RUSSO-UKRAINIAN WAR
Sanctions: Ban on Russia’s oil proposed
The European Union proposes to ban all oil imports from Russia
The European Union, as President Vladimir Putin’s forces continue to wage war against Ukraine, proposes to ban all oil imports from Russia. The ban, if the proposal is successful, might take effect by the end of 2022. The knock-on impact will remove Russia’s biggest bank, Sberbank, from SWIFT (Society for Worldwide Interbank Financial Telecommunication).
SWIFT, legally designated S.W.I.F.T. SC, is headquartered in La Hulpe, Belgium. It’s a cooperative society that provides service to numerous banks around the world. Banks need a financial mechanism to facilitate the quick and easy execution of financial transactions and payments between them. Removing Sberbank from the well-established network could dramatically impact Russia’s ability to work with foreign banks.
The Moscow headquartered Sberbank, reorganised in March 1991 from the RSFSR (Savings Bank of Russia), has numerous dealings with several post-Soviet and European nations. The bank’s prominence, since being reorganised, is entirely a result of its close connections to the Russian government. Consequently, because of this, the reasons for targeting Sberbank are readily apparent. It isn’t difficult connecting the dots.
Elected officials throughout Europe have seen current sanctions imposed have been ignored. The desired effect hasn’t been realised. Putin, in the face of international opinion, has pressed ahead with his intentions to take control Ukraine. There are hopes a ban on Russia’s oil exports to European Union countries might make Putin reconsider his position.
Sanctions have not been kind to Sberbank. President Joe Biden, on Thursday, 24 Feb. 2022, announced wide-reaching sanctions which could potentially cripple the Russian economy. Several Russian individuals and companies, including Sberbank, were and still are the subject of Biden’s added sanctions.
New restrictions were placed on Sberbank’s operations. The Russian bank’s stock, something everyone should have seen coming, took a huge nose-dive. The stock, within days of Biden’s announcement, lost more than half of its value.
Sberbank Europe, only four days after the Biden announcement, was on the brink of bankruptcy. The Deutsche Börse Group, one of Germany’s leading financial institutions, suspended trading Sberbank stock. Sberbank Europe, within only a few days, determined a strategic withdrawal from the European market was the only option. The withdrawal is reminiscent of the phrase “get out whilst we still have the shirts on our backs”.
Both Visa and Mastercard, adding more weight to the bank’s ever increasing financial issues, suspended all activities in Russia. Visa and Mastercard, globally recognised everywhere that accepts credit and debit card transitions, pulled the plug on cards issued by Russian banks. The scales are balanced. All cards issued in Russia by Russian banks no longer work in foreign countries. Conversely, referencing cards issued outside of Russia, all cards no longer work within Russia.