After Russian President Vladimir Putin signs a decree recognizing the independence of Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR), the two breakaway regions in eastern Ukraine, the focus of events in the Russia-Ukraine crisis shifted to how the West react and respond.
As it stands, Western countries, led by the United States, have few options, and there will be no other more powerful measures except to impose multifaceted sanctions on Russia. Since the escalation of the conflict between Russia and Ukraine, no leader in the United States or the whole Western region has stated that soldiers will be sent to assist Ukraine in resisting the Russian invasion.
In the face of Putin’s unorthodox strategic moves, the West’s sanctions against Russia were introduced one by one, as if they were “required moves” in a gymnastics competition.
The U.S Department of the Treasury issued a statement on February 22 saying that it would impose sanctions on two major Russian state-owned financial institutions, setting additional restrictions on Russian sovereign debt, and sanctioning five Kremlin-connected elites. The U.S Department of the Treasury will sanction Russia’s Foreign Economic Affairs Vnesheconom bank (VEB) and Promsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries, which hold assets worth tens of billions of dollars. These subsidiaries represent a wide range of businesses, including banks and other financial firms, electronic component producers, a coal mining company, real estate and so on. In addition, Treasury is also designating influential Russians and their family members in Putin’s inner circle believed to be involved in the Russian regime’s kleptocracy. Biden said the announced sanctions are only the “first set” of sanctions, and the United States is likely to strengthen them.
Following the U.S., the UK has moved swiftly to impose sanctions on the following five Russian banks: Promsvyazbank, IS Bank, Black Sea Bank, Rossiya and GenBank, as well as on three high net worth individuals, including Russian oligarch Timchenko. Canada, for its part, banned Canadians from conducting any financial transactions with DNR and LNR, prohibited Canadians from purchasing Russian sovereign debt, and imposed additional two state-backed Russian banks, prohibiting investors from entering into any dealings with them. Japan’s sanctions include suspension of visas and freezing the assets of DNR and LNR-related personnel, prohibition of import and export transactions between Japanese individuals or entities and the above-mentioned regions, and prohibition of issuance and circulation of new Russian sovereign bonds in Japan. Germany’s sanctions include the suspension of certification of the Russian Nord Stream 2 gas pipeline project. The European Commission’s package of sanctions targets individuals involved in the recognition of the independence of the two regions in eastern Ukraine, banks that provide funds for the Russian army and other operations in these areas, etc. It was revealed that 351 MPs of Russia’s State Duma (lower house) and 27 legal entities and individuals face sanctions.
Judging from the above-mentioned sanctions imposed by Western countries, researchers from ANBOUND believe that the European Union and other countries’ sanctions against Russia do not carry the intended impacts, while the sanctions imposed by the United States are more or less the same, mainly targeting financial institutions and some individuals. Judging by the effectiveness of these measures, these sanctions may not be great for Russia but Moscow has already made financial preparations in recent years, thus laying the brakes on the crisis.
Sanctions, from an objective standpoint, are a true approach to calm Russia down and force it to quietly “think.” But the point is, why should Russia be sanctioned in the first place? What specific goals should be attained with sanctions? The United States and other Western countries may require additional time for this to work.
As of February, 22, the U.S. and Europe imposed a first wave of sanctions against Russia following statements made by President Joe Biden and the US secretary of state Antony Blinken. Blinken said these sanctions must be “strong and powerful”. In the aftermath, the world’s financial markets have now seen that the U.S. and Western sanctions are strong enough to get Russia to ponder on its moves. However, Chan Kung, the founder of ANBOUND, questioned what type of sanctions in this world do not require longer planning and thinking before they are imposed? Such punishments must be implemented gradually. One doesn’t know how long it will take to devise systemic sanctions, but the 24 hours between February 21 and 22 are certainly an insufficient time frame.
If the U.S. wants to strengthen the effectiveness of sanctions against Russia, the focus should be similar to what it did to China in the past, i.e., systematically designing the targets and means of sanctions, which could include state-owned enterprises, systemically important projects, important political figures, the financial system, major science and technology projects, business figures who support Putin, etc. It should be highlighted, in particular, that if the banking system includes financial assets as the subject of sanctions, whether to shut down the SWIFT system against Russia would be a priority. If financial sanctions do not include the shutdown of the SWIFT system, then almost all financial sanctions may be evadable for Russia.
It appears that the sanctions against Russia by the U.S. and Western countries are not systematic and have a lot of similarities with each other, and they seem to be disorganized. A very important reason for this situation may be that the departments of the countries concerned have not carefully studied and designed the sanctions. A well-thought-out sanction plan cannot be created in a short amount of time, and Blinken’s assertion of a “strong and robust counter-attack” is most likely “bragging” from a weak secretary of state.
Final analysis conclusion:
In the face of the rising Russia-Ukraine conflict, sanctions appear to be the only option to calm Russia down and quietly “think,” but the plan released by various nations appear to be lacking in lethality, and what the U.S. did against Russia was a rush job at best. The sanctioning countries do not lack research and policymaking capabilities, but the rush to so haphazardly can only be explained by the West’s unwillingness to truly censure Russia.
Writer by ANBOUND
ANBOUND is a multinational independent think tank. We specialize in public policy research covering geopolitics and international relations, urban and social development, industrial issues, and macro-economy. We enjoy professional reputation in the areas of strategic forecasting, policy solutions, and risk analysis. Over the past three decades, we are committed to independence and openness as our operating principles.
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