President Joe Biden is imposing economic sanctions directly against Russian President Vladimir Putin as a consequence of Russia’s invasion of Ukraine, according to White House press secretary Jen Psaki.
The move — which follows similar decisions by the EU and the UK to freeze Putin’s foreign-held assets — is seen as largely symbolic, as the Russian leader is not believed to have significant overseas wealth.
Some international leaders have been hesitant to directly target Putin because it could cripple diplomatic channels. In January, the Kremlin warned that sanctioning the head of Russia was an “outrageous measure” that could lead Russia to cut ties with the US.
Biden announced a “devastating” slate of sanctions against Russia on Thursday, singling out the Russian leader as the “aggressor” in the conflict.
But both the US and its allies have been hesitant to kick Russia out of SWIFT, a global secure messaging system that links thousands of financial institutions — considered a “nuclear option” that could hurt the West as much as Moscow.
Here’s what you need to know about international sanctions and how they could impact both Russia and the global economy.
For more, read about how the Ukraine conflict is influencing gas prices and the danger of retaliatory cyberattacks. Plus: Twitter accounts with credible information on the emerging crisis.
What sanctions is the US placing on Russia?
After closed-door discussions with leaders of the G7 industrialized nations, Biden announced Thursday afternoon that penalties against Russia would include strict export controls that will “impose a severe cost on the Russian economy, both immediately and over time.”
Those controls include export blocks and restrictions on “semiconductors, telecommunication, encryption security, lasers, sensors, navigation, avionics and maritime technologies,” which Biden said could severely damage Russia’s military and aerospace sectors.
More than a dozen state-owned developers, banks and other companies are banned from doing business in the US, including Russia’s largest financial institution, Sberbank. Along with its subsidiaries, Sberbank accounts for more than a third of Russia’s financial assets.
The US assets of oligarchs with close ties to the Kremlin have also been frozen.
On Friday, the White House said the US would levy personal sanctions against Putin, as well as Russian foreign minister Sergey Lavrov and other Russian national security officials.
Psaki, the White House press secretary, said details of the sanctions are forthcoming, but they would include a travel ban.
Kremlin spokesperson Dmitry Peskov told state-sponsored news agency Tass in January called the imposition of sanctions against Putin “an outrageous measure that is comparable to a break in relations.”
The first wave of US sanctions came Tuesday, targeting other Russian financial institutions and the Russian government’s access to US capital.
The first round of European Union sanctions on Wednesday included blacklisting Russian politicians and halting European trade with Donetsk and Luhansk, breakaway regions in eastern Ukraine whose independence Moscow recognized on Monday.
Calling out Russia’s “barbaric attack” on Ukraine, EU Commission President Ursula von der Leyen said Thursday that the union was also freezing Russian assets and blocking Russian banks’ access to European financial markets.
Von der Leyen announced new sanctions early Friday that she said target 70% of the Russian banking sector and major state-owned companies, and limit Russia’s access to aerospace and computer technology.
She added that the sanctions are intended to not only hit the Russian economy, but Putin’s inner circle directly.
“We are also targeting Russian elites by curbing their deposits so that they cannot hide their money anymore in safe havens in Europe,” she said. The EU has already levied personal sanctions against Putin and Lavrov.
The United Kingdom is sanctioning at least 100 individuals and entities — including Putin and Lavrov — British Prime Minister Boris Johnson announced Friday.
In an address to Parliament, Johnson said he also plans to authorize a special criminal bureau “to target sanctions, evasion and corrupt Russian assets hidden in the UK.”
The UK has also banned Aeroflot, Russia’s national airline, and is expected, like the US, to prohibit exports of electronics, aerospace and telecommunications technology. “We will continue on a remorseless mission to squeeze Russia,” Johnson said “from the global economy, piece by piece. Day by day, and week by week.”
The US and Europe are also levying sanctions against Belarus, which Ukraine says Russia is using as a staging ground for its invasion.
Germany has already postponed indefinitely the Nord Stream 2 pipeline, intended to bring Russian oil to Western Europe via the Baltic.
Both Japan and Australia are freezing the assets of Russian elites, while New Zealand is joining Japan in banning exports to the Russian military.
Russia and SWIFT
One lever Ukraine’s Western allies seem reluctant to pull is blocking Russia’s access to the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, a Belgium-based secure messaging network that links more than 11,000 international financial institutions, including the US Federal Reserve System, the Bank of England and the European Central Bank.
Banks around the globe use SWIFT to send and receive millions of financial messages and money transfer orders.
Blocking Russia’s access to SWIFT would mean European lenders would be hard-pressed to collect payments on the nearly $30 billion in debt owed to them by Russian corporations and individuals.
The sanctions endgame
The sanctions announced prior to Thursday’s incursion were intended to stave off a full invasion into Ukraine. Now they seem more aimed at punishing and putting pressure on Putin and his inner circle.
According to The New York Times, individuals hit with travel bans, frozen assets and other penalties include Russian defense minister Sergei K. Shoigu, businessman and Putin ally Yevgeny Prigozhin and Margarita Simonyan, the head of state television network RT.
The hope, the Times reported, is that such personalized attacks “would strike at the lifestyles of Russia’s highest officials and make it difficult for Mr. Putin by making those around him unhappy.”
The impact on America
Russia is one of the world’s largest exporters of crude oil, providing roughly 40% of the supply for the European Union and 7% for the US.
Sanctions from the West could tighten that pipeline or it shut off altogether. On Thursday, crude oil prices surpassed $105 a barrel for the first time in eight years.
US energy analysts say the average price of gas, which is refined from crude, could soon hit $4 or even $5 a gallon at the pump.
If the conflict continues, crude could go as high as $150 a barrel, analyst Dan Dicker told Yahoo Finance, sending gas prices spiraling to $7 a gallon.
On Tuesday Biden said he was developing a strategy to “blunt gas prices” in the face of the Russian incursion.
In his Thursday remarks, the president said he planned to offset rising gas prices by releasing barrels from the Strategic Petroleum Reserve, a deep underground storage complex along the Gulf Coast holding an estimated 600 million gallons of crude.
“I know this is hard and that Americans are already hurting,” Biden said. “I’ll do everything in my power to limit the pain the American people are feeling at the gas pump.”
Russia’s “not necessarily symmetrical” response
On Wednesday, Russia’s Foreign Affairs Ministry warned of a “finely tuned and painful” response to sanctions by the Biden administration — retaliatory measures that would target “sensitive” US assets.
“There should be no doubt that sanctions will receive a strong response, not necessarily symmetrical, but finely tuned and painful to the American side,” a ministry representative said in a statement, CNN reported.
Russia would be able to “minimize the damage” of US sanctions, they added. “And even more so, sanctions pressure is not able to affect our determination to firmly defend our interests.”
While the ministry didn’t specify what form that response would take, the US departments of Treasury and Homeland Security have already sounded the alarm over potential cyberattacks on US banks, hospitals, government offices and power grids.
In addition, Russia is a major producer of platinum and the largest exporter of palladium, a metal used in automotive exhaust systems, fuel cells, mobile phones and even jewelry and dental fillings.
Rising prices of essential metals could lead to price increases for manufacturers and, ultimately, consumers.