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US President Joe Biden Alamy Stock Photo

Biden unveils 'severe' economic sanctions to make Putin a 'pariah on international stage'

The US President conceded there was a lack of Western unity for enacting an even tougher measure.

US PRESIDENT JOE Biden has announced “severe” economic sanctions to make Russian President Vladimir Putin a “pariah” for invading Ukraine, but conceded there was a lack of Western unity for enacting an even tougher measure.

In a speech from the White House, Biden said four more banks – including the two biggest, Sberbank & VTB – would be hit with sanctions by Western sanctions. In addition, export controls slapped on sensitive components will “cut off more than half of Russia’s high-tech imports”.

“This is going to impose severe cost on the Russian economy, both immediately and over time,” Biden said.

Those measures, on top of a raft of other sanctions already announced this week, will make Putin “a pariah on the international stage,” Biden said.

“Any nation that countenances Russia’s naked aggression against Ukraine will be stained by association,” he said.

Biden confirmed that for now there was no attempt to put sanctions directly on Putin, who is widely reported to have amassed a huge, secret fortune during his two decades in power.

He also said that a much talked about move to cut Russia from the SWIFT international payments system – essentially crippling its banking sector - was not happening.

Ukraine pleaded for yanking Russia from SWIFT on Thursday, but Biden said that the Western coalition could not come to an agreement.

“It is always an option but right now that’s not the position that the rest of Europe wishes to take,” he said.

G7 closes ranks

Biden spoke to the nation after having attended a virtual, closed-door meeting which lasted an hour and 10 minutes with the Group of Seven.

The group of rich Western democracies – Britain, Canada, France, Germany, Italy, Japan and the United States – said it was standing firm against Russia’s “threat to the rules-based international order”.

Biden tweeted that G7 leaders “agreed to move forward on devastating packages of sanctions and other economic measures to hold Russia to account. We stand with the brave people of Ukraine”.

In a joint statement, the seven industrial powers also said they were “ready to act” to minimize disruptions to world energy markets as a result of Moscow’s assault on Ukraine and with sanctions already targeting a major pipeline from heavyweight energy producer Russia.

In London, British Prime Minister Boris Johnson said Britain was freezing the UK assets of Russian titans in banking and arms manufacturing, sanctioning five more oligarchs, and banning Aeroflot.

And Germany’s vice chancellor, Robert Habeck, signalled on Thursday that the Western sanctions aimed to “cut off the Russian economy from industrial progress (and) dramatically limit access to the European and American markets.”

Next step

A first round of Western sanctions was unleashed on Tuesday, after Putin announced he would send troops as “peacekeepers” to two small areas already controlled by Moscow-backed separatists.

The US government joined European allies in imposing sanctions on two Russian banks, Moscow’s sovereign debt, several oligarchs and other measures.

Then on Wednesday, as the Russian invasion force became clearly primed to attack, Biden announced he was imposing sanctions on the Nord Stream 2 natural gas pipeline from Russia to Germany – one of Moscow’s highest-profile geopolitical projects.

Germany had earlier announced it would block the pipeline from opening for deliveries.

US State Department spokesman Ned Price warned this week that “no Russian financial institution is safe”.

But there are limitations to what Western countries can do at a time when the world is emerging from the Covid pandemic.

Energy and other big Russian sectors are for now considered off limits for sanctions. Even so, oil prices are soaring at over $100 a barrel – a surge that will hurt Western political leaders as voters feel pain at filling stations.

The United States is “not going to do anything which causes an unintended disruption to the flow of energy as the global economic recovery is still underway,” said deputy national security advisor, Daleep Singh.

The SWIFT option in particular is seen as problematic. It would at least for some time disconnect Russia from basic commerce – hugely disrupting Putin’s economy – but it would also carry considerable potential aftershocks to the wider, US-led financial system.

Another weakness to the sanctions strategy is that Putin has prepared to ride out any financial storms, at least temporarily.

Still, Singh said that Russia’s government is facing “strategic failure”.

“You will begin to see a chilling effect in Russia,” he told reporters, calling Thursday’s sanctions “the most consequential ever levied on Russia and arguably the most consequential ever levied in history”.

– © AFP 2022 

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