EXPLAINER: A look at the toughest US sanctions Russia faces | Latest news from WDEL
President Joe Biden on Tuesday launched the first of what the United States says could be an ever-fiercer and ever-widening cascade of financial sanctions and penalties over Russia’s moves against Ukraine.
Tuesday’s first tranche of sanctions hit members of Putin’s inner circle and their families as well as two banks the United States considers particularly crucial to the Kremlin and the Russian military. Another new US measure limits Russia’s power to raise funds abroad.
US officials have made it clear that they are holding in reserve possible more devastating measures, in case Russia escalates its actions threatening Ukraine’s territory and sovereignty. The Biden administration says these more sweeping sanctions would cripple Russia’s ability to do business at home and abroad, and likely lead to a recession there.
Here’s a look at some of the toughest possible sanctions that US leaders are keeping in abeyance – while monitoring new Russian moves against Ukraine. The United States has yet to fully disclose which of the options it will use.
NORTH PART 2:
Germany announced on Tuesday that it would suspend its certification of the newly built but never operated Nord Stream 2 gas pipeline between Russia and Germany. A multi-billion dollar project by Russian energy company Gazprom and European companies, the pipeline would transport Russian natural gas to lucrative markets in Europe. He has been a top target for the Biden administration and Republican and Democratic lawmakers, who say the project was a strategic mistake from the start, increasing Putin’s political power over Europe by prolonging his reliance on gas. Russian natural.
Reluctant to part ways with the German ally, Biden has pushed back against repeated attempts by Congress to impose financial sanctions on any company or person doing business involving Nord Stream 2, thereby making it financially impossible for the pipeline to operate. It is unclear whether the United States could still impose its own sanctions on Nord Stream 2, to amplify the actions Germany has just taken.
Biden has insisted in recent weeks that Nord Stream stands no chance if Russia invades Ukraine. “Then there will be no more Nord Stream 2. We will end it,” Biden said.
SANCTIONS AGAINST INDIVIDUALS, COMPANIES AND ENTITIES
US officials have suggested the latest sanctions are just a hint of how far it could go to target Russian companies and individuals.
Tuesday’s actions included strikes against civilian leaders in Russia’s leadership hierarchy and two Russian banks seen as particularly close to the Kremlin and the Russian military, with more than $80 billion in combined assets. This includes freezing all assets of these banks under US jurisdiction.
But U.S. officials have pointed out that Washington could always take more Russian banks, including its largest, offline at the push of a button.
Overall, the United States and its allies aim to impose sanctions that force Putin to change his ways, while hoping to minimize the harshest impacts on ordinary Russians and any collateral economic damage on American and European allies.
Sanctions are imposed on persons on a list of Specially Designated Nationals and Blocked Persons through the Treasury Department’s Office of Foreign Assets Control.
Also known as SDN, the list includes individuals and companies owned, controlled by, or acting on behalf of a targeted country. Traditionally, their assets will be blocked and dealing with SDNs is almost completely prohibited in the United States. Individuals, groups, companies and even aircraft can receive this designation.
Moreover, sectoral sanctions are an option to harm the economy. Sectoral sanctions apply to specific Russian companies – such as energy, finance, technology and defense – to be included in the identification list of sectoral sanctions. Sectoral sanctions will limit certain exchanges but allow certain transactions.
For historical context, Western sanctions issued when Russia invaded and annexed Crimea in 2014 included limits on trade, freezing of assets under US jurisdiction, and limits on access to the US financial system. These restrictions are maintained to date on at least 735 people, entities and vessels, according to the Office of Foreign Assets Control.
For the United States and its European allies, excluding Russia from the SWIFT financial system, which moves money from bank to bank around the world, would be one of the most difficult financial measures they could take. take, damaging the Russian economy immediately and in the long term. The move could cut Russia off from most international financial transactions, including international profits from oil and gas production, which together account for more than 40% of the country’s revenue.
Allies on both sides of the Atlantic also considered the SWIFT option in 2014, when Russia annexed Crimea and backed separatist forces in eastern Ukraine. Russia then declared that kicking him out of SWIFT would amount to a declaration of war. The allies – since criticized for responding too weakly to Russia’s 2014 aggression – dropped the idea.
Since then, Russia has tried to develop its own financial transfer system, with limited success.
The United States has already managed to persuade the SWIFT system to expel a country – Iran, because of its nuclear program. But kicking Russia out of SWIFT would also hurt other economies, including those of the United States and key ally Germany.
COMPENSATION IN DOLLARS
The United States holds one of the most powerful financial weapons against Putin: to prevent Russia from accessing the American dollar. Dollars still dominate financial transactions around the world, with trillions of dollars in play every day.
US dollar transactions are ultimately cleared by the Federal Reserve or US financial institutions. For Putin, this means that foreign banks must be able to access the American financial system to settle transactions in dollars.
The ability to block this access gives the United States the ability to inflict financial hardship far beyond its borders. Previously, the United States suspended financial institutions from clearing dollars for allegedly violating sanctions against Iran, Sudan and other countries.
Unlike the SWIFT option and other financial measures, this is one the US could do on its own. Many Russians and Russian businesses would be blocked from doing even the most common transactions, such as payroll or buying things, because they would not have access to the US banking system.
U.S. export controls could cut Russia off from the high tech that helps fighter jets and passenger planes fly and makes smartphones smart, as well as other advanced software and electronic equipment that powers the modern world .
That could include adding Russia to the most restrictive group of countries for export control purposes, along with Cuba, Iran, North Korea and Syria, officials said.
This would mean that Russia’s ability to obtain integrated circuits and products containing integrated circuits would be severely restricted due to the global dominance of US software, technology and equipment. The impact could extend to aircraft avionics, machine tools, smartphones, game consoles, tablets and televisions.
Such sanctions could also target critical Russian industry, including its defense and civil aviation sectors, harming Russia’s high-tech ambitions, whether in artificial intelligence or IT. quantum.
Like some of the other sanctions being considered, the US export restrictions would risk motivating companies to seek alternatives in other countries, including China.