Could the U.S. really cripple the Russian economy like Biden warns? : NPR

President Biden has threatened Russia with massive sanctions if it follows through on threats to take more Ukrainian territory.



ARI SHAPIRO, HTE:

NATO officials are meeting with a Russian delegation tomorrow in hopes of preventing an invasion of Ukraine by Russian forces now gathered near the border. President Biden has ruled out sending US troops to Ukraine. Instead, he warns of crippling sanctions. NPR international affairs correspondent Jackie Northam is investigating whether the United States could really bring Russia to its knees.

JACKIE NORTHAM, BYLINE: Biden administration officials have deployed with a sharp message in Moscow. If you invade Ukraine, we attack your economy. Here is Secretary of State Antony Blinken on Friday.

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ANTONY BLINKEN: And we’ve been clear with Russia on what it will face if it continues on this path, including economic measures that we haven’t used before, massive consequences.

NORTHAM: Daniel Fried helped craft sanctions against Russia after its invasion of Ukraine in 2014. He says the Biden administration is putting sanctions in the window, letting Moscow know they will be implemented quickly if Putin takes more Ukrainian territory.

DANIEL FRIED: You don’t want to tell the Russians exactly what it is. But you want to tell them enough that they know it will hurt.

NORTHAM: The Kremlin is probably well aware of what it might face – increased targeting of individuals and businesses. But Fried, now a member of the Atlantic Council, says the United States could do more.

FRIED: Take on the high tech industry. Take on the cyber industry. Go after semiconductors. You figure out what they can’t get except through American technology or the G7, and you slap them.

NORTHAM: But Maria Shagina, of the Finnish Institute of International Affairs, has said that withholding US-made technology likely won’t create the brief, brutal shock needed to deter an invasion.

MARIA SHAGINA: It’s something of a long-term impact, and it’s something in the future. This is something that I don’t think will change Russia’s calculation or Putin’s calculation, for that matter.

NORTHAM: The US could launch Russia on SWIFT, the messaging system for international money transfers. The Russians have developed their own system to bypass SWIFT, but it is slow and cumbersome. Shagina says that what would be more powerful would be to sanction Russian banks.

SHAGINA: You want to avoid collateral damage to the general public. So you would probably like to turn to banks which are usually in charge of projects – ambitious projects directly supported by the Russian government.

NORTHAM: The 2014 sanctions made it more difficult for Russian individuals and companies to do business, but they haven’t stopped Moscow from issuing new threats against Ukraine now.

JEFFREY SCHOTT: If you want to have an impact and be disruptive, you have to hit the energy companies.

NORTHAM: Jeffrey Schott is a sanctions expert at the Peterson Institute for International Economics. He says the United States could pressure Germany to stop opening Russia’s NordStream2 pipeline to Europe. This, according to Schott, would hit the Russian state-owned energy company Gazprom hard.

SCHOTT: Another thing we could do – we have sanctions against some of the Russian companies engaged in energy exploration. And we could apply them more effectively.

NORTHAM: Konstantin Sonin, an economist from the University of Chicago, is now in Moscow. He says Russian industry leaders are probably letting the Kremlin know they are concerned about the potential damage.

KONSTANTIN SONIN: They’ll say, don’t do that. Sanctions will hurt us, especially the oil and gas industry. The problem is, the Kremlin may not be very interested in what industries are saying.

NORTHAM: Sonin says Moscow doesn’t seem to mind the threat of sanctions despite all the warnings from the Biden administration.

Jackie Northam, NPR News, Washington.

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