Sanctions and boycotts: the west’s response to Russian invasion of Ukraine
The west has severed trading relationships with Vladimir Putin’s Russia on a scale thought unimaginable only a week ago. As tanks edge towards Ukraine’s capital Kyiv, governments around the world have taken coordinated action, using sanctions to target Russia’s banking system, state-controlled companies and powerful oligarchs. Under self-imposed restrictions, companies in Europe and the US have followed suit, with energy firms severing corporate ties and brands refusing to export their consumer goods. Here are the actions taken so far:
The day after Russia invaded Ukraine, excluding Russian banks from Swift was described by one EU minister as a “very last resort”. Now it is happening: under EU sanctions, seven Russian banks, including VTB, the second-largest, will be excluded from Belgian-based Swift, the bank messaging system that underpins global trade.
Being locked out of the world’s dominant bank messaging system means Russia will have to resort to more cumbersome alternatives, possibly fax machines, although Russia’s central bank says it has a domestic equivalent.
Sberbank and Gazprombank, Russia’s largest and third-largest lenders, which are used for oil and gas payments, were not cut off from Swift. These banks, however, have been under sanctions limiting their access to EU capital markets since Russia’s annexation of Crimea in 2014.
In another unprecedented strike against a G20 economy, Brussels, Washington and London have banned Russia’s central bank from accessing foreign currency reserves – a devastating move when a sizeable chunk of its $640bn war chest is held in dollars, euros and sterling. This will make it much harder for Russia’s central bank to prop up the rouble, which crashed to a record low on Monday,
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