HomeNewsDiplomatic NewsWhat are the economic sanctions on Russia and how they matter?

What are the economic sanctions on Russia and how they matter?

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As the situation in Ukraine becomes more intense and Russian forces continue their advances, the Ukrainian president Volodymyr Zelenskyy has made an appeal from the international community for help. In response to the appeal, different countries have imposed sanctions on Russia with the purpose of hurting the Russian economy. The targets of the sanctions ranged from individuals to institutions, businesses, bank transfers, and exports and imports. Below is an account of the sanctions imposed by different nations on Russia and the significance and implications of these sanctions.

United States:

The US Department of Treasury announced it has sanctioned the two most important banks of Russia: Sberbank and VTB. It has sanctioned other banks like Otkritie, Sovcombank, and Novikombanksv as well.

The USA could end the corresponding banking ties with Sberbank in under a month. So far it has put the banks on the Specially Designated List (SDN), excluding the bank from the US financial system, and banning trade with them.

The USA has also restricted Russian access to American high technology. As per the sanctions, anyone who needs to sell any technology to Russia would require a license which they can request but the request would be denied by default. The sanctions imposed also targeted the Russian Defense Ministry, and the Russian elite families.

European Union

The EU would impose sanctions on Russia’s finance, transport and energy sectors and would impose some restrictions on oil export. It is also considering freezing the European assets of the President and the Foreign Minister. These sanctions would target the Russian elite but there would be no measures to hurt Russia’s energy imports or to exclude Russia from the SWIFT international payment system. The countries of the EU have also rejected the idea of imposing a travel ban on Putin for now as it would make the process of negotiating harder in the future.

Independent decisions by countries include Germany’s blockade of the Nord Stream 2 natural gas pipeline running through the Baltic Sea from Russia to Germany; and Portugal, Estonia, Poland, Czech Republic, and Bulgaria closing their airspace to Russian airlines.

Japan:

Japan’s sanctions on Russia would target the financial institutions and the military equipment export. It would also impose control on high technology and would suspend the visas of some certain Russians. Some major Russian banks are targeted in these sanctions but Sberbank isn’t included.
United Kingdom:
The United Kingdom imposed restrictions on the banks and the Russian elite. Prime Minister Boris Johnson said that the world and history will condemn Putin and he would never be able to wash the blood of Ukraine from his hands. The government of the UK said it would freeze the assets of the major Russian banks, including VTB, and would stop the companies from raising finance in the UK. Apart from sanctioning the finance and some high-end technology, the UK would also ban the Russian airline ‘Aeroloft’ from landing in the UK.

Canada:
Canada’s sanctions on Russia would target several individuals and entities and cancel the export permits. Prime Minister, Justin Trudeau said that the sanctions would target the Russian Security Council, including the Defense Minister, Finance Minister, and the Justice Minister.

Czech Republic:

The Czech Republic banned Russian airlines from its territory and is currently considering taking further action against Russia. The country would also make a speedy exit from the two international banks in Russia and the Russian companies’ access to the Czech Republic funds would also be analyzed.
Australia:
Australia imposed strict sanctions on Russia targeting the Russian elite and lawmakers and criticized countries like China for easing trade restrictions with Russia after it invaded Ukraine. The sanctions against the elite would particularly target the 300 members of the Russian Parliament who authorized the decision to send forces to Ukraine.
New Zealand: 
New Zealand imposed a travel ban on Russia and has stopped trade with the military and security forces of the latter. Prime Minister, Jacinda Arden said the world is sending a clear message to Russia that it would face consequences of what it has done.
Taiwan: 
Taiwan said it follows all the export-control rules in its sanctions towards Russia. The Taiwan Semiconductor Manufacturing Company (TSMC) said it would follow all the rules of the export-control system.
Singapore:

Singapore announced that it would impose “appropriate sanctions and restrictions” on Russia which include banking and financial measures and restricting the export of the items that could possibly be used as weapons against Ukraine

China:

China is home to the largest bank in the world, the Industrial and Commercial Bank of China, which along with the country’s biggest currency trader, Bank of China, is now limiting the finance to purchase raw material from Russia. This decision by China would limit Russian access to foreign currency.

South Korea:

South Korea announced its support for the ban of Russia from SWIFT. It also announced an export ban on strategic material that is covered under the four treaties: NSG, Wassenaar Arrangement, the Australia Group, and MTCR. Other than arms, large- and small-scale technology equipment is also expected to be included in the ban.

As a result of the sanctions, there has been a stark devaluation of the Russian Ruble which led to a severe decline in the Russian economy. This phenomenon has started getting referred to as the Russian Financial Crisis.

It is pertinent to note that this is not the first time that Russia is facing threats of sanctions. In 2014, Russia faced sanctions after annexing Crimea. After a period of recession, the economy of Russia retracted again. The recession period didn’t help Russia to change its policy track. As a result, Russia still exercises influence over the peninsula.

In addition to that, looking at some significant points in history where major sanctions were imposed, the US has sanctioned countries to discourage governmental actions. This includes Venezuela, Cuba, and Iran. The US sanctioned Venezuela but failed to get rid of the authoritarian president. Similarly, the sanction of the US failed to move Fidel Castro from Cuba. Eventually, US sanctions against Iran didn’t help to achieve the desired objectives. Therefore, the implications of US sanctions against Russia may not provide a simple answer.

The economic sanctions on Russia are, without a doubt, harmful for the Russian economy. Nevertheless, it will take time to unfold and right now Putin and his government don’t seem to worry about the short-term economic consequences

TDI
TDIhttps://thediplomaticinsight.com/
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