{O/C} As Russia invades Ukraine's second largest city of Kharkiv, the United States and European nations have decided to pound Russia with the most debilitating sanctions ever.
They include cutting some Russian banks off from the SWIFT messaging system, which is considered the mainstay of international finance.
{SOT}
While Russia continues to imperiously rattle Ukrainians, the European Union, the United States, Britain as well as a host of other countries have stiffened their sanctions against Russia in response to its Ukraine incursion late last week.
The crippling measures, which will subject the Russian central bank's international reserves to heavy restrictions and sever Russian banks from the SWIFT international payment system, are expected to be implement in the coming days.
{Soundbite} URSULA VON DER LEYEN, EU Commission President: We commit to ensuring that a certain number of Russian banks are removed from SWIFT. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.
Second, we will stop Putin from using his war chest. We will paralyse the assets of Russia's central bank. This will freeze its transactions. And it will make it impossible for the Central Bank to liquidate its assets. And finally, we will work to prohibit Russian oligarchs from using their financial assets on our markets.
Following this invasion, eastern European countries and France were all for economic sanctions that would sever Russia from SWIFT, hobbling Russia's ability to do business elsewhere.
Domiciled in Belgium, SWIFT moves countless billions of dollars around more than 11,000 banks as well as financial institutions across the globe.
Cutting off Russian banks from SWIFT will paralyse the assets of Russia's Central bank.
Meantime, the central bank restrictions target access to the more than 600 billion dollars in reserves the Kremlin has at its disposal.
This, as the U.S. said the restrictions would lead to the decline of the ruble, in order for skyrocketing inflation in the country.
As it stands, details are still being ironed out as Western countries work to limit the pernicious effect the sanctions have on their economies.
When this option was considered after the Russian invasion of Crimea back in 2014, Russia declared this tantamount to a declaration of war. So, Western powers shelved the idea back then.
At the outset, Germany had specifically balked at the measure since it could backfire. But after what its Foreign Minister described as a wanton and shameless attack, Germany is ensuring the innocent will not be affected.
Rarely has Western powers unleashed their available financial weapons on a country.
If the latest moves are to do the trick, it will prove a pyrrhic victory for Russia should it take Ukraine over altogether.
Comments