The options on the table for sanctioning Russia, should it embark on a military offensive against Ukraine, are on an unprecedented scale. The United States and the Europeans are considering multiple scenarios, which go as far as banning the import of energy products into Europe and the United States.
The sector is particularly important for Russia: oil and gas revenues made up 80% of its revenue last year. More than half of Russian oil exports and 83% of gas exports go to Europe.
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Sanctions targeting this sector have already been adopted after the annexation of Crimea in 2014, then the nerve attack carried out in 2018 in the United Kingdom by Russian agents. They prohibit the financing of exploration projects in the Arctic. This time, the entire energy sector could be targeted.
“In 2014, there was a desire to send a signal to Russia without suffocating its economy. Today, in the game of poker that is engaged, Joe Biden wants to show that he can strengthen the sanctions “analyzes Olivier Dorgans, lawyer at Hughes Hubbard.
The downside is that it would also have a high cost for Europe, while the United States would be little affected, since it buys almost no Russian oil and gas. This is why the subject divides on both sides of the Atlantic and gives rise to difficult discussions. The new coalition in power in Germany has still not clarified its position on Nord Stream 2, this gas pipeline which is to come into operation and which allows Russian gas to be transported.
“The announcement of sanctions affecting Russian oil and gas deliveries would have an immediate effect on world prices, when prices are already high. It would be very difficult for Europe to do without these deliveries quickly. Since October, on the contrary, it has been asking Russia to supply it with more gas, to bring down prices., recalls Catherine Locatelli, researcher at the CNRS and teacher at the University of Grenoble. Also, in order to give substance to their threat, Europe and the United States are now working on solutions to replace the missing gas for Europe.
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Europeans and Americans are also discussing another option, already mentioned in 2014 and discarded at the time. They could disconnect Russia from the Swift system, the messaging system that handles all banking transactions. This would amount to isolating Russia from the global financial system, complicating all its trade. This has only been done once in the past, against Iran in 2012.
Deprive Russia of electronic components
Another measure being considered: an embargo on certain electronic components similar to the one currently targeting China. “This could affect iPhones which contain a large number of components and patents giving them an American character, but also Intel chips, transistors and a number of elements necessary to build telecommunications networks”explains Olivier Dorgans.
Components, and any finished products that contain these elements, may be prohibited from export to Russia. This could be a serious handicap for Russian industry, while the United States still has a head start in this area. Similar measures have already targeted smaller countries or specific sectors. But never has a state the size of Russia been threatened with so many sanctions at the same time.
Escalation continues around Ukraine
Russia has launched new military maneuvers near the Ukrainian border and in Crimea, hours after the United States decided to put thousands of American soldiers on alert. Kiev must for its part receive a new delivery of arms from the United States and has announced that it has dismantled a group preparing, on Moscow’s orders, armed attacks on its soil.