On Tuesday, the United States, the European Union, the United Kingdom and other countries such as Japan, Canada and Australia announced economic sanctions to punish Russia for the recognition and invasion of two provinces in eastern Ukraine.
Although the sanctions are considerable, the parties avoided raising more severe measures for the time being. These, they have indicated, are reserved for the near future in case Moscow’s aggression does not stop and before it advances towards other territories of the former Soviet republic.
Read More: Russia promises ‘strong’ and ‘painful’ response to US sanctions
According to Capital Economics, the sanctions already filed could cost Russia at least 1 percent of its Gross Domestic Product (GDP). With its announcement alone, the ruble, the Russian currency, lost 10 percent of its value and adds to another 10 percent that had already fallen so far in 2022. That adds up to a total of more than US $50 billion. dollars in the value of Moscow shares.
But if full sanctions are applied, the blow could be up to 5 percent of GDP. Much more severe than the 2.5 percent that the 2014 sanctions caused in retaliation for the annexation of Crimea and that caused an economic crisis in this country.
Although the specific details are not yet known, these are some of the cards that the West reserves to punish Russia if it goes ahead with the aggression.
United States
Washington already has sanctions in place against Moscow. To these he added a financial veto against Donestk and Luhansk, the two separatist provinces, as well as two banks: the VEB, which is the Russian development bank, and Promsvyazbank, the institution that finances the military industry.
Measures that would entangle Russia’s ability to raise capital to finance infrastructure projects among other things. Likewise, limits on transactions with Russian debt and possible specific sanctions against people from the regime and billionaires.
But according to analysts, the affected banks are small and therefore the impact of the current sanctions is very limited. The next step is to block large Russian banks, such as Sberbank, from the international financial system.
Although Russia has diversified its portfolio since 2012 to evade US sanctions, this blow would be more significant.
Likewise, the US could go directly against Russia’s energy sector, which is its “sacred cow”, imposing secondary and tertiary sanctions on those who do business with it and a whole set of trade sanctions to prevent the export of components such as microchips and that are vital for its military industry, cell phones, cars and airplanes.
But in a world as interconnected as the current one, the measures would affect companies from the US and other countries. as are oil and gas prices, which are already high. Hence the pause when imposing this type of measure and leaving them for when the situation worsens.
Europe
The European Union vetoed 27 individuals associated with the regime and 5 financial institutions as well as all members of the Duma (parliament) who approved the independence of the provinces. But as in the case of the US, it is about the smaller banks.
His strongest card, so far, was the one he played Germany by leaving in the air the Nord Stream 2 gas pipeline, a joint project with Moscow that could generate US $15 billion in profits for Gazprom, the main Russian company in this sector.
Like the US, it has saved sanctions against big banks for later and has an ace up its sleeve that it hasn’t used yet: banning Russia from Swift, a global communication service used by banks and financial institutions. to make transactions.
Swift considers itself a neutral entity, but operates from Belgium and is subject to EU regulations.
Without access to Swift, financial institutions would have a very difficult time moving funds into or out of the country. In 2014, when this very move was being considered, former Russian finance minister Alexei Kudrin predicted that Swift’s exclusion would cause a 5 percent shrinkage of the economy.
The United Kingdom
London, which is no longer part of the European Union, announced sanctions against 5 banks and three Russian oligarchs living in the country.
Two of them have a company (SGM) that develops infrastructure projects in the energy sector while the other owns a major investment firm. And also vetoes to the parliamentarians who voted in favor of the recognition of the Ukrainian provinces.
But his most powerful card is going head-to-head against the oligarchs, many of whom have been based in the UK for more than three decades thanks to investor visas. Over the years, they have become part of the high society and have large investments, including football teams from the first division of English football.
Prime Minister Boris Johnson would be considering withdrawing their visas which would deprive them of their paradisiacal life in the United Kingdom and also Europe, since the EU considers a similar measure. In other words, they would be forced to return to Russia.
All, of course, are very close to President Vladimir Putin.
‘SERGIO GOMEZ MASERI
Correspondent of THE TIME
Washington
On Twitter @sergom68
Keep reading
-After Russia’s move in Donbas, what is next in the Ukraine crisis?
-Defying the West, Maduro announces his support for Russia
#arsenal #sanctions #West #punish #Putin