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Five Ways Sanctions Are Hitting Russia

by SuperiorInvest

WASHINGTON — The Biden administration is bragging about the sanctions the United States and its allies imposed on Russia to punish it for its invasion of Ukraine. are historical — such extensive economic sanctions had never before been enacted against a nation of such size.

The State Department said that as of the end of October, the US government had issued about 1,500 new and 750 revised sanctions lists since President Vladimir V. Putin launched the war in February. And 37 countries have joined the sanctions coalition, the ministry said.

The World Bank estimates that the Russian economy does contract 4.5 percent this year, while the International Monetary Fund projects a 3.4 percent contraction. The recession is expected to continue into next year. Russia is struggling with a sharp drop in imports and a drop in real incomes.

But the sanctions they weren’t that devastating as Western officials hoped. The backbone of the Russian economy – oil and gas exports – remains largely intact. Global oil prices have soared since the start of the war, and Russia is on a roll earn more this year from oil sales than in 2021, despite boycotts by the United States and several allies. China and India are among the countries that have increased their imports.

Russia’s economy could suffer even more in the coming months due to a partial European embargo on Russian oil that will take effect in December and controls on exports of critical technology.

But Russian officials are withholding important data, making it more difficult for others to gauge the true effect of sanctions and export controls.

In 2021, Russia had a $1.77 trillion economy, 11th largest in the world. Analysts are putting together a picture of how he is doing.

Here are five key areas to watch:

The Treasury Department is imposing sanctions on Russia’s largest banks, meaning those institutions are cut off from transacting with banks and companies around the world that want to avoid punishment by the US government.

These measures also prevent many Russian companies from doing business because they need to use the international banking system for transactions. The State Department said the sanctions target institutions that hold 80 percent of banking assets in Russia.

The United States and partner governments have frozen $300 billion in Russian central bank assets held in banks around the world, limiting the institution’s ability to aid the war effort and mitigate the effects of sanctions, the State Department said.

US and European officials debated whether Russian government assets frozen abroad should be seized to pay for war reparations and the reconstruction of Ukraine.

The European Union, Britain and the United States have restricted some trade with Russia, including a freeze sale of luxury goods into the country and cooperate with allies stop Russian purchases of semiconductors and other advanced technologies.

However, governments have been reluctant to crack down on Russian energy trade due to concerns about economic growth and inflation. And some countries continue to buy Russian uranium, diamondsnickel and a number of other raw materials.

This continued trade, along with this year’s high oil and gas prices, has meant that the value of Russian exports has actually increased since the invasion of Ukraine, providing Moscow with enough revenue to finance its war. analysis by The New York Times.

Meanwhile, Russian imports fell sharply, reflecting a decision by multinational companies to cut ties with Russia and faltering demand for consumer goods in the country as its economy slows. Major shipping lines such as Maersk and MSC have stopped serving Russia, limiting its ability to gain access to foreign products.

With sanctions and export controls, the United States and its allies are trying to limit technology sales to Russia’s military and energy industries, as well as other strategic industries.

The goal is to cripple Moscow’s ability to wage and finance war.

Countries in the coalition have banned global exports of semiconductors, computers, lasers, telecommunications equipment and other technical goods to Russia. And they imposed sanctions on Rostec, Russia’s largest military and defense conglomerate; Mikron, the country’s largest manufacturer and exporter of microchips; and Tactical Missiles Corporation, which makes missiles used by the Russian military in Ukraine.

Analysts say yes study of Russian military technology in Ukraine to try to gauge the impact of export controls. U.S. officials say the Ukrainians told them some seized Russian equipment contained semiconductors removed from dishwashers and refrigerators. The Russian army is also resorting to the use of older technology.

“They use ancient types of tanks; they are pulling them out of storage,” said Alexander Gabuev, senior fellow at the Carnegie Endowment for International Peace. “The data suggests that export controls are hitting the military quite hard.

When the Biden administration issued the export controls, it said it was also targeting strategic industries such as aviation, shipping and energy extraction. But Mr. Gabuev said it was harder to say whether the controls had a similar effect on those other industries.

Russian car and appliance production collapsed. But larger problems with the Russian economy and supply chains are also to blame.

The United States and its allies have had a hard time squeezing the revenue that Russian state-owned enterprises have received from energy sales.

Russia is the world’s third largest oil producer, and oil sales are the cornerstone of its economy. Russia also sells and transports natural gas to European and Asian countries using a pipeline network. As global inflation rises, governments are reluctant to impose energy bans that could end up driving up market prices.

The United States and Britain import relatively little Russian oil, so their boycotts had a negligible impact on Russia’s overall oil revenues, especially given the rise in the market price of oil in the spring. Turkey, a member of the North Atlantic Treaty Organization, increased its purchases of Russian oil this year. So are China and India, which together account for more than 40 percent of Russia’s oil exports.

In May, the European Commission announced plans to end all imports of Russian fossil fuels by 2027. A European embargo on sea shipments of Russian oil and sanctions on shipping insurance are due to take effect in December.

However, governments are concerned about rising energy prices, so the United States and its allies are discussing oa price ceiling mechanism this would amount to a buyer’s cartel – nations would only offer to buy Russian oil at a deep discount that, if Russia agreed to sell, would keep the country’s oil on the market and deprive Moscow of some revenue. But Russia has threatened not to sell any oil to countries that adhere to the price ceiling. If this were to happen, global oil supplies would be in short supply, leading to a sharp rise in energy prices.

US officials hope Saudi Arabia will increase production. But last month, Saudi and Russian officials led the OPEC Plus energy group in announcing they would cut production by two million barrels a day. American officials they believed they had made a secret deal with the Saudis in May for the kingdom to increase oil production.

The Biden administration was furious and accused Saudi Arabia of aiding Russia, which Saudi officials deny.

The Biden administration has imposed sanctions on hundreds of Russian government officials, executives and oligarchs, along with many of their family members.

Those penalized include some of the top leaders of the Russian government, including Mr. Putin himself; his foreign minister, Sergei V. Lavrov; and Russia’s two top military commanders, Defense Minister Sergei K. Shoigu and Chief of the General Staff Valery Gerasimov.

All 450 members of Russia’s lower house of parliament and 170 members of the upper house were also affected by the sanctions.

U.S. sanctions against individuals generally block their access to any assets in the United States, prevent them from conducting transactions with Americans, and deny them visas to enter the United States.

However, few, if any, senior Russian officials are likely to have American assets or plan to visit America soon.

Parallel sanctions imposed by major European countries such as Britain, France and Germany are more likely to cause disruption, especially for mid-level officials and wealthy Russians who travel and do business outside their country.

U.S. sanctions could similarly affect the spouses and children of prominent Russians who are used to free travel and business and who may act as intermediaries for their more prominent relatives.

In an August crackdown on several Russian businessmen, including steel and fertilizer companies, Secretary of State Antony J. Blinken he said in a statement that “Russia’s elite run massive revenue-generating companies and finance their own opulent lifestyles outside of Russia”.

The United States has imposed sanctions on Herman Gref, CEO of Sberbank, Russia’s largest bank, and Alisher Usmanov, one of the world’s richest men. And he has 10 yachts, four planes and one helicopter blacklisted – although none of these vehicles have been seized by law enforcement.

Among the most notable targets of the Biden administration’s sanctions was a citizen named in May: Alina Kabaeva, a former Olympic gymnast and member of parliament. Mrs. Kabaeva is too widely believed to be Mr Putin’s girlfriend.

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