Ursula von der Leyen announces new Russian sanctions
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With the Russian invasion of Ukraine fast approaching the end of its first week, reports of devastating airstrikes, queues of people fleeing cities, and citizens taking up arms, the global condemnation against Mr Putin are high. The European Union, the UK, the US and Canada are just a few of many imposing sanctions against Russian assets and individuals, including against Mr Putin and Foreign Minister Sergei Lavrov themselves.
Yet calls to exclude Russia from the international payment system of SWIFT is gaining support from around the world.
Already certain Russian banks have been blocked from the rapid global payment scheme.
Many have called for tougher measures against Russia, including a military partnership with Ukraine, however, the notion of sanctions must not be taken lightly.
Sanctions can be a vital weapon in itself when used effectively.
The notion of soft power in such form has proven its worth against Iran, which since President Donald Trump withdrew from the Iran Nuclear Deal, also known as the JCPOA, has seen tough sanctions and the removal of SWIFT imposed on Tehran.
Since happening, the value of the Iranian currency, the Rial, has collapsed eight-fold versus the US dollar.
The immediate effect is felt on the streets, in the shops and in trading posts of Iran.
With prices reaching almost ten times the value of 5 years ago, the Iranian economy has felt the full brunt of the measures.
Whereas there are ways of circumnavigating such sanctions, the process is complicated.
Although the Russian economy is larger than Iran’s, the impact could be much the same.
Since Mr Putin launched his invasion of Ukraine, the value of the Russian Rouble has fallen to its lowest point versus the UK dollar.
In seven days, the Rouble went from around 77 to the dollar, to 84.
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With Russia reliant on exports of gas, oil, minerals and organic commodities, the risk of losing the SWIFT payment system could see the economy lose billions.
In 2020, Russia exported $66.5bn (£49.6bn) to the European Union, much of this from gas, oils and minerals.
Russia also regularly earn $13bn (£9.7bn) from the US, also from similar imports.
In 2019, Russia exported $407bn (£303.56bn) worth of goods around the world, making it the 13th largest exporting economy in the world.
Losing such a sum of money could have a detrimental impact on the Russian economy, and ultimately, on Mr Putin’s war chest.
However, some nations are concerned about removing Russia fully from the SWIFT banking system for fear of retribution.
With Russia well known for cyber-activity, there are fears Russian hackers could take revenge on SWIFT.
A Whitehall source said: “There are a lot of consequences of pushing the Russians off a financial system that would mean them potentially building their own.
“What behaviour and actions are precipitated by removing them from it”
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There is also the notion excluding Russia from the scheme will push Moscow closer to Beijing.
The BBC’s business editor, Simon Jack said: “Perhaps even more damaging to Russia than shutting it out of Swift is a move to isolate Russia’s central bank.
“Preventing it from using its $630bn international dollar reserves to support the rouble could see its value collapse with dire consequences for the Russian economy.”
The Iraq War cost $3tn (£2.23tn) and Afghanistan racked up $2.3tn (£1.75tn), which for Russia, should a long war ensure with Ukraine would account for almost double its GDP per year if it matches figures seen in Iraq.
With protests already being held across Russia over the war, a rise in prices, tough sanctions, travel measures and losing global trade, sporting and cultural events will no doubt inflame anti-war and anti-Putin protests further, and see an opportunity for unrest from within, something Mr Putin has openly shown little toleration for in the past.
With talks between Russia and Ukraine potentially set to take place on the border of Belarus, the amount of time left for Mr Putin may be limited to the flow of cash Russia obtains prior to the coffers door of the Kremlin being slammed shut by the West.
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