In response to Russia’s invasion of Ukraine, on Thursday, US President Joe Biden announced new “devastating” sanctions against Russia. There could be a ripple effect for the world and US, including pricey fuel and cyberattacks.
Biden announces “devastating” sanctions on Russia
US President Joe Biden unveiled new “devastating” sanctions on Russia intended to punish the country for launching a full-scale invasion of Ukraine while calling out Russian President Vladimir Putin for aggression.
The new sanctions will include restrictions on financial institutions, banning the export of technology, and targeting Putin’s inner circle members, CNN reported. Biden conferred with the Group of 7 industrialized nations about which sanctions they planned to impose to coordinate a response of unity among Western allies.
The European Union also sanctions Russian assets, stopping Russian banks from accessing European financial markets.
On Thursday, British Prime Minister Boris Johnson said the UK and its allies would launch a “massive package” of sanctions to “hobble” Russia’s economy.
Potential sanctions the US and the West could impose on Russia
The US and the West have many options it could use to impose potentially crippling financial sanctions against Russia.
One of the most severe proposals could be to sever Russia’s access to the SWIFT international payments systems, the New York Post reported. Without access to SWIFT, Russia and its financial institutions would be effectively cut off from most international business transactions. SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, and the system facilitates financial transactions and money transfers for banks located around the world.
According to Edward Fishman, a senior fellow at the Atlantic Council and former State Department official, he believes “the Biden administration’s response should be full blocking sanctions against all the major Russian state-owned banks,” the Washington Post reported. Such a move would wreak financial havoc in Russia, essentially completely blocking and freezing all US-dollar-denominated assets so that they cannot transact in dollars or move them.
As a domino effect, it could cause the Russian ruble to collapse, tanking the Russian stock market, skyrocketing inflation, and potentially leading to consumer runs on banks to remove money.
The Biden administration has already signaled it did not intend to target Russia’s oil sales directly, which could have a negative impact on the US and the rest of the globe.
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Russia could seize its own citizens’ money
Suppose Western sanctions block Russia’s banks from all foreign funds. In that case, the government could potentially seize about 60 trillion rubles ($750 billion) of deposits from its citizens, according to Nikolai Arefiev, a member of the country’s Communist Party and vice-chairman of the Duma’s committee on economic policy, cointelegraph reported. The official added that Russia stores over $640 billion of gold and foreign exchange reserves abroad.
Sanctions ripple effect on the US, globe and Russian retaliation
The United States and its allies have vowed to take sanctions against Russia for its invasion of Ukraine.
However, both the US and its allies realize the sanctions imposed on Russia will escalate global inflation and higher oil prices. Before Russia’s invasion, President Biden had warned of consequences to Americans as well, namely further significant spikes in already high gas prices, CNN reported.
Johnson warned that the West would need to cease its dependence on Russian oil and gas.
Russia threatens tit-for-tat sanctions
On Thursday, Russia’s Foreign Ministry said, “Russia will respond to European and US sanctions in a tit-for-tat manner,” according to Ria news, SeekingAlpha reported.
Former Russian President Dmitry Medvedev tweeted a warning to the West on Thursday: “Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!”
Cyberattacks possible
Russia could also retaliate against the United States sanctions by launching cyberattacks. In the past two years, suspected Russian hackers launched several attacks, including the SolarWinds ransomware attack that infiltrated several government agencies in 2020, shutting down one of America’s largest fuel pipelines for several days, as well as a separate attack on GBS, one of the world’s largest meat producers, CNN reported.
Ukraine has already faced multiple cyberattacks recently, with one on Wednesday that targeted the website of its parliament, several banks, and government agencies.
US own cyberattack options
President Biden has also been presented with options for the US to carry out massive cyberattacks as well, as a way of disrupting Russia’s ability to sustain its military options in Ukraine, according to a report by MSNBC.
