Following the Kremlin’s invasion of Ukraine, Russia has now become the world’s most sanctioned country.
That’s according to a report from Castellum.ai, a global sanctions-tracking database. Russia has now become the target of nearly 3,000 new sanctions after dozens of nations condemned President Vladimir Putin’s attempts to overthrow the Ukrainian government.
With the combination of sanctions against Russia that had already been put in place before the invasion as well as the latest penalties, Russia has racked up a historic 5,532 sanctions.
Russian sanctions even surpassed Iran who faces over 3,600 sanctions mostly for its continued efforts to manufacture a nuclear program as well as its financial support of well-known terrorist organizations.
The United States and its allies have retaliated against Russia with a series of financial penalties, reflecting a massive change in how conflicts can be waged in a world that is globalized, digital and highly dependent on accessing money electronically.
There have been economic targets in the past that depended on military maneuvers such as factory bombings, blockades and the capture of strategic resources. But the waves of sanctions unleashed over the past several weeks have demonstrated how financial markets can respond faster than setting up conventional weapons.
The sanctions also are a substitute for direct military action against Russia by the U.S. and its allies. President Joe Biden has repeatedly said there will be no U.S. troops on the ground, even as weapons and materials are provided to Ukraine.
The impact of the sanctions likely depends on the pace of the fighting and whether Russia takes Ukraine or finds itself in a slog in which the pain of any sanctions becomes more acute over time. But the value of the ruble has fallen about 35% since Friday, according to the financial data firm FactSet. The sharp decline of the currency has triggered higher inflation, higher interest rates and shortages of goods that hurt regular people in Russia.
So far, the U.S. and international partners have gone after Russia’s largest banks, its central bank and finance ministry, and moved to block certain financial institutions from the SWIFT messaging system for international payments.
But the rules issued by the U.S. Treasury Department allow Russian energy transactions to keep going through non-sanctioned banks that are not based in the U.S. in an effort to minimize any disruptions to the global energy markets.
Meanwhile, inflation, at a 40-year peak and fueled in large part by gas prices, has hurt Biden politically with voters heading into the November elections.
On Tuesday, Biden decided to ban Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine, according to a person familiar with the matter.
"We're banning all imports of Russian oil and gas and energy. That means Russian oil will no longer be accepted at U.S. ports," the president announced at a press briefing.
Biden had explained his reluctance to impose energy sanctions at the outset of the conflict two weeks ago saying that he was trying "to limit the pain the American people are feeling at the gas pump."
Before the invasion, Russian oil and gas made up more than a third of government revenues. Global energy prices have surged after the invasion and have continued to rise despite coordinated releases of strategic reserves, making Russian exports even more lucrative.
The sanctions created a possible trade-off for Biden between his political interests at home and abroad. By invading Ukraine, Russia has potentially fed into the supply chain problems and inflation that have been a crucial weakness for Biden, who now is trying to strike a balance between penalizing Putin and sparing American voters.
Biden specifically highlighted the Russian energy carve-outs as a virtue because they would help to protect U.S. families and businesses from higher prices.
"Our sanctions package we specifically designed to allow energy payments to continue," he said.
Restricting the world’s largest exporter of natural gas and second-largest exporter of oil, after Saudi Arabia, could hurt the unity that U.S. officials say is key to confronting Putin.