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Global: Biden’s sanctions statements

by sermayedunyasi

Biden said his administration would impose sanctions on Russian banks and individuals in response to Putin’s deployment of troops to the Donbas region in eastern Ukraine, and described Moscow’s moves as the beginning of Russia’s invasion of Ukraine. A senior official, however, refused to refer to Putin’s recent actions in Donetsk as an invasion. Noting that the administration is evaluating Russia’s actions and will respond accordingly, the official added that Russia has maintained its presence in the Donbas region for eight years. Troop movements have been described as part of Russian-backed excuses for further invasion.

 

Biden’s sanctions statements targeting the Russian economy in general are as follows;

 

·        “Russia’s attacks on Ukraine pose a significant threat for the coming days.”

·        “West will cut off financing to Russia.” The United States has said it will deny Russia access to the funds it needs to pay off its debts. This is an important and heavy sanction on paper.

·        “We will impose sanctions on financial institutions.” There are two major state-owned financial institutions.

·        “Russia will not be able to trade in the US and European markets.”

·        “Nord Stream 2 project will stop.” Germany suspended certification. Europe will seek alternatives to Russian energy, primarily LNG.

·        “We will impose sanctions on some elite families in Russia.” It is aimed to break the power of pro-Putin oligarchs.

 

As the midterm elections approached, Biden faced pressure from members of his own party, the Democrats, to impose sanctions before any military action by Putin. In fact, it was thought that there could be more severe sanctions in theory, but in general these seem to be the type of sanctions that Russia is used to.

 

On the energy card, Medvedev’s statements are important: “Welcome to the new world where Europeans will pay 2000 Euros for natural gas.” Since Nord Stream 2 has not yet been launched, the German suspension of certification and Biden’s statements normally do not create a new supply shortage. However, Moscow seems to increase the price of natural gas it gives to Europe through its existing pipelines. This, in turn, will mean higher oil and natural gas prices in case of developments such as sanctions or conflict that will increase energy flow and contract prices. Increasing the price of these fuel sources will of course bring inflation challenges that are more difficult to manage in many countries. It is a development that will not benefit Europe, which needs a high degree of external energy resources and has no substitute for local resources. The United States, on the other hand, can partially manage this effect with local oil wells and producers.

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