March 1, 2022

CRS Summarizes U.S. and European Sanctions on Russia

The Congressional Research Service ("CRS") reviewed the sanctions imposed on Russia by the United States and other Western nations in response to Russia’s invasion of Ukraine.

The researcher summarized the various financial and trade sanctions:

SWIFT Sanctions

The Society of Worldwide Interbank Financial Telecommunication (“SWIFT”), the system used for cross-border payment messaging, is removing certain Russian banks from the network to make it more “difficult for them to process cross-border payments.” CRS noted, however, that not all Russian banks had been removed from SWIFT to allow “continued payments for European imports of Russian natural gas.”

Central Bank and Sovereign Debt Sanctions

The G-7 countries are freezing Bank of Russia assets in their jurisdictions. CRS researchers estimated that about half of the approximately $630 billion in Russian foreign reserve holdings could be frozen. Additionally, the researchers described sanctions that restrict Russia’s access to Western capital markets and ability to process transactions in U.S dollars - with a notable exception for energy-related transactions.

Export Controls

CRS researchers considered the U.S. Department of Commerce’s Bureau of Industry and Security notice of a new rule that would block the export of certain technologies to Russia, including goods made in foreign countries with “controlled U.S. technology.” The researchers asserted that the new rule targeted technologies used by the Russian military and was not all-encompassing, allowing for certain exceptions like consumer electronics.

CRS researchers concluded that these sanctions would likely result in (i) a run-on Russian banks, (ii) disruption to Russian capital markets, and (iii) depreciation of the Russian currency along with inflation. CRS noted that Western economies would also be negatively affected because of their reliance on Russian energy and commodities like wheat, metals, and chemical gases.

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