WASHINGTON (AP) – The Biden administration has a variety of options to deliver on its promise of a financial blow to Russia in the event of President Vladimir Putin’s invasion of Ukraine, from sanctions targeting Putin’s associates to disconnecting Russia from the financial system that sends money around the world.
The United States and European allies have made no public mention of any plans to retaliate if Putin dispatches troops concentrated along the border to Ukraine, a former Soviet republic with close historical and cultural ties to Russia but now seeking an alliance with NATO. and the USA. West.
Instead, the ROI can be linked to money.
Secretary of State Anthony Blinken this week pledged financial pain – “economic measures that we have refrained from taking in the past.” President Joe Biden said Friday that the US has developed “the most comprehensive and meaningful set of initiatives that will make things very, very difficult for Mr. Putin.”
The United States has already imposed a number of sanctions against Russian businesses and individuals over the past decade, many of which relate to Russia’s invasion and annexation of Crimea and its support for armed separatists in eastern Ukraine in 2014. US sanctions were also aimed at punishing Russia for electoral interference, malicious cyber activity, and human rights violations.
Since 2014, the West has also helped Ukraine build up its military power. Thus, while Putin denies any intention of launching an offensive, his forces will face a much more resilient Ukrainian army.
The sanctions imposed on Russians include an asset freeze, bans on doing business with American companies, and a denial of entry into the United States. But in an effort to punish Russia, the West has suffered even more serious financial sanctions over the years.
This includes the so-called nuclear option: blocking Russia from the Belgian financial payment system SWIFT, which moves money between thousands of banks around the world.
The European Parliament this year approved a non-binding resolution calling for such a step if Russia did invade Ukraine.
When the US successfully pressured SWIFT to shut down Iranian banks over Iran’s nuclear program, the country lost nearly half of its oil export revenues and a third of its foreign trade, said Maria Shagina, a sanctions and energy policy expert affiliated with the Carnegie Moscow Center. analytical center.
The impact on the Russian economy will be “just as devastating,” Shagina writes. Russia depends on oil and natural gas exports for more than one third of its federal revenues and depends on SWIFT to keep its petrodollars flowing.
Russia has been working since 2014 to protect its domestic financial systems from such a shutdown. Disabling SWIFT will cause indirect damage to Western economies.
John Herbst, a former US ambassador to Ukraine and a career diplomat, said on Friday that he believed “although SWIFT should not be forgotten, it will be a last resort.”
Earlier this year, the Biden administration further limited Russia’s ability to borrow money by barring US financial institutions from buying Russian government bonds directly from government agencies. But the sanctions are not targeting the secondary market, and that remains a possible next step.
Other possible instruments and targets, Herbst noted: financial sanctions against people close to Putin and their families; and new sanctions against Russian banks and Russia’s vital energy sector.