Diplomats from the United States and Europe continue to threaten Russia with new sanctions in an attempt to stop a feared invasion of Ukraine. But confusion remains over the sanctions that could be imposed.

During a visit to Kiev on Tuesday, German Foreign Minister Annalena Baerbock warned that Moscow would pay a “high price” if the crisis could not be resolved through diplomatic means.

His US counterpart, Anthony Blinken, warned last month of “massive consequences” if Russian President Vladimir Putin ordered military action against Ukraine, after the Kremlin rounded up around 100,000 troops on the common border.

Vivid shock and SWIFT

Around the same time, rumors emerged that Washington might be pursuing the so-called nuclear option of cutting off Russian banks from the SWIFT (Society for Worldwide Interbank Financial Telecommunications) payment system – a global network used by nearly all institutions. financial institutions to transfer sums of money to each other.

The exclusion of SWIFT, which is responsible for 35 million daily transactions transferring some 5 trillion dollars (4.4 trillion euros) around the world, would significantly disrupt the Russian economy, according to several financial analysts.

As well as making it harder for Russian banks to make and receive international payments, the measure would likely weaken the ruble significantly. Russian energy giants would be particularly affected.

Although the measure was widely seen as effective in steering Putin away from the brink of war, the German business daily Handelsblatt On Monday, quoted German government sources said excluding SWIFT was no longer an option.

Russian banks could be targeted

Handelsblatt said that this course of action was ruled out because it would also destabilize global financial markets and promote the development of alternative payment systems that would not be subject to oversight by Western countries.

Instead, the newspaper reported, Russian banks could face sanctions.

Russia and China have already developed their own alternatives to SWIFT, but they do not yet have the same global coverage.

A spokesman for the White House National Security Council, however, rejected the Handelsblatt story.

“No option is on the table. We continue to consult very closely with our European counterparts on the serious consequences for Russia if it invades Ukraine further,” the spokesman told Reuters news agency.

Few details have emerged on how Russian banks could be targeted this time, but Germany is keen to avoid restrictions so strict they make it difficult for Europe to pay for gas and oil imports from Russia. Russia, according to the newspaper.

Isolated like North Korea?

the FinancialTimes reported on Tuesday that the sanctions could be similar to those imposed on Iran and North Korea, which have virtually cut the countries off from the global economy.

In 2012, Iran became the only country to date barred from SWIFT under Western sanctions against its nuclear program.

The United States and the EU had already imposed sanctions on Russian banks and companies after Moscow’s 2014 annexation of Crimea, territory recognized by the United Nations as belonging to Ukraine.

The restrictions, targeting Russia’s arms and energy sectors, limit access to EU and US financial markets.

German business leaders have previously called for an easing of sanctions against Russia as Europe’s biggest economy has a lot to lose from new sanctions.

Pipeline persuasion

For example, Nord Stream 2 – a new gas pipeline that crosses the Baltic Sea from Russia to Germany – was completed late last year but has yet to receive permission to operate from the authorities. German.

The pipeline will bring more Russian gas to Western Europe. But opponents of the project, including Ukraine and the United States, argue that it would make Europe too dependent on Russian energy.

Berlin is under intense pressure from the United States and the European Union to suspend approval of Nord Stream 2 as part of sanctions efforts.

German Foreign Affairs Committee Chairman Michael Roth told ARD television on Tuesday that Berlin could not rule out using the pipeline as leverage against Russian aggression against Ukraine.

“If we really were to come to sanctions, and I still hope we will be able to avoid that, we cannot rule out things in advance that might be demanded by our partners in the European Union.” , Roth said.

German reluctance noted

Rafael Loss of the European Council on Foreign Relations told DW that Berlin had so far “shown very little determination” to help Ukraine deter Russia.

“Discussions in Berlin over the past two days have been dominated by all the things that Germany is unwilling to put on the table to defuse this crisis, namely Nord Stream 2, arms transfers and SWIFT .”

He also pointed to perceptions in Europe that talks between the US and Russia were “taking place above Europeans’ heads”, noting how EU foreign policy chief Josep Borrell , was angry that Brussels “does not play any significant role”.

Meanwhile, Russia’s finance minister warned last week that while further sanctions would be “unpleasant”, the country would pull through. “I think our financial institutions can handle it [if] these risks emerge.”

Edited by: Hardy Graupner