The economy today

Sanctions against Russia: the largest financial institutions in the crosshairs

Audio 04:06

US President Joe Biden announces economic sanctions and export restrictions on Russia, in response to his invasion of Ukraine.

Four additional Russian banks will also be sanctioned and more than half of Russia's technology imports cut.

© REUTERS/Leah Millis

By: Aabla Jounaïdi Follow

4 mins

From Washington, US President Joe Biden promised Thursday to " 

 " to the Russian economy.

In coordination with its allies, a series of new sanctions hit the country of Vladimir Putin.

Many personalities close to the Kremlin have been added to the American administration's blacklist.

But above all, the largest financial institutions in the country are now in the crosshairs.

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After the Russian State and then the Central Bank, it is around two of the largest Russian banks, Sberbank and VTB Bank, as well as their subsidiaries, to see their access to American financial markets restricted.

It is a financial juggernaut that is hit today.

Sberbank is an institution very connected to the global financial system and which represents a third of the Russian market.

It is in the sights of Americans but also of Europeans, Canada, and the United Kingdom.

Three other major Russian banks are sanctioned, as well as thirteen of the country's major companies.

Among them, Gazprom, the energy giant which will no longer be able to access the American financial market.

For the time being, there is no question of cutting Russia off from the Swift banking network

The Europeans are divided on this option which is still on the American table, but which would potentially have very serious consequences if it were implemented.

Some European countries like Italy or Germany, dependent on Russian energy supplies, are not in favor of it for the moment.

But for the transatlantic allies, the sanctions taken will in themselves do a lot of harm.

Ursula von der Leyen, President of the European Commission assures that 70% of the Russian banking sector is now hit by sanctions.

In addition, the blacklist of members of the Russian economic elite has also been growing since Thursday, in the United States, Canada, Europe, the United Kingdom, Australia and Japan.

The United States and its allies also want to attack the Russian economy in the long term

And for that, hinder its technological development.

As it did with China, the United States will prevent exports of technological components to Russia.

This includes sensitive civilian-military dual-use technologies to strike a blow at the Russian military.

But still, in addition to components of interest to the aeronautics, space industries and oil refining technologies, Russia will have restricted access to semiconductors.

The challenge is to strongly curb the diversification of the Russian economy and its modernization, which began a few years ago.

More than half of technology imports are targeted according to the White House.

Russia is highly dependent on its Western suppliers for the processors, chips and other advanced instruments essential to its industries.

The Europeans, which are the main Russian supplier, did not detail their sanctions yesterday.

But they have already announced that they will adopt the same measures as the United States in this regard.

Will the impact of this new set of sanctions be felt immediately?

It has been said a lot in recent days: Russia has the means to hold out.

Even though its largest banks are under sanctions today, it is a low-debt country.

It has on its side its enormous foreign exchange reserves which can be used to stabilize its economy.

This is already the case through the actions of the Central Bank in recent days.

In addition, the country can still export its hydrocarbons and cereal products.

And the context is favorable for Russia.

Prices are currently experiencing a historic explosion, to the chagrin of major customers, in Africa in particular.

We can estimate that the restrictions on semiconductors will not have the same negative effects on this economy which is not yet a technological power.

Moreover, the most dissuasive financial weapons such as the exclusion of the Swift banking system have been spared in Moscow.

The situation is therefore far from being critical, for the moment.

On the other hand, with its coordinated and massive sanctions, Westerners and their allies are sending a strong signal

The objective is to make Vladimir Putin and his country pariahs on the international scene.

Making Russia an even more complicated trading partner.

And Vladimir Putin, himself spared from the sanctions, unlike those around him, is perhaps not insensitive to this problem.

Yesterday, he had an appointment at the Kremlin with the Russian business community, worried about recent developments.

He assured them that they “ 

 ”.

At the same time, it was learned that two former European leaders were leaving the Russian ship

Matteo Renzi, the former Italian Prime Minister, has left his position on the board of directors of Delimobil, a Russian service company.

As for the former Prime Minister of Finland, he left the Board of Directors of Sberbank, the institution caught up in the sanctions since yesterday.

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