US sanctions on Russia Explained: How United States' new sanctions against Russia works?

President Joe Biden on Tuesday, February 22, announced that the US is sanctioning two of Russia’s largest banks, cutting it off from getting loans from the West and imposing sanctions on Russia’s elites and their families. In response to Russia's decision to recognize two breakaway regions in eastern Ukraine as independent and ordered its army to launch a “peacekeeping operation” into the area, Biden announced the first round of new sanctions against Moscow, adding to Western efforts to stop the full-scale invasion of Ukraine. Sanctions are being applied to VTB Bank and Russia's military banks. 

Earlier, Germany put a brake on a big gas pipeline from Russia and the British also hit Russian banks with sanctions. 

What are sanctions?

Sanctions are an economic or financial alternative to using military force that is enforced by a country against another to compel to do or not do something. This could include trade embargoes; restrictions on particular exports or imports; denial of foreign assistance, loans, and investments; blocking of foreign assets under U.S. jurisdiction; and the prohibition on economic transactions that involve U.S. citizens or businesses, according to the Congress Research service. 

Sanctions can impact heavily on the population of the receiving countries where the people become agitated enough to demand change from their governments.

US sanctions on Russia timeline

President Biden has already issued an order prohibiting investment in and financing to the separatist regions as the US plans to target relationships between certain Russian and American banks, according to Reuters.

It’s similar to when Russia annexed the region of Crimea from Ukraine, then-President Barack Obama in 2014, first limited trade and business to the region. Later, Russian defence companies, six of the country’s largest banks, and the inner circle of Russian President Vladimir Putin were targetted. 

Russia's response to the sanctions

As per the Reuters report, Russian Foreign Minister Sergei Lavrov brushed off the threat of sanctions and said, "We're used to it. We know that sanctions will be imposed anyway, in any case. With or without reason."

Maria Shagina, an international sanctions expert based in Helsinki, quoted in the Washington Post stated that Vladimir Putin does not seem threatened by Biden’s strategy of a slow escalation of sanctions. She suggested the Biden administration shift the red lines to imposing the tough sanctions as it would be late after the full invasion of Ukraine. 

Russia to invade Ukraine?

If the conflict intensifies, there is a risk of further deterioration of US-Russia relations and if Russia expands its presence in Ukraine or into NATO countries, there will be greater escalation. Russia’s actions have raised wider concerns about its intentions elsewhere in Eastern Europe, and a Russian incursion into a NATO country would solicit a response from the United States as a NATO ally.

The conflict has heightened tensions in Russia's relations with both the United States and Europe, complicating the prospects for cooperation elsewhere including on issues of terrorism, arms control, and a political solution in Syria.

(Image: AP)