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What sanctions could the US hit Russia with if it invades Ukraine?

·3-min read
<span>Photograph: Getty Images</span>
Photograph: Getty Images

Biden enters talks with Putin armed with a wide range of economic measures at his disposal – what are those options?


Joe Biden goes into Tuesday’s virtual summit with Vladimir Putin, after days of close consultation with European allies on a joint response to an invasion of Ukraine, armed with a wide range of punitive measures at his disposal.

There would be increased military support for Kyiv and a bolstering of Nato’s eastern flank, but the primary focus would be on sanctions. The US secretary of state, Antony Blinken, said they would include “high-impact economic measures that we’ve refrained from taking in the past”.

“I think Biden will lay out in considerable detail what sanctions the US will undertake,” said Anders Åslund, adjunct professor at the center for Eurasian, Russian and east European studies at Georgetown University. “There are very many tools that they have available.”

Edward Fishman, non-resident senior fellow at the Atlantic Council, said: “There is much room left for ratcheting up economic pressure against Moscow, should the Biden administration opt to do so.

“Current sanctions against Russia are light-touch; if Iran sanctions are a 10 out of 10 in intensity, today’s Russia sanctions are perhaps a two or a three,” Fishman said. “Not a single major state-owned Russian company is under full-blocking sanctions.”

The menu of possibilities for economic measures is extensive.

The bond market

In April, the US issued a ban on US financial institutions buying new issues of Russian government bonds, which had negligible effect. Washington could go much further and sanction the secondary market in Russian bonds, where they are resold and packaged with other investments.

Nord Stream 2

The gas pipeline from Russia to northern Europe has been completed, but it has not been certified for use by the German energy regulator. Members of the new German government coalition have expressed scepticism about the project, and it is possible it would be cancelled altogether in the event of a Russian invasion of Ukraine.

Sanctions on Russian corporations and banks

“The Biden administration could impose full-blocking sanctions on large Russian banks, energy companies, or defense firms … or impose sweeping prohibitions on investment and provision of services to conventional Russian oil projects,” Fishman said. Two possible financial targets are the huge VTB Bank, and Gazprombank.

Sanctions on oligarchs and their families

The US treasury has been hesitant to impose sanctions on Russian oligarchs, after measures taken against Oleg Deripaska had an impact on the activities of his aluminum company, Rusal, in Ireland, causing a major rift with Dublin. In the wake of an invasion, Congress is likely to add more Putin-friendly oligarchs to a blacklist to be appended to the defence budget. Family members of Putin’s circle could also be more extensively targeted.

Swift

The biggest stick in Biden’s arsenal is the threat to have Russia excluded from the global electronic payment system, Swift, based in Belgium. It was one of the most crippling measures used against Iran, and would make Russia a pariah in international finance. Åslund described the weapon as “the sledge hammer”, possibly to be used as a last resort.

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