The United States, the United Kingdom and the European Union have been secretly negotiating for the last few weeks a battery of sanctions with which to hit
Russia if you decide to invade Ukraine.
(Read here: Ukraine: is there really a risk of a conflict on a global scale?)
Superlatives abound – “huge”, “unprecedented” – to qualify the
sanctions with which the West threatens Russia. But what is it and what effect would they have?
(Also read: The reasons why Europe faces the greatest risk of war in 30 years)
British Prime Minister Boris Johnson had already warned about the imposition of sanctions, after a virtual meeting the day before with the leaders of the United States, Poland, France, Italy, Germany, the EU and NATO.
“We agreed that we would respond in unison to any Russian attack on Ukraine by imposing coordinated and severe economic sanctions, heavier than anything we have done before against Russia,” Johnson explained in an appearance before the British Parliament.
For its part, Russia announced this Friday the ban on several civil servants from entering its territory. European Union (EU), in response to the “absurd unilateral restrictions” imposed by Brussels.
These are mainly representatives of the security forces, members of legislative and executive bodies of some EU countries who are “personally responsible for the propagation of the anti-Russian policy,” the Moscow Foreign Ministry said.
Meanwhile, as the leaders of Western nations have assured, the punishment of Russia would be unprecedented and would exceed the sanctions that were adopted after the Russian annexation of Crimea in 2014. These are the retaliations that the US and its allies evaluate :
Personally sanction the Russian president
Washington has contemplated personally sanctioning Russian President Vladimir Putin, which would place him in the category of pariah heads of state like the Syrian Bashar al-Assad or the late Libyan Muammar Gaddafi.
The US president did not specify the nature of these possible sanctions, but in general it is about freezing assets or prohibiting transactions. The measure would be symbolic and would complicate bilateral cooperation. The Kremlin called the idea “destructive.”
Cut US technology chips out of Russia
Washington has an ace up its sleeve that it has never used against another country: the so-called “Foreign-Produced Direct Product Rule” that would limit Russia’s access to chips.
If applied, companies located outside the US would be banned from chips as long as they are produced with US technology, Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a think tank in Washington DC, explained to Efe.
(Also: Russia-Ukraine: the map showing the most recent troop movements)
The impact would be huge because almost any technology relies on semiconductors, from smartphones and computers to systems for energy extraction, aviation and heavy industry.
Chip production, especially those used for advanced computing, is dominated by the US, Japan, South Korea and Taiwan; while Russia barely has domestic production.
The US has never used this tool against a nation and has only used it once against a company: China’s Huawei, whose revenues fell by 30 percent last year.
For now, Washington has not revealed what the scope of this action would be, that is, if it would be limited to some industrial sectors or if it could affect Russian citizens’ access to consoles, tablets and mobile phones.
Sanctions on large Russian financial institutions
The United States and the EU already imposed sanctions on some Russian financial institutions in 2014, but now the White House has considered acting against the big Russian banks and even against the Russian Direct Investment Fund (FIDR), which catalyzes investment in the most important sectors for the Russian economy.
Among the financial entities that are in Washington’s sights are Sberbank, VTB Bank, Gazprombank, Vnesheconombank and Rosseljozbank, five of the most important in Russia that after the Russian annexation of Crimea already saw how the EU limited their access to markets primary and secondary capital.
Now, these and other entities appear in a bill drafted by the influential US Senator Bob Menéndez, chairman of the Senate Foreign Affairs Committee, with the support of the White House, outlining some of the actions that Washington could take. against Moscow if it invades Ukraine.
(You may be interested in: The warnings to Russia after the call between Biden and his European allies)
Get Russia out of the Swift bank data system
Another of the possible reprisals outlined in this bill consists of excluding
Russia of the Swift transaction consortium, which is the basis of the global financial system because it is used by 11,000 banks in 200 countries or territories to be able to make transfers.
This punishment has been dubbed the “nuclear option” because of the dire consequences it could have for the Russian economy and for the value of its currency, the ruble.
In 2012, Swift cut ties with around thirty Iranian banks after the EU imposed sanctions and due to pressure from the US, which contributed to the decline of the Persian economy.
Cancel the Nord Stream 2 pipeline
Another possible retaliation against the Kremlin would be to cancel the Nord Stream 2 gas pipeline, which seeks to transport Russian natural gas directly to Western Europe bypassing Ukraine and whose certification process is paralyzed, so it has not started operating.
The German chancellor, Olaf Scholz, has not come to assess what the future of that gas pipeline could be. However, the EU High Representative for European Affairs, Josep Borrell, assured earlier this month that the project is “linked” to the situation in Ukraine.
Limits on the purchase of Russian sovereign bonds
In parallel, Washington has been willing to further restrict the access of US institutions to the Russian sovereign debt market.
US banks have already been banned from participating in the primary market for non-ruble Russian sovereign bonds since 2019, and in April 2021, the Joe Biden administration extended that ban to primary market bonds issued in rubles.
The next step would be to ban the purchase of debt on the secondary market, which would negatively impact Russian bond and currency markets.
Retaliation against Russian oligarchs and their families
One of the latest options that the US has put on the table is to sanction members of the Russian Government and the Armed Forces, as well as prominent oligarchs and their families.
Until now, Biden has been cautious about sanctioning Russian oligarchs because two years ago the government of then-president Donald Trump (2017-2021) had to lift the restrictions it had imposed on the Russian giant of the Rusal aluminum, founded by the oligarch Oleg Deripaska.
The sanctions caused tensions with Ireland, France and Germany, where Rusal did business, forcing Washington to back down.
EFE and AFP
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