Some experts say that if the Biden administration follows through on the most severe options that officials have suggested are possible — most notably severing the country’s top banks, including Sberbank and VTB, from transactions with non-Russian entities — Russia could suffer a financial panic that triggers a stock market crash and rapid inflation. The effects would most likely strike not only billionaire oligarchs but also middle-class and lower-income families. Russian enterprises would also be unable to receive payment for energy exports.
Besides isolating Russian state-owned banks, the escalatory sanctions that U.S. officials have prepared would also cut off the ability to purchase critical technologies from American companies.
If the United States imposes the harshest penalties, “there will be unexpected and unpredictable consequences for global markets,” said Maria Snegovaya, a visiting scholar at George Washington University who co-wrote an Atlantic Council paper on U.S. sanctions on Russia.
Edward Fishman, a top State Department sanctions official in the Obama administration, called Mr. Biden’s action on Tuesday a modest first step intended as “a shot across the bow.”
Mr. Fishman said the administration’s move against one of the two targeted banks — VEB, the country’s main development bank — was the first time the United States had fully cut off a state-owned Russian financial institution. “I interpret that as a warning that the Biden administration is prepared to cut off other major Russian banks from the U.S. financial system,” Mr. Fishman said.
“Biden is giving Putin an opportunity to step away from the brink,” he added. “But he’s also signaling that, if Putin unleashes a full-scale war, the economic costs will be immense.”
Article source: https://www.nytimes.com/2022/02/22/us/politics/russia-biden-sanctions-ukraine.html
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