Unprecedented Western Sanctions To Hit Russian Economy Hard

Since 26 February, the United States and European countries have announced a series of severe economic, financial, and political sanctions in retaliation for Russia’s military invasion of Ukraine, with the aim of suffocating the Russian economy. Although many of these penalties have already been applied to other countries (such as Iran or Venezuela), Russia’s integration and weight in world trade gives these western restrictive measures an unprecedented character. All the Western sanctions taken in retaliation for the war initiated by Moscow on Ukrainian territory are of a unique scope and testify to an unprecedented coordination of European countries against the Kremlin. States, usually reluctant to take strong diplomatic positions and measures in the face of political tensions, have joined the US-EU coalition to sanction the Kremlin – those are the United Kingdom, Switzerland, Norway, Iceland and Northern Macedonia. On Monday February 28, the RUB lost up to 30% against the dollar intraday, exchanged at a historical low of 110.77, a record broken on Tuesday when the RUB hit 117. The RUB traded yesterday at 104 vs. USD and 115 vs. EUR. Russian sovereign risk is exploding, 5-year CDS widening from 575bp on Friday 25 February to 2000bp on 1 March during the session. They returned to the level of 1250bp yesterday but remain well beyond its levels post-annexation of Crimea in 2014 (630bp). That same day the Central Bank of Russia raised its key rate from 9.50% to 20% and set up a capital control to contain the fall of the ruble and maintain the functioning of the banking system. The Russian President has also forbidden residents to transfer their currency abroad and to honour their foreign currency debts, to prevent a liquidity crisis. Russian exporters were al so asked to convert 80% of their earnings into foreign currency into rubles. As the conflict intensifies and as new sanctions evolve on an hourly basis, we present in this paper a fairly comprehensive list of sanctions that have been announced against Russia .