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Russia’s cut-off of access to the US dollar and international banks are the consequences Putin could face if he attacks Ukraine.
The financial penalties under consideration if Russia invades Ukraine range from comprehensive to personal to President Vladimir Putin, from cutting off access to the US dollar and international banks to imposing sanctions on a former Olympic gymnast thought to be Putin’s girlfriend.
Publicly, the United States and its European allies have promised to hit Russia financially as never before if Putin deploys his army to Ukraine. However, Western leaders have provided little detail to the public, arguing that it is better for Putin to try to think for himself about the consequences he may face.
A few weeks after the start of negotiations, it is unclear whether the Americans have reached a consensus with Europe on the type of sanctions and how Russia should be punished.
Some of the actions under consideration are of a financial nature.
QUICK SHOCK
For the United States and its European allies, removing Russia from the SWIFT financial system, which enables money transfers between banks around the globe, would be one of the toughest financial steps that could be taken, damaging Russia’s economy immediately. and in the long run. The move could exclude Russia from most international financial transactions, including international profits from oil and gas production, which account for more than 40% of the country’s total revenue.
Allies on both sides of the Atlantic also considered this alternative in 2014, when Russia invaded and annexed the Ukrainian peninsula of Crimea and supported separatist forces in eastern Ukraine. Russia then stated that its exclusion from the SWIFT financial system would be tantamount to a decision to declare war on it. The Allies, who have since been criticized for reacting very poorly to Russia’s aggression in 2014, abandoned the idea.
Russia has since tried to develop its financial transfer system with limited success.
The United States has previously persuaded the SWIFT system to exclude one country, Iran, because of its nuclear program.
But excluding Russia from the SWIFT system would also hurt other economies, including that of the United States and its main ally, Germany. U.S. lawmakers said last week that President Biden’s administration is still analyzing the negative consequences of the move. German Foreign Minister Annalena Baerbock, when asked by reporters about the possibility of excluding Russia from the SWIFT system, expressed doubts about the effectiveness of such an action.
“The strongest stick is not always the most intelligent weapon.” said Mrs. Baerbock.
INTERRUPTION OF ACCESS TO THE DOLLAR
The United States already has one of the most powerful financial weapons to use against Putin if he invades Ukraine, that of blocking Russia’s access to the US dollar.
The dollar still dominates financial transactions worldwide, with daily transactions reaching trillions of dollars.
Transactions in US dollars are ultimately approved through the Federal Reserve or US financial institutions. This would make it difficult for Putin to access the US financial system, eliminating the possibility of making dollar payments.
President Biden has told reporters that removing the ability of Russia and the Russians to conduct transactions in US dollars is one of the options the United States is considering. Unlike the exemption from the SWIFT system and other financial measures, the cessation of access to the dollar is a measure that the United States can do alone. Many Russians and Russian companies would be prevented from carrying out even the most routine transactions, such as payroll or purchasing, because they would not have access to the United States banking system.
EXPORT CONTROLS
White House spokeswoman Jen Psaki has confirmed that the United States is considering imposing export controls, stripping Russia of access to sophisticated technology and programs that aid in the movement of fighter jets, passengers, tablets, and video. -sophisticated games and TVs.
That could include including Russia in the most restrictive group of countries for export control purposes, ranking it with Cuba, Iran, North Korea and Syria, officials said.
Such sanctions could also target critical Russian industries, including its defense and civil aviation sectors, which would undermine Russia’s high-tech ambitions, such as artificial intelligence and quantum computing.
SHARE MARKET
President Biden’s administration has limited Russia’s ability to borrow by barring US financial institutions from buying Russian government treasury bills directly from state institutions last year. But the sanctions did not hit the secondary market, leaving this as a possible next step.
NORDSTREAM GAS PIPELINE 2
Republicans and Democrats in Congress fought for years against the expansion of Russia’s new Nord Stream 2 pipeline to Germany, arguing that it would help Russia use gas supply control as a means to achieve its policy goals in Europe. Rival bills in Congress would impose sanctions on pipeline operators. Republicans want to impose sanctions immediately, but Democrats say they should only do so if Russia attacks Ukraine.
President Biden’s administration has previously been reluctant to impose sanctions at this level to avoid a clash with allied Germany.
German officials say blocking the pipeline if Russia enters Ukraine could be an alternative if Russia invades Ukraine, but they have not provided further details in their public comments.
OLIGARCHS AND PUTIN’S LOVER
One of the most commonly used tactics of sanctions by the United States is the imposition of sanctions on the close circle of leaders, families, and military and civilian circles. Putin, his friends and family may also face this tactic, along with powerful business oligarchs in Russia and their banks.
The sweeping bill proposed by Indiana Republican lawmaker Jim Banks, backed by nearly 40 other Republican lawmakers in the House of Representatives, would begin imposing sanctions on Russia even before another Russian attack on Ukraine, including expulsion. from the SWIFT financial system and sanctions related to the Nord Stream 2 pipeline.
Measures envisioned in the Republican bill include imposing sanctions on several senior Russian officials, the Russian president’s family and a woman reportedly having a romantic relationship with Mr. Putin, Alina Kabaeva, who won the gold medal in gymnastics in 2004 Olympic Games./ VOA
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