The United States and its European allies are proposing tougher sanctions against Russia for invading Ukraine; however, while the sanctions are already hurting Russia’s economy, they have yet to stop the battle. New financial restrictions against members of President Vladimir Putin’s inner circle were imposed by the Biden administration on Thursday.
19 Russian oligarchs and hundreds of their family members and friends will be subject to travel bans, similar to those being proposed in the UK and elsewhere, according to the US State Department. Earlier this week, the White House imposed further sanctions on Russia and its ally, Belarus, including export restrictions on Russia’s oil refineries. In restricting its airspace to Russian airlines, the United States joined Europe and Canada. In addition, the US Justice Department unveiled a new initiative aimed at pursuing Russian oligarchs.
The escalation of sanctions has had an unexpectedly fast impact. The rouble has plummeted, and inflation is on the increase, causing new fear among Russian consumers, not only the oligarchs who were targeted in the first round of sanctions. Foreign corporations have withdrawn from Russia, causing auto plants to close and Boeing and Airbus to stop delivering components and services to Russian airlines.
Russia’s GDP is less than one-tenth the size of the US economy – less than half the size of California’s – and experts expect it will continue to shrink, a fate that contradicts Russia’s status as the world’s second-largest nuclear power. Here’s a rundown of some of the current punishments. They add up to some of the most severe sanctions levied on any country short of military force.
Hindering Russia’s Central Bank
The capacity of Russia’s Central Bank to draw on more than $600 billion (€548 billion) in foreign currency reserves has been constrained by the United States, the European Union, and the United Kingdom. As a result, the bank has few options for supporting the rouble and preventing its depreciation.
Inflation has risen due to the dwindling rouble, which is currently less valued than Bitcoin and many other cryptocurrencies. Russians have flocked to banks to withdraw rubles and exchange them for dollars, reducing the central bank’s foreign-currency holdings. “People in Ukraine are waiting in line to buy firearms.
People in Russia are queuing at ATM machines because they know they may not be able to get the money in two days, or it would cost twice as much “While pressing US senators for even stronger sanctions, Ukrainian MP Oleksandra Ustinova remarked.
Russia cut from SWIFT
The West has cut key Russian banks out of the SWIFT financial messaging system, which is used every day to send billions of dollars between over 11,000 banks and other financial institutions all over the world. The EU has finalized a list of banks that will be removed from SWIFT, which includes seven Russian banks but excludes Sberbank and Gazprombank, two of the country’s major banking institutions.
Western allies have refrained from knocking Russia out of SWIFT in the same way they considered but opposed doing so in 2014 after Russia invaded and annexed Crimea from Ukraine. Russia has stated that excluding it from SWIFT would be tantamount to declaring war. Excluding Russia from Brussels-based SWIFT might harm other economies, like those of the United States and Germany, who buy Russian oil and natural gas.
Cutting Russia off from technology
Last month, the US said that it will restrict technology exports to Russia, including semiconductors, and allies in Europe and Japan backed the decision. The Biden administration stated this week that the export curbs would be extended to Russian oil refineries and Belarus.
Sanctions have been imposed on 22 Russian defense companies that produce combat planes, drones, tanks, missiles, and electronic-warfare systems. President Joe Biden stated that the earlier export restrictions would deprive Russia of more than half of its present high-tech supply, putting a damper on Russia’s plans to modernize its military, aerospace sector, and space program.
Export restrictions may make it difficult for Russia to update airplanes, machine tools, smartphones, game consoles, televisions, tablets, and other electronic devices. The restrictions, on the other hand, may just force Russia to look to China for those devices and their components.
Oil and natural gas exports are critical to Russia’s economy, but sanctions have mostly been avoided because Western politicians are leery of actions that could harm their own consumers.
Since Russia’s incursion, oil prices have already risen.
The United States says all alternatives are still on the table, but a ban on Russian energy imports may limit global supplies and “increase petrol prices for Americans,” according to White House spokesperson Karine Jean-Pierre.
“That’s something we’re really conscious of.”
Biden has announced the release of oil from the government Strategic Petroleum Reserve, indicating that he is concerned about rising gasoline costs as we approach the mid-term elections this year.
Gas prices in the United States are at their highest since 2014.
Senators from both parties have advocated a restriction on Russian oil shipments into the United States. “It makes no sense for us to rely on energy from a country that is actively engaging in acts of war against a freedom-seeking democracy — Ukraine — when we have abundant energy resources right here in America,” Democratic Senator Joe Manchin, a vocal supporter of fossil fuels produced in his state, said.
Ursula von der Leyen, President of the European Commission, indicated on Thursday that Europe has enough gas to get through the heating season, which is winding down. In light of Russia’s invasion, Germany has already shelved plans for the Nord Stream 2 pipeline, which would have transported gas directly from Russia to northern Germany.
A division of Russia’s state-owned Gazprom owns the pipeline.
Aerospace closures to Russian airlines
After days of deliberation about possible retribution, the US blocked its airspace to Russian airlines. The decision was made only after Russian planes had been blacklisted by the European Union and Canada. Prohibition is primarily symbolic in the United States.
Although a few United Airlines flights passed over Russian airspace on their way to and from India, Russian carrier Aeroflot only flew a few flights per week to the United States, and no US passenger airlines fly to Russia. In recent days, cargo giants FedEx and UPS halted business to Russia. Aerospace closures are having a significantly greater impact in Europe, with even neutral Switzerland and Sweden following other European countries’ lead.
“They will be unable to land, take off, or fly across EU territory. Oligarchs’ private jets are included “In a tweet, von der Leyen remarked of the airspace restrictions. Airlines traveling from Europe have forced to take longer routes to reach their destinations due to the closures. For example, a Finnair flight from Helsinki to Tokyo rerouted its flight path to avoid Russian airspace, adding more than a third of the trip time.
Although it will take time to be felt, Russians are more concerned about the declaration that Boeing and Airbus will shut off spare parts and technical support to Russian flights. According to data from aviation researcher Cirium, one of these two companies manufactures the majority of planes in Russian fleets.
Sanctioning Russian oligarchs
The Department of Justice stated this week that it will form a team of federal agents and prosecutors to go after wealthy Russians and anybody else who assists Russia’s invasion of Ukraine or utilizes bitcoin to help Russia dodge sanctions. The force, dubbed Task Force Kleptocapture, has the ability to seize oligarchs’ assets.
Even before the new team arrived in Washington, France seized a boat belonging to the head of Russia’s state-owned oil giant, Rosneft, and a German official said a yacht owned by another Russian billionaire will not leave the Hamburg shipyard where it is being maintained.
A boat belonging by Alexey Mordashov, Russia’s richest man before the EU blacklisted him last week, was also confiscated by Italian authorities. Authorities in the northern port of Imperia seized the Lady M on Friday. Then there’s Roman Abramovich, the Russian billionaire who has announced he wants to sell Chelsea, the English soccer club he’s owned for 19 years, due to the possibility of financial sanctions.
Opposing fans attacked Abramovich’s players at a game this week, yelling, “You’re getting sold in the morning.” On Friday, the UK stated that it was seeking emergency powers to sanction Russian oligarchs who had already been sanctioned by the EU and the US. The Conservative administration has been chastised for taking too long to punish Russian businessmen with ties to the Kremlin, despite receiving money from Russian billionaires.
What are the next moves?
New US sanctions will target Putin’s ally Alisher Usmanov, one of Russia’s wealthiest men, as well as Putin’s press secretary. They will be shut off from the US financial system, and their assets in the US will be frozen, according to the Biden administration.
Following Russia’s attack on the Zaporizhzhia nuclear power station, the EU is considering additional energy-related penalties. Because Russia is a vital supply of energy for the EU, these actions are not being taken lightly.