• Wednesday, June 12, 2024
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Sanctions on Russia: Everything you should know

Sanctions on Russia:  Everything you should know

What is a sanction?

Sanctions are frequently used to harm a country’s economy or the personal wealth of individuals, such as politicians.

New sanctions have been imposed on Russia as a result of its invasion of Ukraine by countries around the world.

Financial sanctions

According to a White House fact sheet, Sberbank, Russia’s largest financial institution, and its 25 subsidiaries’ connection to the US financial system has been severed through correspondent and payable-through account sanctions. This action will restrict Sberbank’s ability to conduct dollar transactions.

Sberbank is Russia’s largest bank, accounting for nearly one-third of the Russian banking sector’s total assets. It is heavily connected to the global financial system and is systemically important to the Russian financial system.

European leaders have also frozen the assets of Russia’s central bank, limiting its access to $630 billion in international dollar reserves. Switzerland, France, and Japan are three of the world’s most important countries. The United Kingdom, the United States, Australia, and New Zealand are just a few of the countries taking advantage of Russia’s thriving economy and affluent population.

The Economic Impact on Russia

The Russian stock exchange was closed on Monday. The Russian ruble fell to new lows against the dollar on Monday, falling as high as 30%, while the Russian central bank raised interest rates to 20%.

The fact sheet also revealed that the United States is giving export incentives to countries that adopt equally stringent measures on Russia. “Countries that adopt substantially similar export restrictions are exempted from new U.S. licensing requirements for items produced in their countries”, the report revealed.

EU boycotts Russia

EU sanctions have been imposed, with 70 percent of the Russian financial market and important state-owned companies, notably defense companies, being targeted.

These include dual-use goods, such as high-tech objects, chemicals, or lasers, which can be used for both civilian and military purposes.

The embargo will also cause a delay in payments to Russia for oil and gas exports.

In addition to sweeping restrictions on the Russian-defense sector, the United States government will impose Russia-wide restrictions on sensitive U.S. technologies produced in foreign countries using U.S.-origin software, technology, or equipment.

This includes Russia-wide restrictions on semiconductors, telecommunication, encryption security, lasers, sensors, navigation, avionics and maritime technologies

These severe and sustained controls will cut off Russia’s access to cutting edge technology.

Trade with Russia

The United Kingdom, the European Union, the United States, and other countries have established restrictions on products that can be transported to Russia.

With an export embargo on specific commodities, the EU hopes to make it hard for Russia to rebuild its oil refineries. The Nord Stream 2 gas pipeline from Russia to Germany has been put on hold by Germany.

In an attempt to harm Russia’s economy and connectivity, it has also banned the sale of planes and equipment to Russian airlines.

Read also: Russia – Ukraine Conflict: WTO expresses concern

Individuals are being targeted

The EU, the United Kingdom, the United States, and Canada formed a transatlantic task group to track down and freeze the assets of sanctioned persons and corporations, with a focus on officials and elites close to the Russian government, as well as their families.

“With European sanctions, we are pursuing a thorough census of financial assets, real estate, yachts, and luxury vehicles that might belong to Russian celebrities,” said Bruno Le Maire, France’s Economy and Finance Minister.

Sergei Borisovich Ivanov, Russia’s Special Presidential Representative for Environmental Protection, Ecology, and Transportation, Roman Abramovich, the owner, Chelsea Football club, Nikolai Platonovich Patrushev, Secretary of the Russian Federation Security Council, and Alexander Vedyakhin, first deputy chairman of the Executive Board of Sberbank, Russia’s largest financial institution, are among the wealthy Russians affected by the sanctions on Russia.

Travel

Effective from March 2nd, the United States will ban all Russian planes from its airspace.

What about Belarus?

Belarus, which has been accused of aiding Russia’s invasion, is also facing further sanctions on top of those imposed following a disputed election in 2020. Individuals who are “assisting the Russian war effort” will also be sanctioned, according to the statement by Ursula Gertrud, president of the European Commission.

What has Russia’s response been to the sanctions?

British airlines have been barred from entering Russian airspace or landing at Russian airports, and Russia’s largest airline, Aeroflot, announced on Sunday that all flights to European destinations will be canceled until further notice.