Biden and Putin’s Ukraine crisis gets personal with sanctions threat
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Russian President Vladimir Putin gesticulates as he attends the annual end-of-2018 news conference held in Moscow, Russia on December 23, 2021.
Evgenia Novozhenina | Reuters
America has communicated the most clear message to date that Russia is its economic leader and its core sectors. Vladimir PutinIf it invades Ukraine, it could be subject to the most severe sanctions ever.
Joe Biden of the United States indicated Tuesday that he could place sanctions on his Russian counterpart if Moscow grants permission to its army invade.
Russia currently has approximately 100,000 soldiers and other military equipment stationed along its Ukrainian border. There are increased fears that Russia is plotting to invade its neighbor. Moscow, however has denied this claim repeatedly.
Western allies are taking no chances with NATO placing its forces on standby and reinforcing its positions in Eastern Europe with more ships and fighter jets. The United States has placed thousands of troops on alert and is ready to respond to any crisis.
Sanctions severe
All three countries, including the U.S., have stated that Russia would be subject to additional sanctions on important individuals and economic sectors if it invades Ukraine. Russia’s 2014 annexation from Ukraine of Crimea has seen previous rounds sanctions targeting sectors like finance, energy and defense.
But the U.S. gave its clearest signal yet on Tuesday that it will look to cripple Russia’s economy — which would likely lead to immense pressure on Putin, both from the Russian people and the country’s business leaders — if Moscow invades its neighbor again.
Biden stated Tuesday that he felt obliged to strengthen NATO defenses in Poland, Romania and Eastern Europe. When asked if he could imagine himself imposing sanctions against the Russian president, Biden replied “Yes.”
The U.K. signaled that they could also do this, with Liz Truss (the country’s foreign secretary) saying, “We are not ruling anything out” when asked if Putin might be sanctioned.
Personal sanctions could be used to threaten Putin. This would go a long way in retaliating against previous Russian-state measures. It is possible that the West will target Putin’s wealth, and he may not travel as much. However, no other details are available.
According to White House senior officials, the statements were made to reporters on a call regarding economic deterrence measures being considered against RussiaWe are ready to implement severe sanctions that have massive consequences, which were not contemplated in 2014 when Russia annexed Crimea.
They are considering a range of measures, including more financial sanctions and the use “novel Export Controls” which could severely restrict Russia’s access U.S. technology components. similar to those used against Chinese technology giant Huawei.
“The slow progressivism of the past has ended. This time, we will start at the top and remain there. On Tuesday, a senior White House official stated that they had made every effort to communicate this intention clearly.
Officials said the U.S. was also prepared to impose export controls — which would essentially block Russia from obtaining U.S.-originated software and technology in an effort to harm key economic sectors in Russia. These would be detrimental to Putin’s strategy of industrializing his economy, they stated.
They noted that such controls would “imperish areas which are important to him,” whether they’re in AI or quantum computing or defense or aerospace or any other key sectors.
This is not an exhaustive list, but there are many options, according to the official, adding that “we’re united as Allies and Partners to decisively impose severe sanctions on Russia if they further invade Ukraine.”
One official was asked about the impact of export control on global supply chains. He stated, “Because we’re talking to denying Russia downstream products, which are crucial to Russia’s ambitions to develop high tech capabilities in aerospace, defense, lasers sensors, maritime and AI robotics, and quantum, et cetera.”
We and/or our partners, allies or not, design and manufacture the technology in these supply chains. Russia would be denied a highly developed input by export controls. It could not replace it through its domestic production, or other sources.
Such sectors, the official noted, were deliberately earmarked as ones that “Putin himself has championed as the way forward for Russia to diversify its economy beyond oil and gas” — another sector that the U.S. could seek to undermine if Russia weaponizes energy supplies.
Russia’s influence in Europe’s oil sphere has made it a major battleground for the U.S. over the past few years. This issue has also been brought to attention by rising tensions regarding Ukraine.
Russia provides the EU approximately 40% of its natural gasoline supplies. Russia has constructed a huge gas pipeline Nord Stream 2 to transport gas directly to Germany. This bypasses Ukraine. American, which wants to expand its exports of liquefied gas to Europe, denounces the project.
In fact, Biden’s administration is looking for ways to ensure energy security for European allies should Moscow cut energy supplies to the region to get concessions from Ukraine.
Un senior administrator from the Administration declined to give his name in order not to reveal details regarding ongoing plans. told CNBC Tuesday that the administration was coordinating with major buyers and suppliers of liquefied natural gas to ensure a diversion of supplies to Europe if necessary.
U.S.: “We’ll sanction You to Hell”
Analysts have noted that U.S. signals regarding possible sanctions against Russia are some of the most powerful they have seen.
Timothy Ash, senior emerging market sovereign strategist with Bluebay Asset Management stated Tuesday evening in a research paper that he has been closely monitoring U.S. sanctions on Russia’s language since 2014.
According to the U.S., officials have told Putin, “Bring it on. You go to Ukraine. We are going to punish you to hell. And we’ll try to strike back by cutting off energy supply to Europe. We are planning for that — we will get Europe thru the winter and you will end up as the loser.’ He noted that the U.S. is working to reduce Europe’s dependence on Russia for energy.
Russian politicians are close friends and believe that tensions in Ukraine reflect Moscow’s and more precisely Putin’s attempts to reverse Western power in Russia’s former territory and back yard since 1991’s end of Cold War.
As Russia is unwilling to enter into a war with the West, sanctions remain an option. Ukraine isn’t a NATO member and the military alliance doesn’t have any obligation to defend it.
However, the West’s allies are determined to prevent Russia from controlling its neighbours and forcing them (and even invading their territories). Russia is seeking legal guarantees that Ukraine cannot join NATO. They also want to see the withdrawal of NATO’s East European deployments. These requests were rejected by NATO as well as the U.S.
According to Andrius Tursa (Central and Eastern Europe advisor at Teneo Intelligence), “The Western allies are limited to concessions” in Russia.
They could undermine the U.S.-NATO security guarantees that are the basis of Europe’s post-1945 security architecture. He noted that the Kremlin seems to have one main objective: the destruction of the post-Cold War Security Order.”
Even if the crisis can be resolved diplomatically, the relations between Russia’s and the West seem to have entered a hostile and uncertain phase. The Kremlin’s perception of the US – and by extension NATO – as its main geopolitical rival is unlikely to dissipate until there are any meaningful changes in Russia’s political leadership.”
This week, markets have been nervous as Ukraine worries have made headlines around the world. There is also little to no certainty about what Putin will do next.
Holger Schmieding (chief economist, Berenberg Bank) stated on Tuesday that the “heightened risk that he might invade Ukraine has begun to affect markets…this is not our base situation.” It is still one of the risks we should be aware. We are not privy to the plans of Putin and do not know when they will be revealed.
Schmieding stated that Putin has already won some victories in Russia after the Ukraine crisis. Higher oil prices are a boon for Russia as an energy exporter.
Schmieding stated that Putin, who is facing mounting worries about declining living standards in Russia, has been able to reap the benefits of an increase in natural gas and oil prices. He also noted that Putin “has already accomplished something with his sword rattling.” He is the talk of the world. Russia and the U.S. are discussing Europe’s future, often without Europe being present.
Putin can show this to his domestic audiences as a return of the Cold War, when the U.S. was the most important global player.
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