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Western sanctions on Russia begin to bite

As the Bank of Russia says ‘the volume of banknotes ready for loading into ATMs is more than sufficient’


Pete Carvill

Economic sanctions on Russia following its invasion of Ukraine have begun to bite, with wide reports of shortages and rising prices in the country.

According to the BBC, financial sanctions include the freezing of assets from the Bank of Russia, the nation’s central bank, limiting its ability to access $630bn in international dollar reserves. The US, UK, and the EU have also banned people and business from making transactions with the same bank, while multiple nations around the world have agreed to remove seven Russia banks from the Swift system.

Various export bans have also been imposed on products that could have civilian or military uses. Germany, meanwhile, has hit the pause button on the Nord Stream 2 gas pipeline, a move that came as a shock to many following chancellor Olof Scholz’s indecision in recent weeks.

The effect of the sanctions, says German broadcaster Deutsche Welle, have left Russia’s economy ‘in crisis’.

It wrote: “The currency collapse has led to long lines outside ATMs across Russia, with fears rising over further plunges in the value of the ruble.”

Other measures taken by the West have been the removal of certain media outlets.

In a statement, the European Council said: “On 2 March 2022, the EU decided to suspend the broadcasting activities in the EU of the Russian state-owned outlets Sputnik and Russia Today until the aggression against Ukraine is brought to an end and until the Russian Federation and its associated outlets cease conducting disinformation and information manipulation actions. It also introduced a Swift ban for seven Russian banks.

Meanwhile, on 25 February, the Bank of Russia said it was going to increase the amount of cash it gives to banks in order to replenish ATMs. That came a few days before the bank raised its interest rates to 20%.

A statement on the Bank of Russia’s website said ominously: “The volume of banknotes ready for loading into ATMs is more than sufficient. All customer funds in bank accounts are fully preserved and available for any operations. Other measures taken by the central bank include increasing the declared capital of state-backed reinsurer RNPC from ₽71bn ($0.6bn) to ₽300bn ($2.57bn).