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Big Sanctions Against Russia – Sydsvenskan

The sanctions the US and UK have imposed on Russia are significant — but at the same time less comprehensive than many expected, according to SEB economist Per Hammarlund.

He also does not believe that Russia will be excluded from the Swift international system of transactions because it will harm the European economy.

Many expected sanctions on Russian energy exports, according to SEB economist Per Hammarlund. The photo shows a plant belonging to the Russian-German gas pipeline Nordstream 2. Photographic archive.

US President Joe Biden and British Prime Minister Boris Johnson have warned Russian President Vladimir Putin of severe sanctions if the Russian military attacks Ukraine. On Thursday, the governments of Washington and London introduced new sanctions against Russia – among other things, four major Russian banks will be closed from the US banking system and British technology exports to Russia will be restricted.

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Per Hammarlund, chief emerging markets strategist at major bank SEB, says that while restrictions on the export of technological equipment to Russia have an impact on the Russian economy and have the potential to reduce the country’s GDP growth, he disagrees that the sanctions are severe.

Reliance on Russian gas

It’s a little disappointing because expectations for sanctions were raised when Biden and, to some extent, Europe talked about sanctions that had never been seen before. We’ve never seen before against Russia, but the sanctions against Iran and North Korea have been much harsher. Still, I agree with Biden, who struggled a bit to explain that there are significant penalties, he says.

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Russia’s energy exports account for about 20 percent of the country’s gross domestic product and would therefore be a concrete target of foreign sanctions. But many European countries rely heavily on Russian natural gas to be able to support a decision to halt gas pipelines from Russia to Europe.

– There is a risk that in this case you will have to introduce a rationing of energy consumption. Hammarlund says Europe would be a very big step.

alternative energy sources

He added that such a decision can only come later if economies’ dependence on Russian natural gas decreases.

– The bloodier the conflict becomes, the longer it takes, the greater the risk of sanctions on Russian energy exports. But he says it could probably take a year because they want to make investments in alternative energy sources before shutting down energy exports from Russia.

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The G7 and the European Union discussed the possibility of excluding Russia from the Swift system for international banking transactions, but neither the United States nor the United Kingdom took such a step. Britain is open to the proposal, while US President Biden has stated that European countries oppose it.

Hammarlund does not believe that Western countries will press, at least in the short term, for rapid cooperation to the exclusion of Russian banks.

– It is related to energy exports, in which Gazprombank and Sberbank bear most of the payments, and therefore you cannot dispose of them in Swift in the near future, he says.