Biden Announces Sanctions On Russia

 

Following the invasion of Russian forces in pro-Russian separatist regions of Ukraine, President Biden announced a first "tranche" of sanctions this afternoon on Russia's sovereign debt, on the major Russian bank VEB, and a military bank. Individual Russians in Russian thug Vladimir Putin's crime syndicate will be hit with sanctions in the days ahead, Biden saying that those corrupt oligarchs "share the corrupt gains of the Kremlin's policies, and so they ought to share in the pain as well."

The banking sanctions effectively cut those entities off from transactions involving U.S. dollars, which are the global reserve currency. By imposing sanctions on Russia's sovereign debt, the U.S. has cut off Russia from Western debt markets and blocked it from re-negotiating its sovereign debt for better rates.

It's not clear what the "red line" is for imposing the full array of sanctions that Biden and its allies have been promising, since Russian forces have now crossed into Ukraine. Germany's action earlier today to suspend certification of the Nord Stream 2 gas pipeline will damage Russia's economy by denying it gas revenues, as other allies are imposing initial sanctions on Putin's Russia for their aggression. 

 

Sanctions On Putin's Russia Begin

Hours after he proclaimed that two Ukrainian regions occupied by pro-Russian separatists would be recognized by Russia as "independent" and "peacekeeping forces" would be moving in, several actions to sanction Russia were initiated. While an announcement from the White House is expected later, sanctions have been initiated by our allies in Europe:

• Germany announced the suspension of certification for the controversial Nord Stream 2 pipeline that would bring Russian natural gas to Germany.
• The UK announced it was placing sanctions on five Russian banks and three "high net worth individuals" in response to Russia's aggression.
• The European Union plans to sanction 27 persons and entities linked to the aggression against Ukraine, and Russian lawmakers who approved Putin's position on invading Ukraine.

The UN Secretary General António Guterres called out Russia's recognition of the two separatist regions as "violation of the territorial integrity and sovereignty of Ukraine." While the U.N. Security Council is hampered by a veto-weilding Russia, the General Assembly may adopt measures to respond to Russia's troop movement into eastern Ukraine.  What will be interesting to watch is China's reaction, which has thus far been reserved, but pushing for a diplomatic settlement that Putin seemed to dismiss in his angry statement announcing the "independence" of the separatist regions.

Updates as necessary.

(image: Reuters)