Biden administration officials said on Saturday there would be new restrictions by the United States and its allies against selling rubles to Russia, undermining the country’s ability to back its currency in the face of new sanctions against its financial sector. That, in turn, could cause inflation — and while administration officials haven’t said so explicitly, they clearly hope it could fuel protests against Mr Putin’s regime in Russia.
“We know that Russia has taken steps since 2014 to protect its economy from sanctions, in part through the hoarding of foreign exchange reserves,” said Emily Kilcrease, senior fellow at the Center for a New American Security. “Central bank sanctions will limit their ability to leverage this asset, while limiting their ability to conduct monetary policy of any kind to manage the economic damage caused by other sanctions.”
The United States and its allies have also announced measures to pressure Russian elites, including creating a task force that says the White House “would identify, hunt down and freeze the assets of sanctioned Russian companies and oligarchs – their yachts, mansions and any other ill-gotten gains we can find and freeze under the law”.
The idea is to hit those closest to Mr. Putin and undermine their ability to live in both Russia and the West. In another new initiative, the United States and its allies have said they will seek to limit the sale of so-called golden passports that allow wealthy Russians linked to the Russian government to become citizens of Western countries and access their financial systems.
Although the measures are among the toughest taken to date, the announcement does not correspond to a general cut of Russia from SWIFT, which some officials see as a kind of nuclear option. Such a move would have essentially cut Russia off from much of the global financial system.
And some experts say that can only push Russia to expand the SWIFT alternative it created years ago when it started trying to “protect” its economy. But Russia’s equivalent system is primarily national; to make it a competitor to SWIFT, officials say, would require teaming up with China.
Saturday’s decisions came the same day German Chancellor Olaf Scholz announced his government was approving a transfer of anti-tank weapons to the Ukrainian military, ending its insistence on providing only non-lethal aid, like helmets.