Old-fashioned but effective, why are experts optimistic about sanctions on Russian banks?

The United States, Britain and the European Union have imposed a series of sanctions on Moscow after U.S. President Joe Biden set the tone for Russia’s incursion into Ukraine, and targeted several Russian banks to hamper their ability to raise funds in financial markets. Experts believe that bank sanctions, although old-fashioned and common, are the most powerful measure the United States can implement in the short term.

Internationally used sanctions
The Ukrainian crisis is heating up. After Russia announced that it recognized the two separated areas of eastern Ukraine as independent states and signed an agreement to give the Russian army the right to establish military bases, US President Biden has set the tone for Russia to start invading Ukraine and coordinating partners such as the United Kingdom and the European Union. , announced sanctions against Russia. Among them, Washington completely blocked Russia’s state-owned Development Bank (VEB) and the military bank PSB (Promsvyazbank), London locked up five banks including Bank of Russia (Bank Rossiya), and Brussels also offered to restrict Russia’s access to EU capital and financial markets s method.

Indeed, sanctions appear to have become the West’s main weapon in response to Russia’s aggression against Ukraine. According to the legal professional body LexisNexis, since the United Nations Security Council established the first sanctions regime in Southern Rhodesia, today Zimbabwe, global sanctions actions have become increasingly complex. The purpose of sanctions is mainly to prevent the escalation of conflicts, resolve conflicts, curb nuclear proliferation, or combat terrorism and human rights violations.

Killer trump to block dollar transactions
In the face of a pushy Russia, experts believe that restricting the use of the dollar by Russian state-owned banks is the most powerful sanction; that is, bank sanctions are the most influential measure the U.S. can impose in the short term. Brian O’Toole, a former senior adviser to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), said such sanctions would prohibit Russian banks from conducting any transactions in U.S. dollars, essentially freezing any dollar-denominated bank transactions at home and abroad. assets or liabilities.

The purpose of the bank sanctions is to block international payments between locked Russian banks and U.S. banks, in order to hit the Russian economy. Kay Georgi, an international trade lawyer, said that since most global trade transactions are conducted through the U.S. dollar, once the currency exchange is cut off, it may make it difficult for the target bank to conduct U.S. dollar transactions, which is an effective sanction.

Risk of financial instability
In fact, part of the purpose of the bank sanctions was to force Russia’s central bank to use its strong currency reserves to get out of trouble. Chris Weafer, head of Macro Advisory, believes that Russia has some defensive weapons against foreign attacks on financial stability in the face of sanctions: strong currency reserves, high oil prices, and 2021 With only 18% of its debt-to-GDP ratio in 2018, Russia is well-positioned to withstand tightening of existing sanctions.

But while Russia has large reserves of a strong currency, currently worth $635 billion, that could help counteract potential shocks, Elina Ribakova, an economist at the Institute of International Finance, said that even if Russia had enough Reserves, sanctions could still lead to a run, which would definitely have a severe impact on the domestic financial system, which would raise the risk of financial instability, including widening spreads and a sell-off in the ruble.

Whether it works or not depends on history
However, Igor Yurgens, vice-president of the Russian Union of Industrialists and Entrepreneurs, a powerful lobbying group, said the Russian central bank has been working on a current account program in China through which Converting cash would help mitigate the impact of sanctions, and while the situation is difficult, authorities have conducted technical stress tests and should be able to cope for a while. Sergey Aleksashenko, a former deputy governor of the Russian Central Bank, believes that the threat of Western sanctions is nothing more than an escalating virtual or information war between Russia and the West. In this confrontation, Putin’s weapon is the chariot, and the West is the sanctions.

So can bank sanctions really work? The Brookings Institution, a Washington-based think tank, draws some conclusions from the history of U.S. economic sanctions, which is that sanctions alone are unlikely to have the desired effect if the goals are large or short-lived. Even if sanctions are comprehensive and have almost universal international support, they may not achieve their goals. The Persian Gulf War is an example, until the U.S.-led coalition launched Operation Desert Storm in 1991. Sanctions alone did not bring Iraqi dictator Saddam Hussein out of invading Kuwait. .

Meta announces that Facebook and Instagram are withdrawing from Europe, officials fade back: they are doing fine

European regulators are drafting new legislation on how user data of EU citizens should be transferred across oceans, raising doubts about how multinational giants manage European data on U.S. servers. Meta, the parent company of social media Facebook, said on the 3rd that if it cannot transfer user data back to the United States, it will consider shutting down Facebook and Instagram in Europe.

Facebook said on the 3rd that “if the new transatlantic data transfer agreement is not accepted, and it cannot rely on standard personal data protection contract clauses (SCC), or other alternative ways of transferring data from Europe to the United States, it will not be able to provide the most important products in Europe. and services, including Facebook and Instagram,” will adversely affect the company’s business, financial condition and operations.

A spokesman for Meta clarified on the 7th that the company has no plans to withdraw from Europe, but previous documents raised the same concerns, “Meta and many other businesses, organizations and services rely on data transfers between the EU and the United States to operate global services.”

Interestingly, European politicians don’t care about the Meta threat. German Economy Minister Robert Habeck said that he has not used Facebook and Twitter for 4 years after being hacked, but his life is still good; French Finance Minister Bruno Le Maire believes that technology giants must understand that when security threats are threatened, Europe Will resist and defend its sovereignty, “the EU has a strong economy and, if united, will not be intimidated by this threat.”

In July 2020, the EU Supreme Court ruled that data transfers between the EU and the US failed to adequately protect the privacy of European citizens. As the EU’s top court found, it has restricted the way U.S. companies can send European user data back to the U.S.

Too many green projects approved for traffic jams, Spanish government persuaded to withdraw case

The European Union is actively promoting green energy, and Spain, as a country rich in renewable energy resources, has also offered a lot of policy measures to promote the development of green energy, especially the current ruling party, the Socialist Party of the left, is the main green energy New Deal (Green New Deal) won the election to power, but the coalition government of the Spanish Socialist Party and the leftist ally Unidas Podemos is persuading green energy cases to withdraw.

Spain is very ambitious about green energy and aims to have 60 gigawatts (GW) of green energy by 2030, but applications for green energy development cases are flying in like snow, with proposals totaling 150 GW, mainly from wind and solar energy.

The Spanish government is not known for its efficiency, the World Bank Government Effectiveness Index, Spain only got 0.89 points in 2020, ranking 41 in the world, the first Singapore is 2.34 points, 15 Japan is 1.6 points, Spain is not even as good as Chile 0.99 points, from this comparison you can see how effective the Spanish government is.

At the end of 2021, the Spanish government, in an effort to promote electric vehicles and green energy, hastened to pass an emergency plan to ease the backlog of paperwork, legislating to extend the deadlines for projects to The legislation extends the deadline for projects based on different application stages, especially the environmental impact assessment, which is the most important bottleneck.

For example, if a wind farm or solar farm is connected to a long transmission network, the construction of the transmission line must also be included in the environmental impact assessment, such as the transmission and distribution line from Aragon to Barcelona, which is 150 kilometers long. In addition, projects in ecologically sensitive areas and protected areas for birds are also ruled out. It is only natural that an EIA is required for development, but when the number of cases explodes and the government’s effectiveness is low, it causes a major traffic jam.

Without improved administrative capacity, zero carbon emission plans are just empty talk
For the sake of fairness, the Spanish government bureaucrats have to strictly adhere to the principle of first-come, first-served. Instead of prioritizing the importance and feasibility of the cases, the cases are indeed examined in the order of submission, first-come, first-served, so that if a project is too haphazard or impractical, or if the EIA of an environmentally controversial zone is afraid of being obsolete, it is also examined in the order of submission, and the other cases waiting behind are overdue.

The Spanish government is well aware of this situation, but it still adheres to the rules, saying that the government cannot arbitrarily and subjectively screen cases for what it wants, and that the government must give a clear explanation to the public to prove that it is not abusing its power.

The Spanish government has come up with a solution: since the government has difficulties in screening, let the applicant “self-censor”! The emergency plan for the end of 2021 includes the following: those who withdraw their cases before January 23, 2022 will get back the €40,000 per million watts they paid for the initial investment in the submission, and those who fail to do so will not get their money back if their case is subsequently rejected, hoping that those who do not have much hope of passing the examination will give up on their own initiative, thereby reducing the number of cases and easing the The trial traffic jam.

The central government’s Ministry of Ecological Transformation is currently handling 697 green energy development cases, including 467 solar, 211 wind, 2 hydroelectric, and 17 combined projects, with a total capacity of 66 GW, while only 19.7 GW of capacity projects have entered the environmental impact assessment stage. However, this is far from the total number of green energy development projects in Spain, as smaller-scale green energy development projects with less than 50 GW of capacity fall within the scope of local government review, but the local governments are also severely congested.

The Spanish government wants to vigorously promote the construction of green energy, a head of enthusiasm at the same time, the entire government from central to local all relevant departments, do not have the administrative operation capacity to match the ambition of the new green energy policy, and focus on the appearance of fair first come, first served, case-by-case examination, the practice also causes doubts, because the impact of development cases on the environment is not only related to itself, but also related to the total number of neighboring development cases, and for example, if multiple green energy development cases are located in the vicinity, all passed, the transmission and distribution network of the place is bound to occur in the lack of capacity and need to increase infrastructure problems.

The Spanish government’s ironic policy of asking citizens to withdraw their own cases is just the tip of the iceberg in the EU’s promotion of green energy. Although many countries have put forward ambitious zero carbon emission target plans one by one, if the administrative capacity is not enough to support them, I am afraid that they will become the biggest stumbling block to achieving the goal.

Ukraine Crisis: Why Europe is a Supporting Actor?

UK must do more to support Ukraine - Commons Defence Chair - BBC News

After U.S. President Joe Biden’s suspected gaffe last week revealed that NATO had different opinions on how to deal with a “minor invasion”, this week, European and American countries have tried their best to put forward a unified front against Russia. Biden held a video dialogue with major European countries and EU leaders, emphasizing the unanimous position of resolving the tension between Russia and Ukraine through diplomatic means. French President Emmanuel Macron also traveled to Berlin to meet German Chancellor Olaf Scholz in person, showing the “solidarity” of the two EU powers in their stance on Ukraine. Some media have also begun to receive news that the United States and Europe are approaching a consensus on economic sanctions against Russia.

At the same time, European countries are also trying to expand their negotiations with Russia more actively. Dmitry Kozak, Putin’s deputy chief of staff, went to Paris on January 25 to meet with government aides from France, Germany and Ukraine. They have reconstructed, to a limited extent, the “Normandy model” of Europe’s response to the Russian-Ukrainian issue since 2014. Macron will also have a phone call with Putin on January 28, hoping to “clarify” Russia’s position on behalf of Europe.

Europe has been marginalized
However, amid the solidarity between the United States and Europe and within Europe, as well as the increasingly aggressive diplomatic activities of major European countries, the development of the situation in Ukraine that people are most concerned about is the U.S. Secretary of State Antony Blinken’s commitment to Russia last week. Fang’s written response to a series of requests for NATO to stop eastward expansion. Faced with the imminent deployment of 8,500 U.S. troops in Eastern Europe, Kremlin spokesman Dmitry Peskov said Russia would only consider its next move after receiving a response from the United States later this week.

Although some media quoted sources that the United States has been in extensive cooperation with the European Union on its written response, this does not change the fact that this is the United States and not Europe’s response to Russia’s request. After Macron called for Europe to have an independent stance on Ukraine last week, the situation in Ukraine in front of Europe is still dominated by the United States and Russia. Not only does Ukraine not have much say in itself, but Europe itself is more like providing the United States Russia is a supporting role in a convenient negotiation venue.

Looking back on the Crimea incident in 2014, former German Chancellor Angela Merkel united the 28 countries of the European Union to impose sanctions on Russia, and established a “Normandy model” negotiation with France to demonstrate on the Russia-Ukraine issue out of European independence. Today, Merkel’s successor, Scholz, has not taken on the role of leading Europe and has made no concrete claims to mediate the situation. Macron, who has been chanting for European independence, has not only faced the challenge of the presidential election in April this year, but also because of France’s difficulty in being alone, he has not been able to go beyond the general talk of “autonomy”.

On January 21, Blinken and Lavrov met in Geneva, Switzerland.

In contrast, the United Kingdom, which has already left the European Union, is far more aggressive than Germany and France. In addition to providing anti-tank missiles to Ukraine first, it also followed the United States to evacuate its diplomats in Kiev, and high-profile accusations that Russia plans to build a pro-Russian puppet regime. When the loudest voice in Europe can only be sung across the sea in English, people know that Europe represented by the European Union has been obviously marginalized on the issue of Ukraine.

In fact, Germany, France and other major European countries often take a different position on the issue of Ukraine and Russia than the US’s “blindly anti-Russian” diplomatic and political inertia. Lukansk) and other pro-Russian separatist regions have proposed special autonomy status, facing up to Ukraine’s history and Russia’s reasonable concern for Russians abroad, rather than the straightforward “pro-Ukraine and anti-Russian” approach like mainstream American politics. This difference in position between Europe and the United States sets the prerequisites for Europe to play an autonomous role in Ukraine.

However, the differences in positions of many European countries towards Ukraine, Russia, and even the United States have determined that unless Europe is a political leader with the determination and ability to promote a transnational consensus behind the scenes, like Merkel, Europe without a clear and specific unified proposition , it is difficult to be a competent negotiating opponent for Russia.

On January 25, American equipment and ammunition were delivered to the Kiev airfield. Ukrainian authorities have called for calm over the U.K. and U.S. judgment that Russia is almost imminent. President Zelensky also pointed out that the current situation is only the reality of the past eight years, and it seems that he wants to downplay the threat of Russia, so as to prevent the propaganda itself from having a substantial impact on Ukraine’s economy.

America’s role in Europe
The first crack in Europe stemmed from the disagreement between France and the former Warsaw Pact countries in Eastern Europe over the US military status in Europe. France, ever since General Charles de Gaulle came to power in the 1960s, has always had a clear inclination for defense independence, much like Macron today. France withdrew from NATO’s integrated military command system in 1966, requiring all non-French NATO troops to leave France. It was not until 2009 that France rejoined the integrated military command system. Macron’s “European army” proposition, and even today’s call for the European side to negotiate with Russia alone, excluding the United States to a certain extent, is also in the same vein.

On the eastern edge of the European Union, however, a group of countries that have long feared the Russian threat because of Soviet history see U.S. military support as the only umbrella against Russia, arguing that Macron’s European autonomy initiative will weaken the U.S., the only one. character of. In 2003, most of these countries ignored the opposition of the two European powers, Germany and France, and joined what Bush called the “coalition of the willing” to support the US invasion of Iraq – including Bulgaria, the Czech Republic, Estonia, Hungary, Latvia , Poland, Romania and Slovakia. To this day, they are still loyal supporters of the U.S. military deployment in Europe and loyal buyers of American weapons.

Even Finland and Sweden, which have not joined NATO due to their geographical proximity to Russia, saw the Russian army on the Ukrainian border at this time, and their immediate domestic response was to re-emerge the discussion of joining NATO. potential roles.

Considering that although Germany in Merkel’s era ostensibly supported the “EU army”, it was lip service but not real.

On January 19, Macron delivered a speech at the headquarters of the European Parliament plenary session in the eastern French city of Strasbourg. He reiterated the importance of EU strategic autonomy in light of the situation in Ukraine, saying that in the next few weeks the EU must come up with a final plan to establish a new security and stability order.

The tear of Nord Stream II
On the other hand, even if we disregard the different opinions of European countries on the necessity of US participation for the time being, the attitudes of major European countries towards Russia are not the same, or even opposed to each other. Therefore, even if the United States does not intervene, Europe itself may not be able to build a united front.

In Germany, natural gas supply is the core of relations with Russia, and its diplomacy with Russia is often based on pragmatism, but not on the European standard dominated by the United States. After Merkel brought forward the deadline for Germany’s complete nuclear disarmament to 2022 in 2011, the “North Stream 2”, which bypassed Ukraine, has become a symbol of German pragmatism. Fewer cracks in European countries’ policies towards Russia.

As early as 2016, the national leaders of the above-mentioned members of the Bush “Alliance of Will” (except Bulgaria) had jointly signed a letter to the European Commission expressing their opposition to the construction of Nord Stream 2. France, which advocates the use of nuclear energy rather than natural gas, has always been quite skeptical about Nord Stream 2. After Russian opposition leader Alexei Navalny was arrested and jailed on his return to China early last year, officials under Macron have publicly called on Merkel’s government to suspend the Nord Stream 2 project. However, since Macron’s European independence cannot be without the support of Germany, France’s remarks tend to be tactful and low-key.

Construction of Nord Stream 2 is now complete and is awaiting approval from Germany.

The tension in Ukraine at the moment highlights the embarrassing position of Germany’s pragmatic Russia policy. Although the diplomacy of the new German government is dominated by the Green Party, which has a tougher stance on Russia, German Foreign Minister Annalena Baerbock refused to export defensive weapons to Ukraine during her visit to Ukraine earlier. It is even more necessary to bypass German airspace.

Earlier, German Navy Chief Kay-Achim Schönbach claimed that Ukraine would never retake Crimea, Putin should be respected in Ukraine, and called on Europe to “join Russia to resist China”, which undoubtedly represents a very common situation in Germany. attitude towards Russia. (Schoenbach has resigned after the related recordings came out.)

Under pressure from many parties, although German Chancellor Scholz stated that if Russia invades, suspending the Nord Stream 2 plan is one of the sanctions that can be considered, but this is not the exact commitment expected by Eastern European countries. In their meeting with Macron, both avoided speaking publicly about Nord Stream 2, the “elephant in the room”, which also shows that Scholz has not changed his inheritance from his Social Democrats and even his predecessor Merkel. Frontal stance on Nord Stream II.

The survival and abolition of Nord Stream 2 can be regarded as the hardest card among the feasible sanctions options in Europe against Russia. When countries fail to reach an agreement here, it is impossible for Europe to build an effective front against Russia.

Europe that doesn’t matter
Furthermore, the Russian-Ukrainian issue is often an issue that has nothing to do with other EU countries other than Eastern Europe and that Europe cannot handle. When Italian Prime Minister Mario Draghi talked about the matter last month, he asked, “What can Europe do to stop Russia? This question should make us stop and think.” He pointed out that Europe does not have enough military power, and On top of the economic sanctions, he asked again, “If we want to impose sanctions on all natural gas, can we really implement sanctions in a strong way at this moment? The answer is obviously no.”

Just the day after Macron and Scholz met (January 26), Putin held a video conference with executives of Italian giants such as Pirelli, Generali and UniCredit. Talk about bilateral trade relations. The meeting has been informed by the country’s foreign ministry.

Although the geographical distance between European countries is small, the cultural and psychological distance is large. This attitude towards the situation on the other side of the continent is not incomprehensible.

At this moment, against the background of different EU countries, everyone has different definitions of what is Russia’s offensive, and even the most basic economic sanctions can be implemented under the circumstances. , it is even more difficult to reach an agreement. No matter how the parties emphasize solidarity in diplomatic rhetoric, it will not change this reality.

In the end, the Russia-Ukraine issue can only be resolved in the name of the United States or NATO led by the United States. For the time being, Europe cannot escape its fate of serving as a convenient location for US-Russian negotiations.