WASHINGTON, Feb 25: US President Joe Biden on Thursday announced "severe" economic sanctions that will make President Vladimir Putin a "pariah" for invading Ukraine, revealing he had no plans to talk to his counterpart. He also conceded a lack of Western unity for enacting an even tougher measure.
In a speech from the White House, Biden said four major banks would be hit with sanctions by Western powers and that export controls on sensitive components would "cut off more than half of Russia's high-tech imports."
"This is going to impose severe cost on the Russian economy, both immediately and over time," Biden said. The measures, on top of a raft of other sanctions already announced this week, will make Putin "a pariah on the international stage," Biden said. "Any nation that countenances Russia's naked aggression against Ukraine will be stained by association," he said.
Biden confirmed that for now there was no attempt to put sanctions directly on Putin, who is widely reported to have amassed a huge, secret fortune during his two decades in power. He also said that a much talked about move to cut Russia from the SWIFT international payments system -- essentially crippling its banking sector -- was not happening.
Ukraine pleaded for yanking Russia from SWIFT on Thursday, but Biden revealed that the Western coalition could not come to an agreement. "It is always an option but right now that's not the position that the rest of Europe wishes to take," he said.
Biden spoke to the
nation after having attended a virtual, closed-door meeting which lasted an hour and 10 minutes with the Group of Seven. The group of rich Western democracies -- Britain, Canada, France, Germany, Italy, Japan and the United States -- said it was standing firm against Russia's "threat to the rules-based international order."
Biden tweeted that G7 leaders "agreed to move forward on devastating packages of sanctions and other economic measures to hold Russia to account. We stand with the brave people of Ukraine."
The banks targeted by the sanctions, Sberbank and VTB Bank, are Russia's two largest and majority owned by the government, accounting for about half the banking system. The US Treasury Department said it imposed "full blocking sanctions" on VTB, meaning all US-held assets "will be instantly frozen and inaccessible to the Kremlin."
VTB is "one of the largest financial institutions Treasury has ever blocked" and the move "sends an unmistakable signal," the department said. Sberbank, which holds about a third of all bank assets in Russia, will be banned from conducting transactions through the US financial system.
Together with penalties against three other banks, the actions target "nearly 80 percent of all banking assets in Russia and will have a deep and long-lasting effect on the Russian economy and financial system," Treasury said. And the Commerce Department said the coordinated export controls impose a "denial on sensitive items Moscow relies on for its defense, aerospace and maritime industries."
Restricted items include semiconductors, computers, telecommunications, information security equipment, lasers and sensors. Washington also seized the assets of a new group of Russian oligarchs, and in a separate action took similar steps against 24 Belarusian individuals and organizations for their "support for, and facilitation of, the invasion" of Ukraine.
Andrew Lohsen of the Center for Strategic and International Studies praised that step, citing reports of attacks on Ukraine coming from its neighbor to the northwest. That makes Belarus "unquestionably a party to this and therefore, they need to be met with a full measure of sanctions as well," Lohsen told AFP.
While Lohnsen predicted the export controls will also be effective, if the United States and its European allies want to squeeze Moscow further, they may have to take steps like going after its oil and gas sector, even if that would drive up fuel prices at home. Nonetheless, the initial coordinated response may have been "more of a sharp reaction than Putin was expecting" and will have "real implications for Russia's long term growth," Lohsen said.
Moscow took steps to shield its economy after it was hit with sanctions in 2014 when it invaded and annexed Crimea in southern Ukraine, including by stockpiling cash and gold. Russia's public debt amounts to just 18 percent of its GDP, far lower than most major economies, and it has foreign reserves of $643 billion as of the end of last week, according to official data.
Elina Ribakova of the Institute of International Finance (IIF), a global banking association, told AFP that Moscow's policies were "a very deliberate" policy shift "to accommodate geopolitical ambitions." "They have a piggy bank that can protect them, and support the economy even if they go into deficit," she said.
IIF Executive Vice President Clay Lowery said Russia will feel the pain, and while some steps were omitted, there is room to escalate. "The bottom line is that these sanctions will have a significant impact on Russia's overall economy, and average Russians will feel the cost," Lowery, a former senior Treasury official, said in a statement. -AFP
