The West and Russia toughened their stances with one other on Saturday, with U.K. Prime Minister Boris Johnson vowing to shut down Russian access to the London financial centre if Russia invades Ukraine, and Russian President Vladimir Putin overseeing tests of his military’s missile systems.
Speaking at the Munich Security Conference, Mr. Johnson and Kamala Harris, the U.S. Vice President, vowed that the West would inflict enormous economic and financial costs on Russia if it invades Ukraine.
At the same event, Ukrainian President Volodymyr Zelensky said he did not know if an invasion was imminent, but pledged a robust defence if it comes. “No matter what, we are going to protect our beautiful land,” he said.
He appealed to the West for support and action, asking for sanctions against Russia to be implemented now unless Mr. Putin begins to withdraw his forces – estimated as high as 190,00 troops – from the Ukrainian borders. He added that the West’s near daily declarations of imminent war was doing Ukraine no economic favours as fear set in across the country.
CNN reported that the White House privately urged Mr. Zelensky not leave Ukraine to visit Munich for fear that Russia could make false claims that he had fled Ukraine.
Mr. Zelensky’s pleas came as U.S. Secretary of Defense Lloyd Austin, speaking from Lithuania, a former Soviet republic that has been a NATO member since 2004, said that Russia was “poised to strike” Ukraine. U.S. President Joe Biden had the same message on Thursday, accusing Russia of carrying out false flag operations to justify an attack.
Moscow denies that it is poised to invade, though it is using the weekend to conduct nuclear-capable ballistic and cruise missile tests in an apparent display of force designed to convince Kyiv that Ukrainian forces would be quickly overwhelmed in a war.
Mr. Johnson said the economic and financial punishment of the West would be unprecedented in its severity if Russian troops and armour cross into Ukraine.
“The UK has worked with the European Union and the United States to put together the toughest and strongest package of sanctions, " Mr. Johnson said. “If Russia invades its neighbour, we will sanction Russian individuals and companies of strategic importance to the Russian state. And we will make it impossible for them to raise finance on the London capital markets. And we will open up the matryoshka dolls of Russian-owned companies and Russian-owned entities to find the ultimate beneficiaries within.”
His reference to “individuals” was thought to be a reference to the billionaire Russian oligarchs who are close to Mr. Putin and who use London as a financial playground. In 2020, a U.K. parliamentary report referred to London as a “laundromat” for dirty Russian money.
Ms. Harris warned Russia of “significant and unprecedented economic costs” if Russia invades.
“Make no mistake, the imposition of these sweeping and co-ordinated measures will inflict great damage on those who must be held accountable,” she said. “And we will not stop with economic measures. We will reinforce our NATO allies on the eastern flank.”
But whether the United States and all the European NATO countries are united in their sanctions strategy is not certain. Germany may still be the weak link because of its strong trade ties to Russia and dependence on Russian energy to power its economy – Kremlin-controlled Gazprom supplies more than half of Germany’s imported natural gas.
Germany Chancellor Olaf Scholtz has yet to specifically say that Nord Stream 2, the new gas pipeline that travels through the Baltic Sea from Russian to northeast Germany, would be killed off if Russia invades; U.S. President Joe Biden last week said it would be.
Likewise, Europe does not appear united in cutting Russia out of the SWIFT global payments system, whose heart is a financial messaging network used by 11,000 banks and other financial institutions in 200 countries. Banning Russia from SWIFT has been called the “nuclear option” that would inflict deep financial damage on Russian banks.
But some European banks fear that eliminating Russia from SWIFT could backfire. For instance, Russian energy giant Gazprom would not be able to use SWIFT to collect payments for the gas it delivers to Europe, raising the question whether Gazprom would simply suspend deliveries. Equally, European banks and their clients could not collect payments from Russian banks.
The Globe and Mail
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