Embargoes and Sanctions

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    US Escalates Sanctions With a Freeze on Russian Central Bank Assets

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    WASHINGTON — The Treasury Department on Monday moved to further cut off Russia from the global economy, announcing that it would immobilize Russian central bank assets that are held in the United States and impose sanctions on the Russian Direct Investment Fund, a sovereign wealth fund that is run by a close ally of President Vladimir V. Putin.The moves are meant to curb Russia’s ability to use its war chest of international reserves to blunt the impact of sanctions that the United States and European allies have enacted in response to Russia’s invasion of Ukraine.“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine,” Treasury Secretary Janet L. Yellen said in a statement.Russia has spent the last several years bolstering its defenses against sanctions, amassing $643 billion in foreign currency reserves in part by diverting its oil and gas revenues and reducing its holdings of U.S. dollars. New restrictions by the United States and its allies against selling rubles to Russia aim to undercut the country’s ability to support its currency in the face of new sanctions on its financial sector.As a result of the sanctions, Americans are barred from taking part in any transactions involving the Russian central bank, Russia’s National Wealth Fund or the Russian Ministry of Finance.Any Russian central bank assets that are held in U.S. financial institutions are now stuck, and financial institutions outside the United States that hold dollars for the bank cannot move them. Because the United States has acted in coordination with European allies, Russia’s ability to use its international reserves to support its currency has been curbed. Japan joined with Western allies in imposing the central bank sanctions, freezing Russia’s yen-denominated foreign reserves, the news agency Nikkei reported.“This is simply unprecedented to a scale and scope that we haven’t seen since the Cold War,” said John E. Smith, the former director of the Treasury Department’s Office of Foreign Assets Control. “Sanctions against the Central Bank of Russia and the central bank’s assets held worldwide are simply beyond comparison to previous sanctions regimes, particularly involving a major power like Russia.”It is not clear how much of Russia’s currency reserves are held in U.S. dollars, and Biden administration officials declined to provide an estimate in a briefing with reporters on Monday.The sanctions on the Russian Direct Investment Fund represent an expansion of the effort to sever Russian financial ties from the rest of the world and punish Russian elites. The Treasury Department described the fund, which was created in 2011 and operates in the insurance and financial services industries, as Mr. Putin’s “slush fund” and emblematic of Russia’s kleptocracy. The chief executive of the fund is Kirill Dmitriev, a close ally of Mr. Putin.The fund, according to its website, works with the “world’s foremost investors” to make direct investments in leading and promising Russian companies. It has reserved capital of $10 billion under management and has attracted over $40 billion into the Russian economy. The sanctions ban any Americans from investing in the fund and freeze any assets that it holds in the United States.Senior Biden administration officials said the actions were effective immediately. They noted that the value of Russia’s ruble had already fallen more than 30 percent over the weekend and that Russia’s central bank more than doubled its interest rate to try to mitigate the fallout. They also predicted that inflation would soon spike and economic activity would contract as the country’s currency lost value.Even nations that usually remain neutral in global disputes entered the fray.Switzerland, a favorite destination for Russian oligarchs and their money, announced on Monday that it would freeze Russian financial assets in the country, setting aside its tradition of neutrality to join the European Union and a growing number of nations seeking to penalize Russia for the invasion of Ukraine. The country said it would immediately freeze the assets of Mr. Putin, Prime Minister Mikhail V. Mishustin and Foreign Minister Sergey V. Lavrov, as well as all 367 individuals the European Union imposed sanctions on last week.“These are probably the most serious economic sanctions ever imposed on a country,” said Elina Ribakova, the deputy chief economist of the Institute of International Finance, predicting that Russia’s economy could contract by double digits.The U.S. moves represent a significant escalation of sanctions, although the Treasury Department said it was making an exemption to ensure that transactions related to Russia’s energy exports could continue. It is issuing a “general license” to authorize certain energy-related transactions with the Russian central bank.The carve-out means that energy payments will continue to flow, mitigating risks to global energy markets and Europe, which is heavily reliant on Russian oil and gas exports. U.S. officials said that they wanted energy prices to remain steady and that they did not want a spike in prices to benefit Mr. Putin. However, they noted that they were considering measures that would restrict Russia from acquiring technology it needs to be an energy production leader in the long term.“The U.S. and other Western economies have deployed a set of highly potent financial weapons against Russia with remarkable speed,” said Eswar Prasad, a Cornell University economics professor and a former International Monetary Fund official. “Cutting off access to global financial markets and to a country’s war chest of international reserves held in currencies of Western economies amounts to a crippling financial blow, especially to an economy like Russia’s that relies to such a large extent on export revenues.”The measures announced on Monday were born from lessons the United States has learned since imposing sanctions on Russia after its annexation of Crimea in 2014. A senior Biden administration official said that Mr. Putin began amassing international reserves after 2014 to blunt the impact of future sanctions and that the United States, in preparing to exert new pressure on Russia’s economy, determined during months of preparation with European allies that it would need to target Russia’s central bank directly.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More

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    U.S. escalates sanctions with a freeze on Russian central bank assets.

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    The Treasury Department on Monday moved to further cut off Russia from the global economy, announcing that it would immobilize Russian Central Bank assets that are held in the United States and impose sanctions on the Russian Direct Investment Fund, a sovereign wealth fund that is run by a close ally of President Vladimir V. Putin.The moves are meant to curb Russia’s ability to use its war chest of international reserves to blunt the impact of sanctions that the United States and European allies have enacted in response to Russia’s invasion of Ukraine.“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine,” Treasury Secretary Janet L. Yellen said in a statement.As a result of the sanctions, Americans are barred from taking part in any transactions involving the Russian Central Bank, Russia’s National Wealth Fund or the Russian Ministry of Finance.The moves represent a significant escalation of U.S. sanctions, although the Treasury Department said it was making an exemption to ensure that transactions related to Russia’s energy exports can continue. It is issuing a “general license” to authorize certain energy-related transactions with the Russian Central Bank.On Saturday, the European Commission, Britain, Canada, France, Germany, Italy and the United States said they would remove some Russian banks from the SWIFT financial messaging system, essentially barring them from international transactions, and impose new restrictions on Russia’s Central Bank to prevent it from using its large international reserves to sidestep sanctions.Russia has spent the last several years bolstering its defenses against sanctions, amassing $643 billion in foreign currency reserves in part by diverting its oil and gas revenues. New restrictions by the United States and its allies against selling rubles to Russia aim to undercut the country’s ability to support its currency in the face of new sanctions on its financial sector. More

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    U.S. and Key Allies Will Bar Some Russian Banks From SWIFT

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    WASHINGTON — The Biden administration and key allies announced on Saturday that they would remove several of the largest Russian banks from the SWIFT financial messaging system, essentially barring them from international transactions. They also said they would impose new restrictions on Russia’s central bank to prevent it from using its large international reserves to undermine sanctions.The actions, agreed to by the European Commission, Britain, Canada, France, Germany, Italy and the United States, represented a significant escalation in the effort to impose severe economic costs on Russia over President Vladimir V. Putin’s decision to invade Ukraine.“Russia’s war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending,” the countries said in a joint statement. “We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin.”The action was a remarkable change of direction for European powers that, until recent days, were reluctant to end a 30-year effort to integrate Russia in the European economy. Now, like the Biden administration, European nations appear to be headed toward a policy of containment.But, out of a sense of political self-preservation, they stopped short of barring energy transactions with Russia. The result is that Germany, Italy and other European nations will continue purchasing and paying for natural gas that flows through pipelines from Russia — through Ukrainian territory that is suddenly a war zone.Some in Europe, along with President Volodymyr Zelensky of Ukraine, had called for all Russian institutions and individuals to be cut off from SWIFT in an effort to bring the Russian economy to its knees. About 40 percent of the Russian government’s budget comes from energy sales.Nonetheless, Ursula von der Leyen, the president of the European Commission, said that “cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports.”Ms. von der Leyen said that the trans-Atlantic coalition would also try to cripple Russia’s central bank by freezing its transactions and making it “impossible for the central bank to liquidate assets.”The targeting of Russia’s central bank could, in the end, prove more consequential than the SWIFT measures. Russia has spent the last several years bolstering its defenses against sanctions, amassing more than $630 billion in foreign currency reserves by diverting its oil and gas revenue. Those reserves can be used to prop up the ruble, whose value has fallen dramatically amid the latest rounds of sanctions.Biden administration officials said on Saturday that there would be new restrictions by the United States and allies against selling rubles to Russia, undercutting the country’s ability to support its currency in the face of new sanctions on its financial sector. That, in turn, could cause inflation — and while administration officials did not say so explicitly, they are clearly hoping that could fuel protests against Mr. Putin’s rule in Russia.“We know that Russia has been taking steps since 2014 to sanctions-proof its economy, in part through the stockpiling of foreign exchange reserves,” said Emily Kilcrease, a senior fellow at the Center for a New American Security. “The central bank sanctions will limit their ability to leverage this asset, along with constraining their ability to conduct monetary policy of any sort to manage the economic damage from other sanctions.”The United States and its allies also took measures to put pressure on Russia’s elites. A senior American official, briefing reporters on Saturday evening, said that Europe and the United States would create a task force to “identify, hunt down and freeze the assets” of Russian companies and oligarchs that are subject to sanctions, “their yachts, their mansions and any ill-gotten gains that we can find and freeze under the law.” He said the goal would also be to throw them out of “their luxury apartments” and end “their ability to send their kids to fancy colleges in the West.”The idea is to strike those who are closest to Mr. Putin and undermine their ability to live in both Russia and the West. One step, the United States and its allies said, will be to limit the sale of so-called golden passports that allow wealthy Russians who are connected to the Russian government to become citizens of Western nations and gain access to their financial systems.While the steps are some of the harshest taken yet, the announcement falls short of a blanket cutoff of Russia from SWIFT, which some officials see as a nuclear option of sorts. Such a move would have essentially severed Russia from much of the global financial system.And some experts say that it may only drive Russia to expand the alternative to the SWIFT system that it created several years ago when it began attempting to “sanction-proof” its economy. But Russia’s equivalent system is primarily domestic; making it a competitor to SWIFT, officials say, would require it to team up with China.The moves on Saturday came on the same day that Germany’s chancellor, Olaf Scholz, announced that his government was approving a transfer of antitank weapons to the Ukrainian military, ending his insistence on providing only nonlethal aid, such as helmets.At the same time, in a post on Twitter, Germany’s foreign minister, Annalena Baerbock, and its economy minister, Robert Habeck, acknowledged that the country’s government was now moving from opposing a SWIFT ban to favoring a narrowly targeted one.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More

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    Before Ukraine Invasion, Russia and China Cemented Economic Ties

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    Facing a wary United States and worried about depending on imports by sea, China is buying more energy and food from its northern neighbor.BEIJING — As Russia wreaks havoc in Ukraine, Moscow has a powerful economic ally to help it resist Western sanctions: China.Chinese purchases of oil from Russia in December surpassed its purchases from Saudi Arabia. Six days before the military campaign began, Russia announced a yearslong deal to sell 100 million tons of coal to China — a contract worth more than $20 billion. And hours before Russia began bombing Ukraine, China agreed to buy Russian wheat despite concerns about plant diseases.In a throwback to the 1950s, when Mao Zedong worked closely with Joseph Stalin and then Nikita Khrushchev, China is again drawing close to Russia. As the United States and the European Union have become wary of China, Beijing’s leaders have decided that their best geopolitical prospects lie in marrying their vast industrial might with Russia’s formidable natural resources.Recent food and energy deals are just the latest signals of China’s economic alignment with Russia.“What happened up to now is only a beginning for both the Russian expansionism by force and the Chinese economic and financial support to Russia,” Shi Yinhong, a professor of international relations at Renmin University in Beijing, said in a text message. “This does not mean that China directly supports in any degree that expansionism — this only means that Beijing strongly feels the necessity to maintain and boost strategic partnership with Moscow.”The United States and the European Union are hoping that sanctions force Russia to reconsider its policies. But Wang Wenbin, the Chinese foreign ministry’s spokesman, said at a briefing on Friday that China opposed the use of sanctions.“Sanctions are never an effective way to solve the problems,” he said. “I hope relevant parties will still try to solve the problem through dialogue and consultation.”At the same time, Russia’s invasion of Ukraine has imposed an awkward diplomatic quandary on China by violating the principle of national sovereignty that the Chinese leaders regard as sacrosanct. While President Xi Jinping of China has not criticized Russia publicly, he could use his country’s economic relationship with its northern neighbor as leverage to persuade the Russians to resolve the crisis quickly.Mr. Xi and President Vladimir V. Putin of Russia spoke by phone on Friday. An official Chinese statement said afterward that Mr. Xi had expressed support for Russia in negotiating an agreement with Ukraine — a stance that Mr. Putin has also favored, provided that Ukraine accepts his terms.Until now, much of China’s energy and food imports came across seas patrolled by the U.S. or Indian navies. As China’s leaders have focused lately on the possibility of conflict, with military spending last year growing four times as fast as other government spending, they have emphasized greater reliance on Russia for crucial supplies.China and Russia share a nearly 2,700-mile border, and in recent years China has become Russia’s largest source of imports and the biggest destination for its exports.“Given the geopolitical tensions, Russia is a very natural geopolitical partner,” said Andy Mok, a senior research fellow at the Center for China and Globalization in Beijing.Initial Western sanctions on Russia have focused on limiting technology exports and imposing financial penalties. For now, U.S. officials have avoided targeting consumer goods, agricultural products and energy, to try to avoid harming ordinary people and further fueling inflation.China is the world’s dominant manufacturer of electronics, machinery and other manufactured goods, and has been supplying them to Russia in exchange for food and energy.A train carrying coal in Yekaterinburg, Russia, in 2020. China’s imports of Russian coal have more than doubled in the past three years.Maxim Babenko for The New York TimesThe new cornerstone of relations between China and Russia is the Sino-Russian nonaggression pact concluded in Beijing on Feb. 4. Mr. Xi and Mr. Putin reached the deal hours before the opening ceremony of the Beijing Winter Olympics and issued a statement saying the countries’ friendship “has no bounds.”The pact freed Mr. Putin to move troops and military equipment from Russia’s border with China to its border with Ukraine while ushering in closer economic cooperation.“The joint statement is strong and has lasting consequences for the new world order,” said Jean-Pierre Cabestan, a research professor of political science at Hong Kong Baptist University.The Chinese and Russian governments share many values, particularly their antipathy to sanctions the West imposes on human-rights grounds. “The two sides firmly believe that defending democracy and human rights should not be used as a tool to exert pressure on other countries,” their pact on Feb. 4 said.When the Obama administration imposed sanctions on Russia after its invasion of Ukraine’s Crimea region in 2014, China helped Russia evade them.It is not clear if China will help Russia evade sanctions put in place this week. On Tuesday, the Biden administration added to previous measures by announcing sanctions against Russia’s two largest financial institutions and sweeping restrictions on advanced technologies that can be exported to Russia. The technological curbs, when taken in concert with allies, would block roughly a fifth of Russian imports, the administration said.Chinese companies that circumvent those rules could face escalating punishment by the United States, including criminal and civil penalties, said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics. Those businesses could also be cut off from American technology and the financial system.ZTE and Huawei, two Chinese firms that were barred from receiving American technological exports, attracted the attention of the U.S. government in part for evading sanctions on Iran.“The interesting question is: Is China going to comply with this?” Mr. Chorzempa said. China also has a law designed to penalize companies for following extraterritorial sanctions by countries like the United States, he said, all factors that “could put companies in a real bind.”“If they don’t comply with the U.S., they’re in trouble with the U.S., but if they don’t comply with China, they could also face penalties in China,” he said.Of course, collecting fines from companies that are unwilling to pay and monitoring whether businesses comply with the rules could be difficult, Mr. Chorzempa added. “It’s already proving difficult to monitor the things that are already controlled, and if you expand that list, that’s going to be a real challenge to verify what’s going to Russia,” he said.Russia’s Attack on Ukraine and the Global EconomyCard 1 of 6A rising concern. More

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    How the U.S. and Europe Are Targeting Putin With Sanctions

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    WASHINGTON — The United States and Europe moved on Friday to personally penalize President Vladimir V. Putin of Russia for his invasion of Ukraine, imposing sanctions aimed at freezing his wealth while continuing to try to cripple his military and economic capabilities through other new restrictions.White House officials said that President Biden intended to impose sanctions and freeze the assets of Mr. Putin, along with Sergey V. Lavrov, his foreign minister. Other Russian national security officials will also be subject to the sanctions, and the United States plans to impose a travel ban to restrict the movement of Russia’s top leaders.The decisions align the United States with its European allies, whose governments made similar moves earlier in the day.“Treasury is continuing to inflict costs on the Russian Federation and President Putin for their brutal and unprovoked assault on the people of Ukraine,” Treasury Secretary Janet L. Yellen said in a statement announcing the sanctions.European leaders met into the early hours of Friday to hammer out an agreement over a new set of sanctions aimed more broadly at the Russian economy and at Mr. Putin himself, as his troops advanced in their invasion of Ukraine.One of the decisions was to freeze the assets of Mr. Putin and Mr. Lavrov, but not to impose a travel ban on them, according to three European Union diplomats and officials familiar with the draft E.U. sanctions.The new American and European sanctions are a provocative step given how rarely governments, including the United States, take aim at foreign leaders. Yet they may prove largely symbolic given that the status of Mr. Putin’s financial holdings has been cloaked in mystery and his money is not believed to be held in the United States.Jen Psaki, the White House press secretary, said that imposing sanctions directly on Mr. Putin “sends a clear message about the strength of the opposition to the actions by President Putin and the direction in his leadership of the Russian military.”Speaking to reporters on Friday, Ms. Psaki said the decision had been made in the past 24 hours after consultation with European leaders. She would not comment on what impact she believed the sanctions would have on Mr. Putin. But she underscored that they were a demonstration of trans-Atlantic unity in opposition to his actions.While the United States has imposed sanctions on and frozen the assets of some Russian oligarchs, targeting Mr. Putin directly was a significant escalation. It puts him in similar company with Presidents Bashar al-Assad of Syria and Aleksandr G. Lukashenko of Belarus, both of whom have been subject to personal sanctions by the U.S. government.Adam M. Smith, a former Treasury Department official who is now a partner at the law firm Gibson, Dunn & Crutcher, said placing sanctions on Mr. Putin sent a significant message given that the United States had never taken a similar action against such a powerful leader. However, he said that it was unlikely that the sanctions would affect Mr. Putin’s wealth or change his calculus in Ukraine.“I don’t think Putin is really going to lose much sleep on being sanctioned,” Mr. Smith said.The personal sanctions add to the growing list of restrictions that the Biden administration, in coordination with Europe, has rolled out. The United States has placed sanctions on major Russian financial institutions and the nation’s sovereign debt, and on Thursday, it took steps to prevent Russia from gaining access to American technology critical for its military, aerospace industry and overall economy.But the attempt to punish Mr. Putin has exposed the degree to which many European countries rely on Russia for energy, grains and other products. A package of penalties, which European leaders described as unprecedented in terms of its size and reach, was difficult to forge consensus on, even as Russian forces approached Kyiv, Ukraine’s capital.Europe’s economies are deeply intertwined with Russia’s economy, and the more the European Union leans into Russian sanctions, the more its own members will also feel the pain. The toughest of sanctions could even derail the bloc’s tentative recovery from the recession induced by the coronavirus pandemic.That is why negotiators left off the table particularly difficult elements, such as imposing sanctions on oil and gas companies or banning Russia from SWIFT, the platform used to carry out global financial transactions on commodities including wheat. E.U. officials said one key reason for their reluctance to cut off Russia’s access to the platform was that Europe uses it to pay for the gas it buys from Russia.Experts said that the approved sanctions were tough and that the speed at which the European Union was moving was impressive. But some were critical of the leaders for not going further.President Volodymyr Zelensky of Ukraine was scathing in a statement posted on Facebook on Friday.“This morning, we are defending our state alone,” he said. “Like yesterday, the world’s most powerful forces are watching from afar. Did yesterday’s sanctions convince Russia? We hear in our sky and see on our earth this was not enough.”Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More

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    Biden Hits Russia With Broad Sanctions for Putin’s War in Ukraine

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    The penalties will affect Russia’s biggest banks, its weapons industry, its largest energy company and families close to President Vladimir V. Putin. The country’s stock market has plummeted.WASHINGTON — President Biden, vowing to turn President Vladimir V. Putin of Russia into a “pariah,” announced tough new sanctions on Thursday aimed at cutting off Russia’s largest banks and some oligarchs from much of the global financial system and preventing the country from importing American technology critical to its defense, aerospace and maritime industries.The package unveiled by the U.S. government is expected to ripple across companies and households in Russia, where anxiety over Mr. Putin’s full-scale invasion of Ukraine has already begun setting in. The nation’s stock market fell more than 30 percent on Thursday, wiping out a huge amount of wealth.The new U.S. sanctions include harsh penalties against the two largest Russian financial institutions, which together account for more than half of the country’s banking assets.U.S. officials are also barring the export of important American technology to Russia, which could imperil industries there. In addition, the United States will limit the ability of 13 major Russian companies, including Gazprom, the state-owned energy conglomerate, to raise financing in Western capital markets. And it is penalizing families close to Mr. Putin.The sanctions against the financial giants will cause immediate disruptions to Russia’s economy but are manageable over the longer term, analysts said. The technology restrictions, on the other hand, could cripple the ability of certain Russian industries to keep up.“Putin chose this war, and now he and his country will bear the consequences,” Mr. Biden said in remarks from the East Room of the White House. “This is going to impose severe cost on the Russian economy, both immediately and over time.”It was the second round of American sanctions imposed on Russia this week, following a more modest tranche that Mr. Biden announced on Tuesday after Mr. Putin’s government recognized two Russia-backed insurgent enclaves in eastern Ukraine as independent states.It was accompanied by a blizzard of sanctions from other countries announced on Thursday. Britain adopted penalties largely in line with the American ones, with additions such as barring Aeroflot, the Russian airline, from operating in its territory. The European Union announced measures including bans on large bank deposits in the European Union and halts in many technological exports to Russia, including semiconductors. Japan and Australia also unveiled various sanctions.One question in the days and weeks ahead is whether the United States and its European allies can stay in lock step on Russia’s actions, as they claim they will. Secretary of State Antony J. Blinken spoke on both Wednesday and Thursday with the European Union’s top diplomat, Josep Borrell Fontelles, a sign of the intense efforts to coordinate a joint response.The new suite of sanctions from Washington includes some of the tougher penalties that U.S. officials had said were being considered. There had been debate about whether constricting the operations of Russia’s biggest banks and other large companies would cause too much pain to ordinary Russians and to citizens in other countries.Russia has a $1.5 trillion economy, the world’s 11th-largest. The global economy remains precarious at the start of the third year of the pandemic, and many governments are grappling with the highest inflation rates in decades. The price of crude oil has been surging this week because of Mr. Putin’s actions.“I know this is hard, and that Americans are already hurting,” Mr. Biden said on Thursday. “I will do everything in my power to limit the pain the American people are feeling at the gas pump. This is critical to me.”But he added that Mr. Putin’s aggression could not go unanswered. “If it did, the consequences for America would be much worse,” he said. “America stands up to bullies. We stand up for freedom. This is who we are.”Residents lined up at a bus station in Kyiv, Ukraine’s capital, on Thursday.Emile Ducke for The New York TimesDaleep Singh, the deputy national security adviser for international economics, told reporters that over time, the sanctions would “translate into higher inflation, higher interest rates, lower purchasing power, lower investment, lower productive capacity, lower growth and lower living standards in Russia.”But it is unclear whether the sanctions will compel Mr. Putin to halt his offensive, in which dozens of Ukrainian soldiers and civilians have already been killed, according to Ukrainian officials. If Mr. Putin pushes forward, then the sanctions will serve as a punishment, Mr. Blinken has said.Some analysts are skeptical that the pain of the sanctions will break through to Mr. Putin, who has isolated himself during the pandemic, even from some of his close advisers.Alexander Gabuev, a scholar at the Carnegie Moscow Center, said the Russian leader and the top officials around him had adopted a bunker mentality, understanding that their lives and wealth depend on their status at home, not within Western nations. They also see themselves as being on the frontline of an ideological contest with the United States and its allies, he said.Furthermore, the Russian government adopted fiscal policies to shield the country’s economy after the United States and Europe imposed sanctions in 2014 following Mr. Putin’s first invasion of Ukraine, and some top security officials and oligarchs have profited off the changes.Edward Fishman, who oversaw sanctions policy at the State Department after Russia annexed Crimea in 2014, said he was surprised at the breadth of the new U.S. sanctions beyond the financial and technology sectors. He said the measures limiting access to capital markets for Russian state-owned enterprises in industries as varied as mining, metals, telecommunications and transportation “cut across the commanding heights of the Russian economy.”Even as Russia’s stock market plunged and the ruble fell to a record low against the dollar, the country may avoid all-out financial panic. Sergey Aleksashenko, a former first deputy chairman of the Central Bank of Russia and former chairman of Merrill Lynch Russia, said the financial measures were likely to inflict serious but ultimately bearable pain.“They will be able to manage what is related to the financial sector,” Mr. Aleksashenko said. “Maybe it will be complicated, maybe it will be expensive — but it’s doable.”More damaging, albeit over a longer term, Mr. Aleksashenko said, would be the new technology export controls.The export controls imposed by the Commerce Department are aimed at severing the supply of advanced technologies to Russia, such as semiconductors, computers, lasers and telecommunications equipment.The measures are expected to stop direct technological exports from American companies to Russia, potentially hobbling the Russian defense, aerospace and shipping industries, among others. They also go beyond previous sanctions issued by the U.S. government by placing new export limits on products that are manufactured outside the United States but use American equipment or technology.The administration said the measures, taken in concert with allies, would restrict more than $50 billion of key inputs to Russia. The country imported $247 billion of products in 2019, according to the World Bank.“This is a massive set of technology controls,” said Emily Kilcrease, a senior fellow at the Center for a New American Security.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More

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    Why didn’t the U.S. cut off Russia from SWIFT? It’s complicated.

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    President Biden said on Thursday that the United States and Europe were united in their efforts to confront Russian aggression toward Ukraine with aggressive sanctions. However, there was one area where he suggested disagreement: SWIFT.The Belgian messaging service, formally known as the Society for Worldwide Interbank Financial Telecommunications, connects more than 11,000 financial institutions around the world. It is viewed as a potential nuclear option in the world of sanctions because, if Russia was kicked off SWIFT, the nation would essentially be severed from much of the global financial system.But doing so would not be simple and could come with its own set of costly complications for countries outside Russia, many of which are dependent on the country for energy, wheat and other commodities. That has made some nations skittish about pulling the trigger.SWIFT is a global cooperative of financial institutions that began in 1973 when 239 banks from 15 countries got together to figure out how to best handle cross-border payments. It does not actually hold or transfer funds, but it allows banks and other financial companies to alert one another of transactions that are about to take place.Blocking Russia from SWIFT would curb its ability to conduct international financial transactions by forcing importers, exporters and banks to find new ways to transmit payment instructions. Because of Europe’s heavy reliance on Russian energy exports, analysts said, there is a reluctance among some euro area leaders to take that step and risk those purchases by making doing business with Russia more costly and complicated.The Financial Times reported on Thursday that Prime Minister Boris Johnson of Britain was pushing hard for Russia to be removed from SWIFT, while Chancellor Olaf Scholz of Germany said such a move should not be included in a European Union sanctions package.Mr. Biden made the case on Thursday that the sanctions the United States imposed on Russian financial institutions would be as consequential as excising Russia from SWIFT. He said kicking Russia off the platform remains “an option” but that most of Europe opposes such a move for now.“It is always an option,” Mr. Biden said. “But right now, that’s not the position that the rest of Europe wishes to take.”The United States and Europe disagreed on whether to oust a country from SWIFT before, most recently in 2018, when the Trump administration wanted to cut Iran’s access. Ultimately, SWIFT cut ties to Iranian banks out of fear of being in violation of sanctions against that country.Still, sanctions experts said that SWIFT was often overhyped as a tool and that cutting access could actually backfire by forcing Russia to find alternate ways to participate in the global economy, including forging stronger ties with China or developing a digital currency.Russia’s Attack on Ukraine and the Global EconomyCard 1 of 6A rising concern. More

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    Ukraine Crisis: What Happens Next for the Rest of the World?

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    Europe faces a new refugee crisis, and harsh economic penalties to punish Russia are expected to reverberate worldwide.WASHINGTON — Much of the world woke up on Thursday to the specter of an all-out war in Europe after President Vladimir V. Putin of Russia ordered his troops to invade Ukraine. That left millions of people — in Ukraine and Eastern Europe, but also in the United States and elsewhere — wondering how the conflict would affect their lives.At least 40 Ukrainian solders were reported killed in the hours after the invasion, with estimates of tens of thousands of deaths over the course of the conflict. But beyond the anticipated bloodshed, economic penalties to punish Russia will reverberate worldwide.Rising energy costs and potentially slowing supply chains will take their toll on consumers. Russian cyberattacks could cripple electronic infrastructure. A new refugee crisis will require international assistance. And an era of relative calm in the West that has pervaded since the end of the Cold War might be coming to a close.Here is what might happen next on the military, economic and diplomatic fronts.More military forces head to NATO’s eastern borders.Many of the U.S. troops who arrived in Poland this month have been working with Polish forces to set up processing centers to help people fleeing Ukraine.Czarek Sokolowski/Associated PressNATO announced on Thursday that it was sending reinforcements to its eastern flank, joining some 6,500 U.S. troops the Pentagon has already dispatched to Eastern Europe and the Baltics.“We are deploying additional defensive land and air forces to the eastern part of the alliance, as well as additional maritime assets,” NATO said in a statement. “We have increased the readiness of our forces to respond to all contingencies.”The Pentagon is also repositioning about 1,000 troops in Europe. About 800 U.S. troops are moving to the Baltics from Italy; 20 Apache helicopters are heading to the Baltics from Germany, and 12 Apaches are going to Poland from Greece. Eight F-35 strike fighters are heading to Lithuania, Estonia and Romania from Germany, the Pentagon said.In addition, U.S. Army troops, including those from the 82nd and 101st Airborne divisions, are preparing to move closer to Poland’s border with Ukraine to help process people fleeing the country, an Army spokesman said on Thursday.Many of the 5,500 troops from the 18th Airborne Corps who arrived in Poland this month have been working with the State Department and Polish forces to set up three processing centers near the border to help deal with tens of thousands of people, including Americans, who are expected to flee Ukraine.In Jasionka, Poland, an indoor arena has been outfitted with bunk beds and supplies for up to 500 people; U.S. officials say that capacity could be quickly expanded. In Austria, Chancellor Karl Nehammer said on Wednesday that he was prepared to accept refugees. The State Department and the U.S. Agency for International Development are funding relief organizations that are currently providing food, water, shelter and emergency health care to people in the region who have fled to escape the violence.In the days to come, the C.I.A. will assess what kind of assistance it can provide to Ukraine. If a Ukrainian resistance develops in parts of the country that Russia seeks to control, the agency could secretly supply partisan forces with intelligence and, potentially, armaments.“We need to support the resistance to the invasion and the occupation in all ways possible,” said Mick Mulroy, a former C.I.A. paramilitary officer and senior Pentagon official in the Trump administration. “Our special operations and intelligence assets with an extensive knowledge base from 20 years of fighting insurgencies should be put to immediate use.”‘Severe’ sanctions from the U.S. and Europe.The Treasury Department is likely to put one or more Russian state-owned banks on the agency’s list for the harshest sanctions.Natalia Kolesnikova/Agence France-Presse — Getty ImagesPresident Biden on Thursday plans to announce “severe sanctions” against Russia to try to deter Moscow from carrying out further violence in Ukraine and to punish it for its actions, U.S. officials said.The next set of economic sanctions is expected to be much harsher than what U.S. officials had described as a first tranche that was imposed on Monday and Tuesday. Mr. Biden is likely to order the Treasury Department to put one or more large Russian state-owned banks on the agency’s list for the harshest sanctions, known as the S.D.N. list. That would cut off the banks from commerce and exchanges with much of the world and affect many other Russian business operations.The Biden administration said on Tuesday that it was imposing that kind of sanctions on two banks, VEB and PSB, but those are policy banks with no retail operations in Russia.Administration officials have studied how sanctions would affect each of the big banks, including Sberbank and VTB, Russia’s two largest banks. Sberbank has about a third of the assets in the country’s banking sector, and VTB has more than 15 percent. Some experts are skeptical that the administration would put those two banks on the S.D.N. list for fear of the consequences for the Russian and global economies. For now, U.S. officials are not ready to cut off all Russian banks from Swift, the important Belgian money transfer system used by more than 11,000 financial institutions worldwide.The Treasury Department has other sanctions lists that would impose costs while inflicting less widespread suffering. For example, it could put a bank on a list that prevents it from doing any transactions involving dollars. Many international commercial transactions are done in U.S. dollars, the currency that underpins the global economy.The Treasury Department is also expected to put more Russian officials, businesspeople and companies on the sanctions lists.By Thursday afternoon in Russia, the nation’s stock market had fallen nearly 40 percent.The Commerce Department has been making plans to restrict the export of certain American technologies to Russia, a tactic that the Trump administration used to hobble Huawei, the Chinese telecommunications company. The controls would damage the supply chain for some Russian sectors. U.S. officials said their targets included the defense industry and the oil and gas industry.European officials are expected to announce sanctions similar to many of the ones planned by the United States, as they did this week. However, they have been more wary of imposing the harshest sanctions because of the continent’s robust trade with Russia.Although Mr. Biden has said he will contemplate any possible sanctions, U.S. officials for now do not plan big disruptions to Russia’s energy exports, which are the pillar of the country’s economy. Europe relies on the products, and surging oil prices worldwide would cause greater inflation and more problems for politicians. However, Germany announces this week that it would not certify Nord Stream 2, a new natural gas pipeline that connects Russia and Western Europe. On Wednesday Mr. Biden announced sanctions on a subsidiary of Gazprom, the large Russian energy company, which built the pipeline and had planned to operate it.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More