Wars are raging all over the world, yet relatively few are traditional shooting wars. Most are financial wars involving banks, payment systems, capital markets and gold. The latest example of a financial war is described in this article.

The U.S. is in a complicated financial war with Venezuela. The U.S. has placed an embargo on Venezuelan oil exports and has threatened to seize any money received by Venezuela for their oil. The only exception is for oil shipped directly to U.S. refineries where the sales proceeds would be placed in escrow accounts for the benefit of the people of Venezuela once a replacement president to Nicolas Maduro is installed.

Maduro is fighting this by turning to the Russians. Venezuela has informed buyers of its oil to deposit proceeds to an account at Gazprombank AO, an entity controlled by Russia’s largest energy company and indirectly by Russia itself. That account is presumably beyond the direct jurisdiction of the U.S. authorities. But this war could easily escalate to the point where the U.S. imposes secondary sanctions on parties that do business with Gazprom.

It’s not clear how much this financial war will escalate and how it will end. What is clear is that financial warfare may be more destructive to a target economy than bombs and is definitely here to stay.

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