The Western powers late on Tuesday night responded to Russia’s aggressive moves in Ukraine by implementing economic sanctions to deter it from carrying out a full-scale invasion of Ukraine.
Some experts however doubt that the sanctions would deter Putin. US president Joe Biden’s announced sanctions which stopped two Russian state-owned banks from raising new money from Western banks. The sanctions cover Vnesheconombank (VEB), Russia’s state development bank, and Promsvyazbank (PSB), another state-supported institution as they are prohibited from trading in Russian debt as of March 1.
The US Treasury in a statement said that they are also imposing sanctions on influential Russians and their family members in Putin’s inner circle. “Today’s action constrains Russia’s ability to finance defense-related contracts and raise new funds to finance its campaign against Ukraine. Treasury is also designating influential Russians and their family members in Putin’s inner circle believed to be participating in the Russian regime’s kleptocracy, including the Chairman and CEO of PSB,” the Treasury department said in a release.
FSB Chief Aleksandr Bortnikov, VTB Chairman Denis Bortnikov, top presidential aide Sergei Kiriyenko, Vkontakte CEO Vladimir Kiriyenko and their wives and childen also face sanctions.
“The sanctions that we’ve already announced go well beyond what we did in 2014 – full blocking sanctions against two of Russia’s largest financial institutions, VEB and the military bank. These institutions hold more than $80 billion in assets. They provide key services that are critical to financing the Kremlin and Russia military. We have comprehensive sanctions against Russian sovereign debt,” Antony Blinken further added while addressing a joint press briefing with Ukrainian foreign minister Dmytro Kuleba.
US’ neighbour Canada also imposed similar sanctions banning Canadians from engaging in purchases of Russian sovereign debt and said that it is stopping financial dealings with state-backed Russian banks.
However, some believe that the sanctions are not too strong and may give confidence to Vladimir Putin by further emboldening him. Olivier Dorgans, a lawyer specialised on economic sanctions at the Ashurst law firm, told news agency AFP that asset freezes on several Russian oligarchs and individuals will have limited impact.
“The sanctions don’t yet get to where it hurts, it is a coherent step in relation to defending European economic interests,” Dorgans was quoted as saying by news agency AFP.
Andrew Lohsen, a Russia expert at the Center for Strategic and International Studies in Washington while speaking with AFP also reflected that the sanctions will not compel Russia into changing its course.
Experts still feel that financial sanctions like excluding Russia from SWIFT, the international bank transaction system would be harsh and imposing export controls which would starve Russian financial institutions of key high-tech equipment and software can have a further damaging impact.
Aside from the US and Canada, sanctions were also announced by the UK which slapped sanctions on five Russian banks including Rossiya and Promsvyazbank (PSB). Germany also sanctioned the gas pipeline Nord Stream 2 – which did not begin operations anyway as it await German regulators’ approval – in a bid to deter Ukraine.
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