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How US economic sanctions work

Economic sanctions remain one of the most powerful tools the US has in its foreign policy arsenal. And as Russian forces continue to pile up along the border with Ukraine, U.S. officials are hoping the threat of these sanctions can deter a full-scale invasion.

“The point of sanctions is that they are most effective if they don’t have to be applied,” said Olga Oliker, program director for Europe and Central Asia at the International Crisis Group. “They’re most effective if you can convincingly threaten something the other guy doesn’t want him to do so much, and then do what you’re trying to keep him from doing.”

In addition to sanctions targeting individuals or specific companies, some proposals include cutting Russia off from the SWIFT system, which would remove Russian institutions from an important global financial network.

Another target is the near-completion of the Nord Stream 2 gas pipeline, which, once operational, will double the amount of natural gas transported from Russia to Germany via the Baltic Sea and likely reduce the need for other pipelines such as the Urengoy-Pomary-Uzhgorod gas pipeline. . which passes through Ukraine.

Texas Republican Senator Ted Cruz has proposed a bill that would require automatic sanctions against Nord Stream 2 operators within two weeks of Russia’s invasion of Ukraine. The bill did not pass on Thursday, but received several Democratic votes in the final count.

Democratic Senators Robert Menendez of New Jersey and Jeanne Shaheen of New Hampshire have proposed an alternative bill that would “impose tough sanctions on the Russian banking sector and high-ranking military and government officials if the president [Vladimir] Putin is stepping up hostilities in or against Ukraine.”

“The Ukrainian army is not the same as it was when Russia invaded Crimea,” Shahin said in an interview with CNBC.com. “They had upgraded their weapons systems – the United States supported them in this. Instructors from both NATO and the United States worked in our country. So the circumstances are very different from those that were when Russia entered the Crimea. And we must do everything we can to make it clear to Putin that it will be a cohesive response if he takes this action.”

Watch the video above to find out how US sanctions work, whether the US can convince allies to cut Russia off from the important SWIFT financial network, and what’s next in the foreign policy standoff between the West and Russia.


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