US President Joe Biden announced new sanctions against Russia on Thursday in response to the invasion of Ukraine. There will be restrictions involving Russian government transactions in foreign currencies, barriers to Russian access to new technologies and measures against the country’s biggest banks.
In the military field, the Democrat made it clear that US troops will limit themselves to protecting the territory of NATO allies, a military alliance of which Ukraine is not a part. “Our forces are not going to Europe to fight in Ukraine, but to defend our NATO allies. The United States will defend every inch of NATO territory with the full force of American power,” he promised.
NATO should meet on Friday (25) to define its next steps in the crisis. According to the Reuters and AFP news agencies, the US will send another 7,000 US troops to Europe, in order to reinforce the security of the countries of the military alliance.
The sanctions announced this Thursday affect the institutions Sberbank, VTB, Otkritie, Sovcombank OJSC and Novikombank, in addition to their subsidiaries, with various measures. Sberbank will have limited access to dollar transactions, for example.
Banks will no longer be able to do business with US companies and will have their US assets frozen. The four largest institutions affected have, together, US$ 1 trillion in assets.
The package of measures will make foreign investment and loans difficult for several Russian companies, including Gazprom, the country’s largest energy company, which is active in gas production. It also provides for limiting Russia’s access to imported high-tech products. This is expected to cause the Russians to lose the ability to improve their military power.
There were also punishments against some members of the Russian elite and Belarus for allowing Russia to use its territory in operations to invade Ukraine. Direct punishments against Russian President Vladimir Putin, which have not yet been adopted, are also up for debate.
Biden announced the measures in a speech at the White House. “We will limit Russia’s ability to do business involving dollars, euros, pounds and yen,” he said, without elaborating, citing the currencies of the US, EU, UK and Japan.
However, Biden himself admitted that the sanctions will have little immediate effect.
“No one expects sanctions to prevent something from happening. They take time. [Putin] he’s not going to say: ‘Oh my God, these sanctions are coming, I’m leaving,'” he joked, when questioned by journalists. “Imposing sanctions and seeing the effect of sanctions are two different things. And now let’s see him start to feel the effect. The sanctions exceed anything that has already been done. They are deep. We’ll talk in a month or so to see if they’re working.”
The US government, however, did not heed a request by Ukraine to remove Russia from the Swift system, which integrates financial institutions around the world and allows international money transfers. According to Biden, European countries are against the measure.
In the speech, the American leader made attacks on the Russian president. “[Vladimir] Putin is the aggressor. Putin chose this war and now he and his country will bear the consequences,” he warned, in an energetic tone.
“Putin committed an attack on the principles that support global peace. This war was never motivated by security concerns. It was motivated by Putin’s desire for an empire, by any means necessary. (…) He has much greater ambitions. than Ukraine. He wants to re-establish the former Soviet Union,” Biden said. “We will ensure that Putin becomes a pariah in the international arena.”
The president also said there was “a complete rupture” in US-Russia relations at the moment, and he had no plans to speak with Putin.
Biden stressed that the repudiation of Putin’s actions now unites the United States, Europe, Japan, Australia and more countries. But, asked if he would ask China to put pressure on Russia to stop the invasion, he replied: “I’m not prepared to comment on that at the moment.”
The US government spent weeks warning that Russia intended to invade the neighboring country. The American pressure for this not to happen, however, did not work, and Putin sent troops to the neighboring country on Thursday (24).
On Wednesday night (23), Biden spoke with Ukrainian President Volodymyr Zelensky by phone. Shortly after the invasion began, the White House released a statement from the president, in which he considered the attack premeditated and unjustified. “Russia alone will be responsible for catastrophic loss of life and human suffering,” he said.
Biden noted that Ukrainians are likely to have difficult weeks and months ahead as foreign occupation could lead to acts of civil disobedience, but he is confident of local resistance. “The Ukrainian people have shown, in their 30 years of independence, that they will not tolerate anyone who tries to take their country back.”
On Thursday morning, Biden met with the National Security Council to discuss the situation in Ukraine and then participated in a virtual meeting with the leaders of the G7 countries, which includes, in addition to the US, Germany, Canada, France, Italy, Japan, UK and European Union.
Biden has the challenge of calibrating sanctions to hit Russia without generating effects that turn against the US economy itself. Sales of oil and gas are Russia’s main export. Applying restrictions on the trade of these fuels would lead to a rise in the price of these fuels worldwide, which could reach US consumers.
Rising inflation is currently one of the main problems in the US and having more expensive gas at US stations would make the issue worse. This Thursday, oil has already risen due to inflation, and the price of a barrel of oil exceeded US$ 105, a value that had not been seen since 2014.
“We designed the sanctions to maximize long-term effects on Russia and minimize the impact on the United States and allies,” the Democrat said on Thursday. To avoid the fuel price spike, the US government will be able to release new parts of its strategic reserve to the market, if necessary.
On Tuesday, Biden had already announced a round of sanctions against two Russian banks linked to the financing of military activities and barriers to the trading of Russian debt bonds, which would make it difficult for the country to raise money abroad.
However, Russia has about $600 billion in dollars and does not need to raise money abroad to finance its small deficits. In recent years, its external debt has decreased, as a consequence of the difficulty of carrying out operations abroad, brought about by previous sanctions.
