Failing to send troops to support Ukraine, the United States is preparing its economic weapons against Russia. Alongside the heated Russian-American debates at the UN on Monday, and a telephone exchange on Tuesday between US Secretary of State Antony Blinken and the head of Russian diplomacy Sergey Lavrov, Washington is continuing its preparations to target Moscow in the wallet in case invasion of Ukraine. A bill providing for new sanctions against Russia is being finalized in Congress and is expected to pass this week. “We’re one yard away from the in-goal, and I hope we get there successfully,” Senate Foreign Affairs Committee Chairman Bob Menendez said on Sunday. One watchword: hit hard. L’Express takes stock of the measures envisaged across the Atlantic.
- Financial sanctions against Russian banks
One of the punch measures would be to target the big Russian banks in order to isolate the country’s economy. Drawing inspiration from the sanctions that targeted Iranian banks under the presidency of Donald Trump, the US Treasury Department could thus decide to include Russian banking establishments on the list of Specially Designated Nationals (SDN). “Concretely, the targeted banks would see their capital, and their assets which are held by American banks or companies, be immediately frozen and made unavailable”, explains Olivier Dorgans, partner in the firm Ashurst, specialist in economic sanctions.
The damage to the economy would be deep and lasting. “The targeted banks would become persona non grata in global financial exchanges, insofar as many banking establishments and companies prohibit themselves from having commercial relations with banks which are subject to American measures of freezing of assets, continues the ‘expert. Moreover, these banks could no longer do operations in dollars, because that necessarily calls for the participation of an American entity.
Ultimately, the risk of bankruptcy for these banks, and more generally, of an economic crisis in Russia, would increase considerably. “Russian growth, which has already been stagnant since 2014, would be strongly penalized. We could probably expect a recession in the country,” points out Anders Aslund, economist at the Atlantic Council based in Washington.
- Disconnecting Russian banks from the Swift network
Another formidable measure in the cards, blocking the access of Russian financial institutions to the Swift system. This interbank network, based in Brussels, is used by more than 11,000 financial players to exchange with each other in an automated and secure manner. More than forty million messages are transmitted there daily throughout the world. “Russian banks would be deprived of an essential instrument for communicating with their international partners, but also internally, between Russian banking establishments. In addition, the security of exchanges would be greatly affected”, underlines Olivier Dorgans.
Without this tool, Russian banks would suddenly be forced to resort to other more traditional methods such as telephone, e-mail or fax, with the processing times that this entails. A disorganization implying, de facto, a significant disruption of transactions including Russia. “I think that the Russian banks could recover from it, but that would handicap them very strongly, a fortiori if it is coupled with measures of freezing of the assets”, judge Olivier Dorgans. If since 2014 Russia has undertaken to develop its own exchange system, the SPFS, it remains mainly used internally and represents only around 15% of traffic in the country.
- Block the commissioning of the Nord Stream 2 gas pipeline
Long opposed to the commissioning of the Nord Stream 2 gas pipeline – linking Russia to Germany via the Baltic Sea – the United States warned last Wednesday that “if Russia somehow invades Ukraine ‘another’, this one ‘will be blocked’. At this stage, the Republican and Democratic senators have not yet managed to agree: the former calling for an immediate blockage when the latter want to make an invasion of Ukraine subject to this possibility. “This would be a very heavy blow for Russia, which has been betting for many years on the construction of this gas pipeline which it fully controls and which bypasses Ukraine”, observes Anders Aslund.
Dario Ingiusto / L’Express
“For the Russian economy, it would be a handicap in the sense that Europe’s gas supply is a source of wealth. However, it would also be a handicap for Europe, insofar as it is largely dependent on Russian gas. to cover its energy needs,” said Olivier Dorgans. According to the latest report from Statistical Review of World Energy, nearly 40% of the gas consumed on the Old Continent comes from Russia. A figure that rises to 55% for the sole case of Germany. “Difficulties in gas supply would necessarily be accompanied by a rise in prices”, slice Olivier Dorgans.
- Ban the sale of American technology
Among the other measures considered by Washington, the imposition of technological sanctions on Russia. The Commerce Department could thus prohibit the export of certain American technologies to Russian companies under sanction, in order to stop their supply chain and reduce their production capacity. In 2019, the Trump administration, for example, placed the Chinese giant Huawei on a blacklist, to prevent it from acquiring certain American technologies essential to its products.
“This measure had proven to be very effective, notes Anders Aslund. Similar restrictions on the export of semiconductors could have a great impact on the high-tech sector in Russia.” Indispensable to most electronic equipment, semiconductors are particularly used in high-tech industry and aeronautics. “Russia remains quite dependent on semiconductors and processors of American origin. And there are few alternatives at the global level in the context of the current shortage”, abounds Olivier Dorgans. A way to target strategic Russian companies, and the Kremlin’s ambitions in the new technologies sector.
- Financial sanctions “against members of the Russian elite and their families”
A great classic of American sanctions against Russia, Washington also indicated on Monday that it was preparing “specific sanctions measures against members of the Russian elite and their families”. The objective: to target individuals gravitating in Putin’s first circle in order to reach the Russian president as closely as possible. In mid-January, American senators had also unveiled a bill providing for direct targeting of the Kremlin tenant.
“Sanctions against a head of state is a measure that would cross a line, it would be equivalent to a break in relations,” denounced the spokesman for the Russian presidency, Dmitry Peskov. Only a handful of heads of state are under US sanctions, such as Kim Jong-un, Nicolas Maduro or Ayatollah Khamenei. “Sanctioning Putin directly would have a strong symbolic impact, since it would be akin to a snub. On the other hand, targeting the oligarchs would have a more limited impact, because many of them are already subject to sanctions”, slips Olivier Dorgans. It remains to be seen, therefore, the solution that Washington will choose to favor.