The measures are designed to cripple Russia’s economy and force President Vladimir Putin to halt military action.
What is a sanction?
A sanction is a penalty imposed by one country on another, often in order to stop it acting aggressively or breaking international law.
Sanctions are often designed to hurt a country’s economy, or the finances of individual citizens such as leading politicians. They can include travel bans and arms embargoes.
They are among the toughest measures nations can use, short of going to war.
What sanctions are Western nations imposing?
British Prime Minister Boris Johnson said he was imposing a series of measures:
- All major Russian banks will have their assets frozen and they will be excluded from the UK financial system. This includes a full and immediate freeze on VTB bank
- Laws to stop major Russian companies and the state raising finance or borrowing money on UK markets
- Asset freezes on 100 new individuals or entities
- Russia’s Aeroflot airline will be banned from the UK
- Export licences suspended for dual use items which can be used for military purposes
- A stop to exports of high-tech items and oil refinery equipment
- A limit on deposits Russians can make to UK bank accounts
The prime minister said “oligarchs in London will have nowhere to hide”.
Similar financial sanctions will be extended to Belarus for its role in the assault on Ukraine, he said.
US President Joe Biden later followed suit, declaring that Russia “chose this war” and would bear the consequences:
- Four major Russian banks will have their assets frozen and be cut off from US dollar transactions
- Sanctions are also being imposed on additional Russian elites with links to the Kremlin
- The US and its allies will cut off more than half of Russia’s high-tech imports to stop the country from being able to modernise its military, build ships and aircraft and advance in aerospace
The EU, meanwhile, said it had agreed on Thursday to a sweeping set of sanctions against Russia, which would have “massive and severe consequences”.
“These sanctions cover the financial sector, the energy and transport sectors, dual-use goods as well as export controls and export financing, visa policy, additional listings of Russian Individuals and new listing criteria,” it said in a statement.
The US, UK, EU and others had already imposed limited sanctions after Russia recognised the independence of two breakaway republics in eastern Ukraine.
The measures targeted Russian banks and individuals, and took steps to cut Russia out of financial markets.
German chancellor Olaf Scholz put on hold permission for the Nord Stream 2 gas pipeline from Russia to Germany to open.
What other sanctions could Russia face?
Western nations are lining up harsher sanctions. Options could include:
Excluding Russia from Swift
One measure would be to exclude Russia from the financial messaging service Swift. Ukraine has called for this to be done immediately.
Swift allows quick transactions and is used by 11,000 financial institutions in 200 countries.
Banning Russia from it would delay the payments Russia gets for exports of oil and gas.
When Swift banned Iran in 2012 – under pressure from the US – Iran lost almost half of its oil export revenues and 30% of foreign trade.
However, a Russian senator warned that if Russia were blocked from Swift, Europe might no longer be sent its oil and gas.
And Russia could focus on other customers and get paid through other systems – for example, China’s Cross-Border Interbank Payment System.
Mr Johnson says there is potential to cut Russia out from Swift.
However, Mr Biden says this is not being proposed “right now”, and the EU is thought unlikely to take this measure.
Blocking Russian gas and oil exports
Oil and gas makes up a fifth of Russia’s economy and half of its earnings from exports.
As such, refusing to buy its oil and gas would be a very tough sanction.
However, it would also be damaging to Western nations that rely on it.
Russia supplies 26% of the EU’s crude oil and 38% of its gas. Even a brief cut in gas supply would raise energy prices.
Closing off Russia to the world
The US could ban Russia from transactions involving dollars by introducing penalties for firms allowing it to do so. The UK has also threatened to stop Russian companies using the pound.
Western nations could also ban exports of high-tech goods to Russia, such as semiconductor microchips.
This would affect Russia’s defence and aerospace sectors and industries like car production.
The US, EU and UK have already blacklisted some Russian banks.
Blacklisting more of them might mean Moscow would face a big fall in its currency, the rouble, and a financial crisis.
The Russian government would have to bail out the banking system, at great expense. However, it has built up reserves of over $630bn (£464bn) to deal with economic shocks.
The UK government could also take further action against Russian money in London financial institutions and banks.
It says it is using “unexplained wealth orders”, requiring people to say where their cash has come from.
But only a handful of these orders have ever been used.
The cost of sanctions to the West
Every measure Western nations take against Russia could also affect their own economies.
Hitting the Russian banking sector could damage firms which do business in Russia, or have assets in its banks.
An export ban on high-tech goods would hit many Western manufacturers.
Most importantly, Europe relies on Russia for 40% of its natural gas.
Russia’s foreign ministry has threatened to introduce sanctions of its own against the West. This may include reducing or shutting off gas supplies to Europe.
