Biden threatens devastating sanctions if Russia invades Ukraine. Here's what that might look like.
WASHINGTON – President Joe Biden vows that Russia will face “swift and severe costs” if Russia invades Ukraine, but following through on that threat will require a tough balancing act since sanctions could ripple across the economy.
Some top European allies of the U.S. have raised concerns about various options, warning that Russian President Vladimir Putin could retaliate by cutting off oil and gas supplies that are vital to their country.
Europe gets as much as 40% of its gas from Russia, and countries like Germany could be left in the cold if Putin decides to end their supplies.
What could sanctions against Russia look like?
Here’s what we know:
Putin a target
Putin and members of his inner circle could personally pay a price if Russia invades Ukraine.
Two dozen Senate Democrats have filed legislation that would allow the Biden administration to block all U.S. property transactions and interests in property held by Putin and more than a dozen other top officials in Russia’s government and military if Russia invades. The White House quickly announced its support for the measure.
Particularly irksome to Putin himself, the bill would require the U.S. State Department to issue a detailed report on Putin's personal net worth and his assets, along with those of his inner circle.
A separate bill filed by Rep. Jim Banks, R-Ind., would ramp up sanctions against Putin now instead of waiting for an invasion.
The measure, which is co-sponsored by 40 other House Republicans, urges the administration to consider sanctions for many in Russia’s upper echelon, including members of Putin’s family and the woman purported to be his longtime girlfriend, Alina Kabaeva, a former Olympic gymnast.
Targeting a foreign leader personally would be unusual but not unprecedented. Two years ago, the Democratic-led House approved a biting sanctions bill that would have punished Turkish President Recep Tayyip Erdogan personally over Turkey’s assault on U.S.-allied Kurdish forces in Syria.
The legislation, which stalled in the Senate, called for a public assessment of Erdogan’s net worth amid questions about his finances in Turkey.
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Moving money around the world
One of the toughest actions the Biden administration and its NATO allies could take against Russia would be to remove it from the SWIFT financial system that's used to transfer money from bank to bank around the globe. Kicking Russia out of the system would remove it from most international financial transactions, including international profits from oil and gas production, which account for more than 40% of the country’s revenue.
The downside? The U.S. economy and those of its allies also could suffer, since it could discourage some Western banks from dealing with Russia, and Moscow could retaliate by cutting oil and gas exports.
“The toughest stick won’t always ultimately be the most intelligent sword,” Annalena Baerbock, Germany’s foreign minister, told reporters in January.
Reuters, quoting sources in the U.S. and Europe, reported last week that banning Russia from SWIFT is no longer on the table.
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Nord Stream 2
Biden has vowed to stop the completed but not-yet-operational Nord Stream 2 gas pipeline from Russia to Germany if Russia invades Ukraine.
The $11 billion undersea pipeline, a priority for Putin, would allow Russia to send gas to its customers in central and eastern Europe without using land routes that run through the Baltic states and Ukraine. Right now, Russia pays Ukraine around $2 billion a year in transit fees to send the gas through its lines.
The pipeline was completed last year but is still awaiting final regulatory approval from Germany before it goes online.
Biden vows that no gas will be allowed to flow through the pipeline if Russia invades Ukraine. But stopping the pipeline would require the cooperation of Germany. German Chancellor Olaf Scholz has said Germany and the U.S. “will act together” if Russia invades Ukraine but has stopped short of saying outright that it would agree to block Nord Stream 2.
The Biden administration says it is working to secure energy supplies from other sources so that Russia's European customers can still get the gas they need if Nord Stream 2 is blocked.
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Export controls
The Biden administration is considering imposing tough export control measures that could keep Russia from getting high-tech components used in smartphones, airplanes and automobiles.
One option would be to add Russia to the most restrictive group of countries for export control purposes, together with Cuba, Iran, North Korea and Syria.
That would mean Russia’s ability to obtain high-tech components would be severely restricted because virtually all semiconductors are designed with U.S. software and parts. The impact could extend to machine tools, smartphones, game consoles, tablets and televisions.
Sanctions could also target critical Russian industry, including its defense and civil aviation sectors, which would hit Russia’s high-tech ambitions, whether in artificial intelligence or quantum computing.
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Blocking Russian access to US dollars
The U.S. already holds one of the most powerful financial weapons to wield against Putin if he invades Ukraine – blocking Russia from access to the U.S. dollar.
Dollars still dominate in financial transactions around the world, with trillions of dollars in play daily.
Transactions in U.S. dollars ultimately are cleared through the Federal Reserve or through U.S. financial institutions. Crucially for Putin, that means foreign banks have to be able to access the U.S. financial system to settle dollar transactions.
The ability to block that access gives the United States the ability to inflict financial pain well beyond its borders. Previously, the U.S. has suspended financial institutions from dollar clearing for allegedly violating sanctions against Iran, Sudan and other countries.
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Michael Collins covers the White House. Follow him on Twitter @mcollinsNEWS.
Contributing: The Associated Press