No need to ‘circle the law’, Russia’s business activities still happen normally despite Western sanctions, here’s why
Moves to isolate Russia have blacklisted most of the country’s largest banks and targeted oligarchs. In addition, the list of sanctioned individuals includes the daughters of President Vladimir Putin.
On Friday, Britain said it would join the US and EU in freezing all of their assets at home and banning travel abroad. On the same day, the EU also blacklisted four banks that were excluded from the SWIFT payment system, including Russia’s second largest bank, VTB.
However, a number of large lenders and many small lenders have so far been… operating normally. Most Russian banks continue to be connected to SWIFT. As a result, linkages with Asia and the Middle East are still being done and causing serious disruptions to supply in Europe.
“The number of sanctions that have been put in place is truly exceptional and the number of sanctions that have been put in place is truly exceptional,” said John Smith, president of the Washington law firm Morrison & Foerster and former director of the Treasury Department’s Office of Foreign Assets Control. groundbreaking. But in many ways it’s just the tip of the iceberg.”
In the latest round of sanctions this week, the US and UK ordered a complete blockade of Sberbank – Russia’s largest bank. They also sanctioned the country’s largest private lender, Alfa Bank. Overall, more than 10 Russian banks have been blacklisted since the start of the war.
However, vulnerabilities still exist. More than 10 Russian banks – although small, are not sanctioned. So far, the US has not targeted Gazprombank. The EU has also not taken any action against this bank and so far has not sanctioned Sberbank. European diplomats say the two lenders are a “conduit” for Russian oil and gas payments, on which the member states of the union depend heavily for energy consumption.
According to Simone Tagliapietra, a senior fellow at the Bruegel think tank in Brussels, the EU imports more than $900 million in gas and oil from Russia every day. Meanwhile, coal from Russia – the EU commodity that has just suspended import activities, accounts for only 16 million USD of this country’s revenue.
The EU’s asset freeze on four Russian banks is part of the fifth package of sanctions the bloc has imposed on Russia since it launched a military campaign in Ukraine. The latest measures took effect late on April 8, including a series of export bans and dozens more sanctions targeting individuals with high status. The bloc also imposed a ban on imports of Russian vodka and caviar.
When the European Commission (EC) discussed the latest sanctions package earlier this week, a group of more than 200 lawmakers in the European Parliament called for the removal of all Russian banks from the SWIFT system. .
Meanwhile, sanctions experts and officials say that these measures are working.
Lisa Ledbetter, a senior finance officer at law firm Reed Smith, said: “Overall, comprehensive financial sanctions as well as corporate, oligarchs are gradually isolating Russia from the system. global finance.”
The country is facing difficulties in importing goods and fuels, the supply chain is also disrupted and economic growth decelerates. The European Bank for Reconstruction and Development (EBRD) last week forecast that Russia’s economy will shrink by 10% this year and experience a prolonged stagnation.
More sanctions could be imposed if the hostilities remain tense. For example, the EU’s exclusion of more banks from the SWIFT system remains an option, according to EU diplomats. So far, 7 banks have been on the sanctioned list, but VTB is the only big bank.
Ledbetter said that targeting Russia’s major banks should be done carefully and step by step. Adding a few large banks to the sanctions list could have major consequences for the global interbank market, commodities and energy, possibly disrupting international financial integration, she said. .”
As Europe and other countries remain dependent on Russian energy and other exports, according to Smith, those sanctions on Russia are like “complicated surgery.” “You need to be careful to use the scalpel without killing the patient, in this case the international community,” he said.
Refer to WSJ
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