The United States is preparing a sweeping tranche of economic sanctions to “maximize pain in the Kremlin” if Russia invades Ukraine, The Independent has been told by a US government source.
These could include blocking financial transfers from Russia’s three biggest banks, two additional sources said.
Some 100,000 Russian troops are believed to have been deployed by Moscow to Ukraine’s border with Belarus. British armed forces minister, James Heappey, has said that Russian forces are already in Ukraine. Experts on the region said that an invasion was now more probable than not.
The first US official quoted above said that the US, working with its partners and allies is “preparing massive sanctions” that are far beyond any measures which were on the table in 2014, when Russia annexed Crimea. These could include export controls, as well as financial sanctions.
They will be designed to “maximize pain the Kremlin while also minimizing the spillover” elsewhere, the US government source said.
In preparation for this effort the country is: “Working with countries and companies around the world to ensure the security of supply of natural gas and to mitigate against price shocks for the American people, Europe and the global economy.”
The US is working with European allies to help consider how best to “deploy their existing energy stockpiles”.
The US has also been in talks with natural gas exporter Qatar and other exporters of the energy stuff including north African countries. The talks with major exporters are aimed at ensuring “a surge in natural gas output to European buyers” the US government official said.
This includes requests to ask for flexibility under existing contracts between exporters and buyers in Asia, in order to “enable diversion to Europe” of the critical supplies.
Two additional sources familiar with US government’s planning said that these could include both energy and financial sanctions and include blocking of transactions from some of Russia’s largest banks, such as Sberbank, VTB and Gazprombank.
Germany is also now braced to halt the final stages of Nord Stream 2, the vast, billion pound gas pipeline from Russia, should the country invade Ukraine, US sources said. This is a significant shift in Berlin’s approach to the issue, won by assurances in talks with the US that there would be strong support for their energy supplies from non-Russian exporters.
It comes after the US secretary of state, Antony Blinken, told German news outlet ZDF’s Heute Journal last week: “We oppose the pipeline. But I’ve heard the chancellor say as recently as a few days ago that in the event of Russian aggression against Ukraine, there will be severe costs and everything will be on the table.”
There was now an “above 50 per cent chance of invasion”, Helima Croft, managing director and head of commodities strategy at RBC Capital Markets told The Independent. In order to avoid conflict, Vladimir Putin, the Russian premier, would need to “unbundle his demands” that require NATO to be removed from “his sphere of influence”, she added.
Ian Bond, director of foreign policy at the Centre For European Reform (CER), told a webinar that he was “pessimistic” about the prospects for invasion, and that he believed there was a very real risk that an invasion could lead to a new Cold War between Russia and western powers.
Speaking in parliament on Tuesday, British prime minister Boris Johnson said that if Russia does invade Ukraine, the UK would “look to contribute to any new NATO deployments to protect our allies in Europe”.
Mr Johnson said that no one would gain from an invasion, and that “Russia would create a wasteland” in the country.