The financial options being considered to punish President Vladimir Putin if Russia invades Ukraine range from the sweeping to the acutely personal — from cutting Russia off from U.S. dollars and international banking to slapping sanctions on a former Olympic gymnast reported to be Putin’s girlfriend. Publicly, the United States and European allies have promised to hit Russia financially like never before if Putin does roll his military into Ukraine. Leaders have given few hard details to the public, however, arguing it’s best to keep Putin himself guessing. And weeks into the negotiations, it’s far from clear that Americans have succeeded in achieving U.S. and European consensus on what sanctions will be imposed, and what would trigger them. A look at some of the financial actions under consideration: SWIFT RETALIATION For the U.S. and its European allies, cutting Russia out of the SWIFT financial system, which shuffles money from bank to bank around the globe, would be one of the toughest financial steps they could take, damaging Russia’s economy immediately and in the long term. The move could cut Russia off from most international financial transactions, including international profits from oil and gas production, which in all accounts for more than 40% of the country’s revenue. Allies on both sides of the Atlantic also considered the SWIFT option in 2014, when Russia invaded and annexed Ukraine’s Crimea and backed separatist forces in eastern Ukraine. Russia declared then that kicking it out of SWIFT would be equivalent to a declaration of war. The allies — criticized ever after for responding too weakly to Russia’s 2014 aggression — shelved the idea. Russia since then has tried to develop its own financial transfer system, with limited success. The U.S. has succeeded before in persuading the SWIFT system to kick out a country — Iran, over its nuclear program. But kicking Russia out of SWIFT would also hurt other economies, including those of the U.S. and key ally Germany. U.S. lawmakers said last week the Biden administration is still analyzing how bad that impact would be. Annalena Baerbock, the foreign minister for Germany, asked by reporters about the proposed Russian SWIFT ban, seemed to express doubts. “The toughest stick won’t always ultimately be the most intelligent sword,” Baerbock said. DOLLAR CLEARING The United States already holds one of the most powerful financial weapons to wield against Putin if he invades Ukraine — blocking Russia from access to the U.S. dollar. Dollars still dominate in financial transactions around the world, with trillions of dollars in play daily. Transactions in U.S. dollars ultimately are cleared through the Federal Reserve or through U.S. financial institutions. Crucially for Putin, that means foreign banks have to be able to access to the U.S. financial system to settle dollar transactions. The ability to block that access gives the United States the ability to inflict financial pain well beyond its borders. Previously, the U.S. has suspended financial institutions from dollar clearing for allegedly violating sanctions against Iran, Sudan and other countries. Biden indicated to reporters that cutting off Russia’s and Russians’ ability to deal in dollars was one of the options the U.S. was studying. Unlike the SWIFT option and the other financial measures, it’s one the U.S. could do on its own. Many Russians and Russian companies would be stymied […]

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