By ELLEN KNICKMEYER, Associated Press
WASHINGTON (AP) — The financial options being considered for punishing President Vladimir Putin if Russia invades Ukraine range from the sweeping to the very personal — from cutting Russia off from U.S. dollars and international banks to imposing sanctions on a former Olympic gymnast who would be that of Putin. girlfriend.
Publicly, the United States and its European allies promised to hit Russia financially like never before if Putin deployed his army in Ukraine. However, the leaders gave few concrete details to the public, saying it was best left to Putin himself to guess.
And weeks after the start of negotiations, it is far from clear that the Americans have managed to reach a US and European consensus on the sanctions that will be imposed and what would trigger them.
A look back at some of the financial actions envisaged:
Political cartoons about world leaders
For the United States and its European allies, excluding Russia from the SWIFT financial system, which moves money from bank to bank around the world, would be one of the most difficult financial measures they could take. take, damaging the Russian economy immediately and in the long term. The move could cut Russia off from most international financial transactions, including international profits from oil and gas production, which together account for more than 40% of the country’s revenue.
Allies on both sides of the Atlantic also considered the SWIFT option in 2014, when Russia invaded and annexed Ukrainian Crimea and backed separatist forces in eastern Ukraine. Russia then declared that kicking him out of SWIFT would amount to a declaration of war. The allies – since criticized for responding too weakly to Russia’s 2014 aggression – dropped the idea.
Since then, Russia has tried to develop its own financial transfer system, with limited success.
The United States has already managed to persuade the SWIFT system to expel a country – Iran, because of its nuclear program.
But kicking Russia out of SWIFT would also hurt other economies, including those of the United States and key ally Germany. US lawmakers said last week that the Biden administration was still analyzing the severity of that impact. Annalena Baerbock, Germany’s foreign minister, when asked by reporters about Russia’s proposed SWIFT ban, seemed to express doubts.
“The hardest stick won’t always be the smartest sword,” Baerbock said.
The US already has one of the strongest financial weapons to wield against Putin if he invades Ukraine – blocking Russia’s access to the US dollar.
Dollars still dominate financial transactions around the world, with trillions of dollars in play every day.
US dollar transactions are ultimately cleared by the Federal Reserve or US financial institutions. For Putin, this means that foreign banks must be able to access the American financial system to settle transactions in dollars.
The ability to block this access gives the United States the ability to inflict financial hardship far beyond its borders. Previously, the United States suspended financial institutions from clearing dollars for allegedly violating sanctions against Iran, Sudan and other countries.
Biden told reporters that cutting off Russia’s and Russians’ ability to trade in dollars was one of the options the United States was exploring. Unlike the SWIFT option and other financial measures, this is one the US could do on its own. Many Russians and Russian businesses would be blocked from doing even the most common transactions, like payroll or buying things, because they would not have access to the US banking system.
White House press secretary Jen Psaki has confirmed that the United States is considering imposing export controls, which could cut Russia off from high technology that helps warplanes and planes passengers to fly and makes smartphones smart, as well as the other advanced software and electronic equipment that powers modern global racing.
That could include adding Russia to the most restrictive group of countries for export control purposes, along with Cuba, Iran, North Korea and Syria, officials said.
This would mean that Russia’s ability to obtain integrated circuits and products containing integrated circuits would be severely restricted, due to the global dominance of US software, technology and equipment. The impact could extend to aircraft avionics, machine tools, smartphones, game consoles, tablets and televisions.
Such sanctions could also target critical Russian industry, including its defense and civil aviation sectors, harming Russia’s high-tech ambitions, whether in artificial intelligence or IT. quantum.
Like some of the other sanctions under consideration, the US export restrictions would risk motivating companies to seek alternatives in other countries, including China.
The Biden administration limited Russia’s ability to borrow money by banning US financial institutions from buying Russian government bonds directly from public institutions last year. But the sanctions did not target the secondary market, leaving that as a possible next step.
NORDSTREAM 2 PIPELINE:
Congressional Republicans and Democrats have for years fought Russia’s new Nord Stream 2 gas pipeline to Germany, saying it would help Russia use its control of gas supply as leverage to achieve its political goals in Europe. . Rival bills in Congress would sanction the pipeline operators – Republicans want to impose the sanctions immediately, but Democrats only if Russia invades Ukraine.
The Biden administration has previously steered clear of this level of sanctions, to avoid getting in the way of the German ally.
German officials say blocking pipeline operations if Russia moves into Ukraine would be “on the table” if there were an invasion – but that’s all they have done publicly.
AFTER THE OLIGARCHS… AND A DECLARED FRIEND
One of the sanctions tactics most used by the United States is to sanction the immediate circles of the leaders, their families and the military and civilian circles. Putin, his friends and family could also face it, as well as Russia’s powerful business oligarchs and its banks.
Sweeping legislation by Indiana Republican Rep. Jim Banks, co-sponsored by nearly 40 other House Republicans, would stack the penalties even before any new Russian invasion of Ukraine, from SWIFT shutdown to Nord Stream sanctions.
They would also urge consideration of targeting many in Russia’s upper echelon with sanctions.
This includes Putin’s family and a woman believed to be Putin’s romantic interest, Alina Kabaeva, who won Olympic gold in 2004 as a gymnast.
Associated Press writers Ken Sweet in New York and Geir Moulson in Berlin contributed to this report.
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