russia. But what about plants, production facilities, other physical property? I seriously doubt Russia would allow any physical capital to leave the country at this point. Russia has been cut from US and EU credit markets. If licenses are pulled I could see Russia taking a step to nationalize US and EU property and default on US and EU loans. That step would only be more assured if after trying to sue the west for the sanctions through the WTO, a west-favoring decision is reached by WTO judicial. The bottom line is that it may in the end be in Russia's best interest to nationalize western property and default on western loans once capital has fled and relations have soured to a point of no return. If relations keep souring at the rate they have, we just might see it happening.
Truth be told the current capital/ debt market outflow(s) will affect the economy (including manufacturing and physical infrastructure) through the banking system. Top four domestic institutional banks have heavy bond issues dominated in EURO, USD and CHF which require constant refinancing based on value-at-risk. Manufacturing/ capital infrastructure are dependant on this outlet for funding . If it dries at the top, it has a trickle- down effect. This is just the institutional capital markets.
You look at the government borrowing levels and again this becomes bleaker. Prior to the last round of imposed sanction issued 3-4 days ago, WSJ provided some basic numbers from early July. In 2015, Russian Finance ministry is doubling the borrowing requirement. This number will go up and esitmates from the Economist and some other sources expect this to triple based from 2014 actuals.
Russia Plans More Domestic Borrowing as Options Narrow - WSJ
World bank is now reviewing participation and funding for Russian Dev projects. Many others (IMF, EBRD etc) will follow by choice or regulation requirements
Rating agencies, capital market borrowing and further Ruble risks (down trade-weighted 9% and that's likely to fall to below May levels) highlight how dangerous it could become.
You mentioned the WTO, which is a great point to illustrate what is at risk. Russia fought 'tooth and nail' to gain member status. Nationalising the current international partnership 'assets' inside the Russian federation would have grave consequences for the domestic economy over the next 7-10 years. Nationalising would be a message that Russia would not want to contemplate on any serious wholesale level as you propose.
Argentina with Repsol as a recent example. In the long term you will have to pay it back, if you want to play with everyone again..
In fact the Yukos court ruling from a few days back ($50b USD) to pay shareholders for exactly what you are mentioning above.. expropriating the assets of Yukos in a "politically motivated attack"
Rouble reaches weakest level since May - FT.com
I agree with Twain and you seem to be underestimating this impact from an economic perspective. An economy such as the Russian, is not in a vacuum by any stretch. Certain Govt polices may have some short term help / relief, but essentially in the medium- long term the consequences aren't great and look worse as we progress
To say this might be the 'point of no return' is a tad incorrect IMV and a little premature. Diplomatically this has hardly started...
