For Whaddya Wanna Know Wednesday, we asked for all your economic and tech questions about Russia’s invasion of Ukraine. One listener wonders if we should be worried about cyberattacks becoming a large part of Russia’s strategy. Or will the country try to pivot to crypto (can they even do that?)? Then, our hosts help us figure out what exactly SWIFT is, following the global financial system’s removal of certain Russian banks. And we’ll find out what China’s role in all of this could be.
Here’s everything we talked about on the show today:
- “Within Days, Russia’s War on Ukraine Squeezes the Global Economy” from The New York Times
- The Russian invasion of Ukraine could raise food prices worldwide from Vox
- “Cyber-attacks on Ukraine are conspicuous by their absence” from The Economist
- “Russian cyber attacks against US banks increasing: sources” from The New York Post
- “Global hacking group Anonymous launches ‘cyber war’ against Russia” from CNBC
- “What is SWIFT and how is it being used against Russia?” from CNN
- Senators ask if Russia can use cryptocurrencies to skirt sanctions from The New York Times
- “Crypto will not save Russia from sanctions, experts say” from Al Jazeera
- “China not emerging as lifeline for sanction-slammed Russian economy” from The New York Times
Make Me Smart March 2, 2022 transcript
Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.
Kimberly Adams: We should probably start the show.
Kai Ryssdal: Just waiting for the music to start, man. That’s the rules. Hey everybody. Welcome back to Make Me Smart. Making the day makes sense is what we try to do each and every day.
Kimberly Adams: And I’m Kimberly Adams, thank you for joining us on Whaddya Want to Know Wednesday, where we answer your questions from the past week. And if you have a question that you think we should answer, leave us a voicemail at 508-827-6278 or send us an email firstname.lastname@example.org Here is the first question.
Adriana: Hi, my name is Adriana calling from San Antonio, Texas. Now with the Russia, Ukraine thing going on, it just has me wondering what kind of negative impact it’s going to have on everyone. Not just the two countries involved. Financially speaking, of course, so thanks. Have a good day.
Kai Ryssdal: I’ll, I’ll take this one. And then you take the next, we’ll just take turns. So we’re gonna do a lot of Ukraine today, actually, which I think I said yesterday just as a way to set it up, because honestly, there are a lot of questions out there one of which is Adriana’s question. What’s it going to mean financially for, oh the entire planet? Number one wars inherently destabilizing, destabilizing is a bad thing for any economy, it makes risk a little more challenging. And with risk comes higher costs. You see it obviously in oil, right, Brent North Sea crude today, the global benchmark $114, up 8.88% actually. Gas I’m sure is 370 now on a on a on an average basis around the country from triple A shipping costs are up globally, aviation costs are up, food is up. This is this is the challenge of a globalized economy, right is that you have a big ripple someplace and then the costs go up. Now the challenge really, and we don’t know how this is going to turn out with whatever Vladimir Putin is going to do with with Ukraine. But the challenge is going to be how long are those disruptions going to last? Once the fighting stops? Whether it’s with him saying, “wait a minute, Ukraine, I’m really sorry, I completely screwed this up” or with him taking over Kyiv. Right? The question is going to be how long are the disruptions going to last? And I’ll give you just one example from Marketplace Today. I had an interview with a guy by name of John Ostrower, he’s an aviation analyst and journalist he runs a site called the “Air Current.” And I said to him, how far back has global aviation been set by not even just the war, but by the sanctions of the last five days? And he said we’ve gone we’ve gone 30 year backwards in a heartbeat.
Kimberly Adams: What does that mean?
Kai Ryssdal: 30 years, well, we’ve disrupted supply chains. We – right so we’ve disrupted global supply chains –
Kimberly Adams: Do you mean like building planes and stuff?
Kai Ryssdal: For the building of planes for the the interconnectivity that global aviation gives us. So Russia now, Russia’s civil aviation industry has been fundamentally zeroized. Right. And that has trickle down effects to everybody else. Boeing and Airbus have said we’re not going over there anymore. The Chinese are not yet participating in that. It’s just it’s a it’s a ripple effect that we don’t know yet what is going to happen. And aviation, just one part, lots of other things going on as well.
Kimberly Adams: Yeah, I just want to really quickly hit on the food part because that’s, that’s really crucial. I’m looking at the story in Vox where Russia has like 18% of the world’s global exports in wheat, Ukraine. 8%. If you look at corn, Ukraine’s got 13%. And the issue is a lot of countries in the Middle East and North Africa rely on those exports. And so it potentially destabilizes other countries, not us because you know, our amber waves of grain and such and may kick up our food prices. But if you’re talking about other countries that maybe don’t have a domestic supply to fall back on. This can be really destabilizing to other countries. So.
Kai Ryssdal: Totally. Alright, next go.
Charlie: Hello, this is Charlie from Napa, California. And my question is, has there been any signs of increased cyber attacks during this land war in Ukraine. Has Russia been taking advantage of us being distracted to attack critical infrastructure. Thanks for helping me be smart.
Kimberly Adams: We have been looking at this a lot on on Tech. And you know, it’s interesting because Russia definitely launched wide scale cyber attacks on Ukraine in the lead up to the invasion. And there has been, you know, a long history for years of, you know, Russia linked cyber attacks throughout the United States. But a lot of people are really surprised that there haven’t been more cyber attacks. And, you know, Stephanie, who’s our colleague who’s covering tech and warfare says, you know, the experts that she’s talked to, are really surprised the Internet has stayed up as as well as it has. But I think it’s also interesting, because I was looking at this the other day, and the experts I talked to said they were they thought it was unlikely that Russia, the government was going to launch a cyber attack on the United States infrastructure, or even European infrastructure, because NATO has said in the past, that cyberattacks could be viewed as actual attacks. And if you attack one NATO ally that’s attacking all NATO allies. So yes, the troll farms and the, you know, cyber attacks coming out of Russia that can’t be directly linked to the government, they may kick up. But to see the Russian government officially launching these things would be a massive escalation. If you’re talking about attacking the US, and CISA, the cybersecurity and infrastructure security agency here in the US has this Shields Up program, they’ve been telling us corporations and water treatment facilities and electric grids to get ready for months. And they’ve been working with folks saying that there was a risk of cyber attacks. And, you know, on the front page of the website says, while there are no specific or credible cyber threats to the US homeland at this time, Russia’s unprovoked attack on Ukraine, which has involved cyber attacks on Ukrainian government and critical infrastructure organizations, may impact organizations, both within and beyond the region. And so yeah, US banks are also noticing increased activity on the cybersecurity front, although it’s hard to, you know, officially attribute those to any specific region. But there’s also sort of counter attacks, Anonymous says that they are going to be attacking Russia that they are attacking Russia and taking down Russian government websites and such. So, you know, this is another front in modern warfare.
Kai Ryssdal: Yeah, absolutely true. Can be a big deal. Check your two factor authentication, change your passwords, all that good stuff.
Kimberly Adams: All that stuff. Yeah. All right. Here’s one. I hope you are ready for it Kai, go.
Janet: Hi, this is Janet from Springfield, Virginia. And I wondered if you guys could make me smart about what is SWIFT? And why does it matter? And how does it work? I’m hoping you guys can help. I was trying to explain it to my husband and came up blank. Thanks, bye!
Kimberly Adams: That last line can be all of us.
Kai Ryssdal: Yeah. Yeah, so SWIFT is so it’s it’s an acronym. It’s a Brussels-based organization called the Society for Worldwide Interbank Financial Telecommunications. It is basically the plumbing or the guts of interbank, as it says, communications, right. It’s it’s, it’s as as I guess it’s Marissa or maybe Marque said in our prep. It’s basically a financial group chat. It’s how big banks, actually all banks, internationally-based, send payment orders and messages and facilitate the movement of money around the world. So it is it is the pipes through which that type of that kind of communication moves. And the theory being that by isolating Russia and putting them out of SWIFT, it will make them it will make it harder for those banks to do business. Now, a couple of caveats here. Number one, the Russians have been building their own version of SWIFT, which has an acronym which I can’t remember. So they can still even though the banks have been disconnected from SWIFT –
Kimberly Adams: I think it’s CIPS.
Kai Ryssdal: CIPS. Yes. Which I don’t know what it stands for. They have been building their –
Kimberly Adams: Cross Border Interbank Payment System.
Kai Ryssdal: Barusky, I think but anyway, so it’s, it’s not like those banks can’t send those messages, messages. They just have to work a little bit harder at it. That’s thing number one to know about SWIFT. Number two is that almost 80% of the financial transactions that happen in Russia have already been sanctioned, the financial institutions that do those transfers and transactions have been sanctioned And those direct sanctions, as it’s called, are generally speaking, a more effective way to isolate the banks because there’s no real workaround. If the Treasury Department or the EU or the Brits say, “I’m sorry, Sberbank,” one of Russia’s biggest banks, “you may not do transactions with any of these Western banks. Don’t care what the plumbing is.” That kind of screws them. And that in point of fact, is what has happened. So SWIFT is a big deal. Absolutely. Is t the only deal? No, there’s lots more financial sanctioning going on. Hope that makes sense.
Kimberly Adams: Yeah. make sense to me. All right. Good.
Kai Ryssdal: Crypto, crypto, crypto, crypto. Yeah. So here we go.
Michel: Hello sunshine! I’m Michel from Daytona Beach, Florida. Would the use of cryptocurrency be a way to get around the sanctions placed on Russia? Keep making me smart love the show. Thanks, guys.
Kai Ryssdal: All right.
Kimberly Adams: I love being called sunshine.
Kai Ryssdal: Right?
Kimberly Adams: Yeah, so they’re probably gonna try it. It’s unclear if it’s gonna work. So this is something the US and the EU have voiced concerns about whether or not the Russian government is going to try to use transactions and cryptocurrency to get around sanctions. And, you know, we had four US senators, I think just today, including Senator Elizabeth Warren, asking the US Treasury if it had the tools and the resources to figure this out. Whether or not Russia was going to be able to evade sanctions using cryptocurrency, a lot of the experts are doubtful that crypto by itself would be enough, because we are talking about a big country that does 10s of billions of dollars in transactions every day. And in a weird way, crypto isn’t big enough for that quite yet. And so you’d kind of have to turn over the entirety of that infrastructure to just processing Russian transactions. And that’s unlikely to happen. It doesn’t seem like a lot of these companies that deal in in crypto are blocking Russia, but they’re watching for it. And they’re watching to see how they might be affected by sanctions. And they can flag suspicious transfers, but they’re not for the most part, it seems blocking those transactions, because that’s kind of the point right? To have a decentralized system that isn’t under the control of a government or an entity. But, you know, maybe the oligarchs can do things on a smaller scale, and some of the sanctions might be able to be evaded. But it seems so far that even if it’s attempted, it’s not going to make a meaningful difference. But we’ll see.
Kai Ryssdal: Yeah, yeah, I think crypto is a really interesting part of this whole thing. Totally interesting. And it may well be this may well be cryptos moment, you know, I don’t I don’t really know. Tell you what, Jauk, let’s skip down to Melissa, shall we? Let’s, let’s do that last one with Melissa. And then we’ll get get everybody on their way.
Melissa: Hey, Make Me Smart Team. This is Melissa, calling from San Francisco. As I follow all of this devastating news and financial sanctions going on with Ukraine and Russia, it makes me wonder what’s preventing Russia from just going to China to finance this war or a big part of it? Have they already done that? Are they going to do that? And it’s just a matter of time? Or is there a bigger reason w1hy Russia going to China or China agreeing to support Russia is such a big deal, and would require further scrutiny or backlash from the global community? Thanks for making me smart.
Kai Ryssdal: Yeah, that’s a really good question. So look, Russia basically can’t go anywhere in the West, right? I mean, they can’t even go to Switzerland to sell rubles to the bank of Switzerland, right? They, they, they can’t even do that. So the logical place for them to go is China. And they may well, right, they’ve got some portion of their foreign reserves, which remember our foreign currencies, usually held overseas by central banks. They’ve got some portion of their foreign reserves in China. So they have that amount of money. But then, so let’s say that they got a bunch of renminbi and once they get the Chinese yuan once they get that money, what are they going to be able to do with it globally? Don’t really know. Number two, China has been while not backing away from supporting Russia, they have certainly been cool, if not cold, to the prospect of of actually giving them support, right. The other week, the Chinese official who was at the there was a European security conference, talked about maintaining territorial integrity and how important that is to China. And then he said, “like Ukraine,” which is kind of a big deal. So there are some challenges with Russia trying to go to China and do things that way. Let me just throw in this caveat, though. And if you heard marketplace today, you heard Amy Scott talking about the divestment process and what that’s meant for a lot of companies and we talked about Boeing earlier in this And they’ve got some aviation repair facilities ver in China. There are a bunch of assets now, aviation assets, oil assets, manufacturing, manufacturing plants, which are fundamentally distressed assets, right? They’re of no use to anybody, because you’re not going to do business with them. And the Chinese could conceivably go in there and say, “We will give you 14 cents on the dollar for this 400 miles of pipeline,” whatever. And the Russians might say, “Yeah, we can do that deal.” So who knows? I think there are very smart people in the administration and in the European Union and and Japan and in the UK, who are saying, “Let’s keep an eye on China, because that definitely could be something that’s going on here.” So watch this space. There’s more to come. We’re, you know, it’s we’re day seven, but we’re not done with this thing yet. For sure. For sure.
Kimberly Adams: Not in the tiniest bit.
Kai Ryssdal: Not in the tiniest bit. The thing we are done with though is this podcast. Hope you like what we did single topic for the second week in a row.
Kimberly Adams: Nicely done.
Kai Ryssdal: Yeah, I’m back tomorrow. I think it’s Marielle. I don’t know. I’m just reading the copy. Alright, Marielle’s on Hollowed Out Shell Thursday, we’ll see how we felt especially because on Monday, we were all really all of that already. I’m just saying.
Kimberly Adams: Keep sending us your questions for Whaddya Want to Know Wednesday, hollowed out or no. You can email us email@example.com, or leave us a voicemail at 508-UB-SMART.
Kai Ryssdal: Make Me Smart, which is this podcast is produced by Marissa Cabrera and Marque Greene. Our intern’s Tiffany Bui I get all the credits today. Holy cow. Today’s show was engineered by Jayk Cherry. Ben Tolliday, Daniel Ramirez composed our theme music our senior producer is Bridget Bodnar. There we go. I don’t know. I guess maybe she just forgot to include everybody. I don’t know whatever. That’s fine, I like to share.
Kimberly Adams: But they all live in our hearts.
Kai Ryssdal: That’s true. That’s true.
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