Western countries will impose unprecedented sanctions on Russia if it invades UkraineBritish Prime Minister warned on Tuesday Boris Johnson, after a virtual meeting the day before with the leaders of the United States, Poland, France, Italy, Germany, the EU and NATO.
(Read here: Ukraine: is there really a risk of a conflict on a global scale?)
“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.
(Also read: The reasons why Europe faces the greatest risk of war in 30 years)
U.S, 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 it decides to invade Ukraine.
The punishment would be unprecedented, according to the leaders of Western nations, and would go beyond the sanctions that were adopted after the Russian annexation of Crimea in 2014. These are the retaliation that the US and its allies evaluate:
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.
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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.
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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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