The US President’s advisors are satisfied with the effects of the previous sanctions against Russia.
(Photo: Bloomberg)
new York The ruble is falling, inflation is rising, hundreds of billions of dollars of Russian money are blocked: the US government feels vindicated in the sanctions that came into force today. Implementing the financial sanctions on Monday before the markets opened has thwarted Russia’s attempts to move foreign assets quickly before then, a senior government official said Monday morning.
“Our strategy is to ensure that Russia’s economy moves backwards while Putin moves forward with his invasion of Ukraine,” the official said. “And no country is safe from sanctions,” he said. “We will ensure that the invasion of Ukraine becomes a strategic mistake for Putin,” said another colleague.
Over the weekend, the US, the EU and other Western allies announced that they would freeze the assets of Russia’s central bank. It is the first time penalties have been imposed on the central bank of any of the big 20 industrialized countries. The US estimates total central bank reserves of $630 billion, most of which is held overseas and denominated in dollars or euros.
All dollar accounts will also be affected by the measures taken against the central bank’s assets, the government official said. The USA can always prevent access to assets in its own national currency – even if these are held in accounts in countries that do not sanction Russia.
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“After the attack on Crimea, the Central Bank of Russia withdrew most of the funds from the US and transferred them to other parts of the world,” he said. “But they still mostly left the assets in dollars. Putin’s reserves are important only to the extent that he can get at them,” the official said.
>> Read more about the market reactions: Moscow postpones the start of the stock exchange, the ruble falls to a record low
In addition, the country’s most important credit institutions are to be excluded from the Swift banking communications network.
Buying oil and gas is exempt from the sanctions
However, there is one major exception to the sanctions: transactions to purchase Russian oil and gas. Above all, Europe and especially Germany obtain a large part of their energy from Russia.
A fact that Robin Brooks, chief economist at the Institute of International Finance (IFF), is extremely critical of: “Every hour of every day we import Russian gas and pay Putin hard currency that helps him fight this war,” Brooks tweeted. “The right thing to do now would be to focus on cutting gas imports today.”
The senior US administration official, on the other hand, defended allowing these international transactions for energy purchases to continue. This is to prevent energy prices from rising further, which could harm the West and benefit Putin.
“We have a common interest in the energy market remaining stable,” the official said. “But in the long term we have a common interest in Russia’s role in the global energy market decreasing.”
More: The way out for Russia’s isolated financial system? Here’s how China’s Swift alternative Cips works