Russia’s invasion of Ukraine has brought about unison amongst some of the big countries. On February 24th, Biden said in a speech, “In terms of a Cold War… you have the vast majority of the rest of the world in total opposition to what [Putin] is doing… It’s going to be a cold day for Russia.”
Countries like Canada, Japan, New Zealand, Taiwan, South Korea, Singapore, the UK, the US, and the European Union revealed a list of sanctions against Russia targeting their military, oil refineries, and banks.
The US sanctions are targeting the two largest banks- Sberbank and VTB Bank.
On Thursday, the US released a statement saying the US banks must sever ties with the correspondent bank with Russia’s largest lender Sberbank in 30 days. Officials also stated that the list includes, VTB, Otkritie, Novikombank, and Sovcombank. The move basically means that all the bank’s US financial assets will freeze, and all trade will be banned with the US. The US has effectively banned the Russian energy company, Gazprom, oil pipeline company, Transneft and power company RusHydro from accessing their credit markets.
Countries like the US, UK, Canada and EU have also jointly agreed to prevent Russian central banks from deploying £540bn of international reserves.
A statement released on Thursday by the US and its allies said measures will include restrictions on semiconductors, telecommunication, encryption security, lasers, sensors, navigation, avionics, and maritime technologies.
Belarus’s support for Russia has also led the US to impose sanctions which includes but is not limited to 2 major Belarusian state-owned banks, 9 defense firms, and 7 regime-connected officials and elites.
The European Union, on the other hand, agreed on the SWIFT sanctions and has readily agreed to freeze all European assets of Vladimir Putin and his foreign minister’s Sergey Lavrov. SWIFT, also known as The Society of Worldwide Interbank Financial Telecommunication is a system that facilitates fast cross-border payments, making trade flow smoothly. It’s not a means of transferring funds, rather, it’s a secure messaging system, alerting banks when transactions will occur. It’s a system that connects more than 11,000 financial institutions in over 200 countries. This kind of sanction will be a direct blow to Russia’s financial system, damaging the economy. Be it Russian individuals or companies, everyone will find it difficult to pay or receive for import/export purposes, borrow or even invest overseas. They have also put a limit of €100,000 in EU bank accounts held by Russians.
EU sanctions are now applied to 680 Russian individuals and 52 entities, which includes 351 members of the Russian state Duma who are backing Putin up, and an energy insurance company.
Prime Minister of Japan, Fumio Kishida said that they will impose harsh sanctions against Russia, including military equipment exports and financial institutions. Japan will halt the export of semiconductors to Russia.
South Korea surprisingly also imposed sanctions on Russia. Seoul’s foreign minister said that they will be banning exports of strategic items and blocking Russian banks from the SWIFT payment. The government has also decided to release oil reserves for stabilization of the energy markets and further review resale of Liquified Natural Gas (LNG) to Europe.
UK’s Prime Minister Boris Johnson has put himself out there by introducing the biggest list of sanctions against Russia. These sanctions are targeted mainly at banks, Putin’s closest allies, and wealthy Russians enjoying London life. The UK has imposed a £50,000 limit on bank accounts in the UK held by Russians. The government said that it will freeze assets on big Russian banks and stop big, major Russian companies from raising finance in the UK. The British government will also ban Russia’s airline Aeroflot from stepping into the UK, suspend dual export licenses to Russia, and ban exports of the extractive industry.
Canada has targeted 62 individuals and entities with their sanctions, some of which include members of the major bank, and has canceled all export permits. Trudeau said that the sanctions will target the Russian Security Council, including the defense, finance, and justice minister.
The Czech Republic has banned Russian airplanes from flying and will accelerate their exits from two major Russian banks set up in the Soviet Era.
Taiwan will also impose sanctions on Russia, saying that it has robust export-control rules and will comply with all the instructions.
Australia is aiming its sanctions at the oligarchs and is also working with the US to impose sanctions on important Belarusian individuals who aided Russia.
New Zealand imposed travel bans on Russia and stopped trade with its military and security forces.
Singapore will also impose sanctions and restrictions aiming at financial institutions and control export items that could be used as a weapon.
Germany has suspended the $11 billion Nord Stream 2 pipeline project, which would apparently bring cheap fuel from Russia.
Other countries such as Cambodia, India, Malaysia, the Philippines, Thailand, and Vietnam have called for discussions to end the war without condemning Russia.
China, on the other hand, has shown dissatisfaction towards these sanctions and has refused to term Putin’s move as an “invasion”. Myanmar is also backing up Putin’s move.
All these joined sanctions will directly affect Putin and Russia’s major institutions but not in the short term. Sanctions are one of the most powerful tools of the national security of the US and its partners when they aim to influence a country. However, experts have said that these sanctions might not stop Putin’s invasion of Ukraine. For sure, these sanctions are significant and huge and the Russian economy is already facing the effects of the war. Stock markets are faltering, hitting an all-time low on Thursday, with the Russian ruble tumbling to a record low of a penny at one point.
Overall, the sanctions will keep around $1 trillion in Russian banking assets from flowing through the US markets and its partners’ financial system. It’s also a hard hit to Russia’s tech industry. Brian O’Toole, a former senior adviser to the director of the Office of Foreign Assets Control in the US Department of Treasury has said, “I do worry a little bit that if there’s no immediate economic impact on Russia, it may give Putin the idea that the pain of sanctions is less than he anticipates and gives him some incentive to keep pushing the envelope.”
Daniel Fried, a diplomat and former ambassador to Poland has said that the sanctions placed in 2014 after Russia annexed Crimea convinced Putin to back off saying, ” We had eight years of relative peace. Now he’s back. Maybe we should have kept the pressure on.”
We have yet to see how these sanctions will have an impact on the whole Russian population. O’Toole said, while the 2014 sanctions were effective, they were mainly targeted at the country’s elite and not the general population. O’Toole said, “The point is to cause enough economic harm to get Putin to sit up and take notice. They can’t do that without having something that also hurts the broad Russian populace.”