US mulls sanctions, SWIFT financial system blockade if Russia invades Ukraine

There are plenty of options for the Biden administration to pledge sanctions against Russia or hit it financially in a retaliatory move should Russian President Vladimir Putin launch a military offensive on Ukraine, experts have weighed in. While the United States and NATO have given no clear indication of military action against Moscow’s purported attempts of Ukrainian invasion, the US has been exploring options to respond to the Russian threat by slapping sanctions targeting Putin’s close associates that would cut Russia off from the global Belgium-based SWIFT financial system that moves payments across thousands of banks worldwide.

The US has used SWIFT blockade threat to disconnect Iranian banks over Iran's nuclear enrichment programs that led to a massive loss of oil export revenue and a third of Tehran’s foreign trade, Maria Shagina, an expert on sanctions and energy politics affiliated with the Carnegie Moscow Center think tank told Associated Press.

This image provided by Maxar Technologies shows 11 SU-34 aircraft at Morozovsk airbase in Russia. Credit: AP

Sanctions for Russia’s economy will be 'equally devastating'

Former Soviet republic’s allies, US and NATO, that have helped Kyiv build its military may resort to more rigorous financial implications for Kremlin by freezing their monetary assets, and the impact of such embargoes and sanctions for Russia’s economy would be “equally devastating,” says the expert at the Carnegie Moscow Center think tank. Russia, however, has worked to insulate its domestic financial systems for several years to deter economic crisis from such a cutoff.

Last week, the United States Secretary of State Antony Blinken held a high-level meeting with his Russian counterpart Sergey Lavrov, talks on Moscow-Ukraine border tensions hit a deadlock after Russia downright denied plans of Ukraine invasion. Moscow, in turn, accused Ukraine of military troop build-up in the eastern frontier where the Ukrainian government has battled the Russian-backed separatists since early 2014 after the annexation of Crimea.

This image provided by Maxar Technologies shows overview of deployments at Opuk training area at the Black Sea coast of Crimea. Credit: AP

Russian paratroopers walk from a plane during maneuvers in Taganrog, Russia. Credit: AP

Situation at border 'a nightmare scenario'

Russia had described the situation on the tensed border as “a nightmare scenario of military confrontation” that was returning, as per the reports. Blinken also warned Russia of “grave consequences” in case the latter planned an offensive against Kyiv. The United States compelled Russia to de-escalate confrontations and work a diplomatic resolution as a war would be “in no one’s interests.”

Blinken also mentioned financial repercussions for Moscow if the conflict was flared unilaterally. “The US had developed the “most comprehensive and meaningful set of initiatives to make it very, very difficult for Mr. Putin,” US President Joe Biden had earlier last week told reporters at White House. The warning echoes sanctions that the US slapped on Russia after the invasion and annexation of Crimea and lending military support to armed separatists in eastern Ukraine in 2014.

US Department of the Treasury’s Office of Foreign Assets Control (OFAC) had designated five Russians and three entities related to Russia’s occupation of the Crimea region of Ukraine and its severe human rights abuses and asserting governmental authority over the Crimea region of Ukraine without the authorization of Ukraine. 

Following Crimea’s annexation, Russia had also sought to connect the mainland to the Crimea region separated by the Kerch Strait by building the longest bridge in Europe. Several persons were targeted by the US for their involvement in this project. US has also slapped sanctions on Moscow for its alleged election interference, and malicious cyber activities. 

While Russian leader Putin denies the intention of Ukraine's invasion, labelling the issue as an artificially built-up hysteria, the United States has bolstered the Ukrainian army to retaliate in case the invasion occurs.