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The economy, the battlefield where the potential conflict in Ukraine could be waged

The escalation of the conflict between Russia and Ukraine has led the United States and its allies to put on the table the possibility of a forceful deployment of troops in Eastern Europe, but another is that the war ends up being fought economically.

The United States, Britain and the European Union have been negotiating an unprecedented sanctions package to respond if Russia invades Ukraine. They are measures of both draft and effectively leaving Russia out of the global banking system.

Congressmen from the United States have hinted in recent weeks that it could remove Russia from the banking data system ‘Swift’, a highly secure network that connects more than 11,000 financial institutions around the world.

From Moscow, Russian legislators have indicated that, if this step is taken, the Kremlin could respond suspending all shipments of oil, gas and metals to Europe.

If Russia is left out of the ‘Swift’ system, it would be virtually impossible for its financial institutions send money inside or outside the country, which would have a huge and immediate impact on Russian companies and their foreign customers.

In 2012, ‘Swift’ cut ties with about thirty Iranian banks after the European Union imposed sanctions and due to pressure from the United States, which contributed to the decline of the Persian economy.

Never-before-seen sanctions and chip supply blockage

The European Union, which has been more reluctant to escalate the war on the ground, has been very forceful in his statements about economic sanctions that Russia could face if it invades Ukraine.

“It will be broad sanctions never seen before,” Danish Foreign Minister Jeppe Kofod said on Monday.

On Tuesday, the head of European diplomacy, Josep Borrell, said that the sanctions “will be the most significant advantage that the West, or at least the European Union, has.

The punishment would be unprecedented, according to the leaders of Western nations, and would exceed the sanctions that were adopted after the Russian annexation of Crimea in 2014.

Washington also has a resource that it has never used against another country: the so-called ‘Foreign-Produced Direct Product Rule’ (or the rule of products produced abroad, in Spanish) that would limit access to Russia of chips.

If applied, companies located outside the United States would be prohibited from exporting chips to Russia as long as they are produced with US technology, Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a think tank in the United States, explained to Efe. Washington.

The impact would be huge because almost any technology depends on semiconductors, from smartphones and computers to systems for energy extraction, aviation or heavy industries.

Chip production, especially those used for advanced computing, is dominated by the United States, Japan, South Korea, and Taiwan; while Russia barely has domestic production.

Sanctions against large Russian banks

The United States and the European Union already imposed sanctions on some Russian financial institutions in 2014, but now the White House has considered acting against the big Russian banks and even against the Russian Direct Investment Fund (FIDR), which catalyzes investment in the most important sectors for the Russian economy.

Among the financial entities that are in Washington’s sights are Sberbank, VTB Bank, Gazprombank, Vnesheconombank and Rosseljozbank, five of the most important in Russia that, after the Russian annexation of Crimea, already saw how the European Union limited their access to primary and secondary capital markets.

Now, these and other entities appear in a bill that has been prepared by the influential US Senator Bob Menéndez, chairman of the Senate Foreign Affairs Committee, with the support of the White House and which outlines some of the actions that Washington could take against Moscow if it invades Ukraine.


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