A Template of Economic War: Russia and United States
I found a very good website summarizing the sanctions against Russia and the countermeasures taken by Russia since early this year. I did want to do the same since whenever I heard the news on sanctions against Russia, they look so familiar, just like those measures are repeating again and again.
I read about Economic War in Ray Dalio’s book, an Economic War typical includes:
- Asset Freezes/ Asset Seizures (充公)
- Blocking Capital Market Access
- Embargoes (禁令，禁運；限制)/ Blockades(封鎖)
Let’s try to reclassify major events on the website into these three categories. I focus on the US action since most of the other countries are just following the US.
| Date | Category | Description |
| 2022-02 | Embargoes/Blockades | In response to Putin’s decrees, the Biden administration issues an Executive Order (EO 14065) stopping new US investment in, US exports to, or US imports from the regions. This builds from a series of EOs sanctioning Russia after its annexation of Crimea and for Russia’s interference in foreign elections from 2014 (EO 13660, EO 13661, EO 13662, EO 13685) from 2018 (EO 13849) and from 2021 (EO 14024, EO 14039). Russia’s invasion prompts the Department of Commerce to restrict Russian access to technology—e.g., semiconductors, computers, telecommunications, information security equipment, lasers, and sensors—by controlling US exports or exports from third countries that use US inputs such as equipment, software, and blueprints (Foreign Direct Product Rule). |
| 2022-02 | Blocking Capital Market Access | In response to Russia’s invasion of Ukraine, US Treasury sanctions Public Joint Stock Company Sberbank of Russia, requiring all US financial institutions to close Sberbank accounts and to reject any future transactions. Treasury freezes the assets of Russian banks VTB Bank Public Joint Stock Company (VTB Bank), Otkritie, Novikom, and Sovcom. Treasury also sanctions 13 major Russian state-owned and private entities as well as other Russian oligarchs. Adhering to the February 26 joint statement, US Treasury prohibits transactions with Central Bank of Russia, National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, but issues a general license to authorize certain energy-related transactions. Treasury takes further action to block any transactions with Russian Direct Investment Fund, a key sovereign wealth fund. Treasury provides additional guidance on March 2, 2022. |
| 2022-02 | Asset Freeze | Following the February 21 EO, US Treasury sanctions two major Russian state-owned financial institutions (VEB, PSB) and their subsidiaries that are critical to financing the Russian defense industry, five Kremlin-connected oligarchs, and imposes additional restrictions on Russian sovereign debt. The US, EU, UK, Canada, France, Germany, and Italy announce a joint action to remove some Russian banks from the SWIFT financial messaging system, to prevent the Russian Central Bank from deploying reserves to undermine sanctions, to limit “golden passports” used by Russian oligarchs to skirt sanctions by obtaining citizenship in other countries, as well as launching of a transatlantic task force. Japan issues a similar statement on February 27. |
| 2022-03 | Embargoes/Blockades | In response to Belarus enabling Russia’s invasion of Ukraine, US Department of Commerce controls US exports or exports from third countries that use US inputs (Foreign Direct Product Rule) destined for Belarus’s defense, aerospace, and maritime industries. This complements the new US controls on exports destined for Russia announced February 24. US Department of Transportation and Federal Aviation Administration block Russian aircraft and airlines from entering American airspace. Despite the sharp increase in energy prices, the Biden administration issues an Executive Order (EO 14066) banning imports of Russian oil, liquefied natural gas, and coal. The US, EU, UK, Canada, France, Germany, Italy, and Japan announce new actions to impose economic costs on Russia, including increasing import tariffs to eliminate World Trade Organization (WTO) membership benefits, denying Russia’s borrowing privileges at the World Bank and IMF, and other trade and financial sanctions. Adhering to the March 11 joint announcement, the Biden administration issues an Executive Order (EO 14068) with sweeping new prohibitions on certain trade with and investment in Russia. US Department of Commerce restricts exports of luxury goods to Russia and Belarus. US Treasury targets more Russian oligarchs, business executives, and politicians, and issues guidance to protect against sanction evasion through cryptocurrencies or other virtual currencies. |
The countermeasures taken by Russia are:
- imposes Russian capital controls, banning Russians from transferring hard currency abroad, including for servicing foreign loans.
- ban Russian exports of certain commodities and raw materials.
- unfriendly countries’ must buy Russian oil and gas in rubles.
I think there is a lot to observe and reflect on this conflict/war. This template seems to repeat many time in other countries against US as well.
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