We’re all now at war — an economic war — and there will be winners and casualties miles away from Ukraine and Russia. And Australian wheat and coal suppliers are two groups, who are beneficiaries of this tragic decision of Vladimir Putin’s.

This headline from CNBC this morning can’t be ignored by any country contemplating what Putin has orchestrated for Ukraine: 'The West is trying to destroy Russia’s economy. And analysts think it could succeed.'

Measures to KO the Russian central bank, and other key banks preventing them from doing international business, could bring the Russian economy to its knees. The Russian oligarchs and their yachts, as well as property, are all being targeted such that the owner of the Chelsea Football Club, Roman Abramovich, has his club on the market for sale! It has been valued at $US5bn but he won’t get that because it’s a fire sale. He also wants his $2.7bn worth of loans to the club repaid as he sells his properties valued at about $US360 million!

As he receives a lot less for his assets, his only comfort might be that his wealth is said to be about $19bn. That said, that was a figure estimated before the Russian invasion of Ukraine.

On Tuesday, the French Finance Minister, Bruno Le Maire, told a radio station that the aim of the latest round of sanctions was to “cause the collapse of the Russian economy”. And that’s happening with the ruble slumping to an all-time low against the greenback, and the Moscow stock exchange has been closed for three days.

The country’s biggest lender, Sberbank, is listed on the UK stock market and has fallen 95% and the country’s key interest rate controlled by the central bank has gone from a big 9.5% to a whopping 20%!

And this has to be a message for China, which has always had its eyes on Taiwan: the West has learnt how to use the most non-nuclear, powerful weapon of all — economic sanctions — to close Russia down.

“Swedish economist and former Atlantic Council senior fellow Anders Aslund tweeted Wednesday that the Western sanctions effectively ‘took down Russian finances in one day’.” (CNBC)

Goldman Sachs says Russian growth for 2022 has gone from an expected 2% rise to a 7% fall, but this is based on the fact that exports are still being bought by the West, but that’s starting to change.

The AFR’s Tony Boyd told us this yesterday: “On Wednesday night, an oil trading giant called Trafigura Group offered to sell a cargo of the Russian Urals oil at a discount of $US18.60 ($25.50) a barrel to the Brent Crude benchmark, which sits at about $US113 ($155) a barrel at present, with futures sitting near 10-year highs.

“A report in Bloomberg described the discount as being the biggest seen in oil markets. But the cargo drew no bids. Zero. Nada. Nothing.”

That will spread as Western businesses are being slammed if they do business with Russia or go soft in their analysis of the situation. And Mike Cannon-Brooks of Atlassian copped criticism for being too balanced in a communique about the conflict, from his own staff, The Australian has reported.

But these sanctions and refusing to do business with Russia, along with the supply problems coming out of a Ukraine that is fighting a war, will bring costs. It will add to the supply chain problems and force up inflation, which we’ll all feel in our hip pockets. Ask anyone trying to get a building project completed without rising costs, or just look at your petrol bill when you fill up.

Tony Boyd pointed out what Russia supplied the world: “oil (somewhere between 8 per cent and 10 per cent of global supply), natural gas (about 30 per cent), wheat (about 27 per cent including Ukraine), palladium (about 20 per cent), corn (about 15 per cent including Ukraine), platinum (about 12 per cent) and aluminium (about 8 per cent).”

It's why inflation is likely to go higher.

On the flipside, there are winners and our wheat and coal suppliers are two big beneficiaries.

Russia supplies up to 90% of Poland’s coal but as The Australian points out, “the country’s government has led the European charge to impose sanctions on Russia in the wake of the invasion of Ukraine,” and so our coal miners are being asked to come to the rescue of the Poles. And it looks like Italy and Croatia may also follow Poland’s lead and ask Australian producers for additional tonnes to be sold to their economies.

Meanwhile, “Russia and the Ukraine account for 30 per cent of global wheat exports,” the AFR’s Emma Connors reports. “Australia could fill the void in the availability of wheat supplies due to the conflict. However, Australian wheat is much more expensive than Ukrainian and Russian wheat.”

We currently supply 40% of Indonesia’s wheat needs, while Russian and Ukrainian wheat growers supply over 6 million metric tons of the stuff. That demand is likely to head south to Oz.

Meanwhile, other likely winners will be those on variable home loans, with both the US central bank boss, Jerome Powell and our own RBA Governor, Dr Phil Lowe, all implying that the Russian-Ukraine war was likely to slow down what they do with interest rates over 2022.

Also, the lack of Russian and Ukrainian resources on world markets will drive up commodity prices, which helps a lot of our miners and their stock prices. And it also explains why the AUD is rising, which will make Aussies the winners when they start travelling overseas later this year.

This war and its implications explain why our dollar is up 3 US cents in a month.

Aussie dollar

Finally, all these anti-Russian economic attacks on Putin’s economy and his people’s assets will be a wake-up call for China. The world’s second-largest economy is a huge exporter, and unlike the Cold War days of the 1950s and 1960s, the people of China aren’t isolated from the world and have Western goals and aspirations.

Losing all this because of a desire to annex Taiwan might be a cost the people of China might not tolerate in the year 2022.