International perspective: the Ukraine crisis

Read how regions are reacting to the crisis in Ukraine from our teams in Washington, Beijing and Brussels.

Washington

We should expect to see the Biden administration’s aggressive posturing on Russia continue. The White House has unveiled an unprecedented set of sanctions that could be reasonably seen as economic warfare against Russia.

The administration has:

• Banned dollar trading with the Central Bank of Russia and the Russian National Wealth Fund
• Blacklisted Sberbank, Russia’s second largest bank, from processing transactions in US dollars
• Frozen the US-held assets of three other Russian banks
• Frozen the US assets of major oligarchs
• Outlawed Russian state-owned enterprises from selling debt instruments in the US.

The Biden administration has also set an embargo on sensitive American technological parts that could fuel the Russian war effort.  Sanctioning energy giant Rosneft is not on the table but could be held in reserve in case the violence gets worse.

The Biden administration has also requested that Congress authorises almost $7bn in military and humanitarian aid to send to Ukraine, which is currently being debated and revised on Capitol Hill. Congressional leaders in both parties have implied that they are willing to go beyond the White House’s request and spend up to $10bn to accommodate the effects of refugee flows into Eastern Europe.

Beijing

In the current situation, the People's Republic of China (PRC) has little to gain and a great deal to lose from its current position on Ukraine. Beijing is trying to strike an impossible balance by pursuing three goals at the same time:

• A strategic partnership with Russia
• Commitment to foreign policy principles of ‘non-interference’
• A desire to minimize any collateral damage from EU and US sanctions.

It is assumed that China will provide Russia with an economic lifeline via resource deals, bank lending, conducting trade in RMB, or further purchases of oil, gas, and wheat as international sanctions snowball. China will also hope to secure its major economic and trade investments in Ukraine (particularly the inroads made by the Belt and Road Initiative), regardless of the current or future leadership in Kyiv. China will need to be cautious though that they do not fall foul of sanctions themselves. With existing concerns about China in the West this situation could be used to increase those tensions and build greater ‘like minded’ alliances.

Brussels

The EU has shown unity its decision to stand up to Russian aggression. Restrictive sanction measures now apply to total of 680 individuals and 53 entities.

• The EU has green lit a package of measures banning Russian banks from the SWIFT international payments system, including VTB, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank and VEB
• The EU has also banned access to EU airspace and EU airports by Russian carriers of all kinds, and delivered hundreds of millions of euros worth of humanitarian and military aid.

The EU has also accepted a request from Ukranian President Volodymyr Zelenskyy to allow his country to gain “immediate” membership under special procedure, although it is unlikely to go through at this time. Other concerns include an increasingly volatile energy market with Russia providing 35% of the EU’s natural gas supply, and a potential refugee crisis. Putting in place the relevant long-term support mechanisms will be a prime consideration for the EU in the coming months.