Factbox: How Western sanctions target Russia, article with image

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Skyscrapers of the Moscow International Business Centre, also known as “Moskva-City”, are seen from Ostankino tower on a frosty winter day in Moscow, Russia January 8, 2017. REUTERS/Maxim Shemetov/File Photo

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NEW YORK, April 6 (Reuters) – The West’s punishment of Moscow over its invasion of Ukraine ramped up this week following the discovery of civilians shot dead at close range in the Ukrainian town of Bucha, seized from Russian forces. read more

Below are details on Westernsanctions so far:

BANKS & FINANCIAL FIRMS read more

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The U.S. imposed “full blocking sanctions” on Sberbank (SBER.MM), which holds one-third of Russia’s total banking assets, and Alfabank, the country’s fourth largest financial institution. That means U.S. persons cannot do business with the lenders, while any of their assets that touch the U.S financial system are frozen.

Britain also on Wednesday froze Sberbank’s assets.

U.S. President Joe Biden on Wednesday was set to sign an executive order prohibiting new investment in Russia by U.S. persons, which includes a ban on venture capital and mergers, U.S. officials said. read more

Previous sanctions by the U.S., Britain and other Western allies in the days following Russia’s Feb. 24 invasion of Ukraine, which it calls “a special military operation,” kicked the vast majority of Russian banking assets out of those countries, although some activities were allowed to continue.

U.S. banks were required to sever correspondent banking ties, which allow banks to make payments between one another, with Sberbank. Russian lenders VTB, Otkritie, Novikombank and Sovcombank, were also subject to full blocking sanctions.

European Union sanctions hit 70% of the Russian banking system. read more

INDIVIDUALS

The United States on Wednesday announced sanctions on Russian President Vladimir Putin’s two adult daughters, Russian Foreign Minister Sergei Lavrov’s wife and daughter, and senior members of Russia’s security council.

Separately, the U.S. Justice Department on Wednesday said it charged Russian oligarch Konstantin Malofeyev with violating existing sanctions, saying he provided financing for Russians promoting separatism in Crimea. read more

The U.S. government on Feb. 25 joined European countries in slapping sanctions on Putin and Lavrov.

More than 100 Russian elites, including members of Putin’s inner circle, members of the Russian parliament, and Russian executives and businessmen, have been sanctioned since Feb. 24 by Western nations. read more

SWIFT BAR read more

The United States, Britain, Europe and Canada in February and March blocked certain Russian lenders’ access to the SWIFT international payment system, preventing the lenders from conducting most of their financial transactions worldwide.

The movealso placed restrictions on the Russian central bank’s international reserves, the nations said in a joint statement. read more

SWIFT is used by more than 11,000 financial institutions in over 200 countries.

SOVEREIGN DEBT & CAPITAL MARKETS

This week, the United States stopped the Russian government from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks.

Under earlier sanctions, foreign currency reserves held by the Russian central bank at U.S. lenders were frozen, but the Treasury had allowed Moscow to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis. On Monday, Washington decided to cut off Moscow’s access to the funds, according to a U.S. Treasury spokesperson.

In late February, Britain, the European Union and the United States put new restrictions on dealing in Russian sovereign debt. read more

Britain announced a ban on Russian sovereign debt sales in London, the European Union banned EU investors from trading in Russian state bonds, and U.S. investors, who were already barred from investing in Russian sovereign debt directly, were banned from purchasing it in the secondary market from March 1.

ENERGY

U.S. President Biden on March 8 imposed an immediate ban on Russian oil and other energy imports and Britain said it would phase out imports through the end of 2022. read more

Berlin on Feb. 22 halted the certification of the Nord Stream 2 Baltic Sea gas pipeline project designed to double the flow of Russian gas direct to Germany. The following day the United States imposed sanctions on the company in charge of building the pipeline. read more

The United States and the EU already had sanctions in place following Moscow’s 2014 annexation of Crimea on Russia’s energy and defense sectors, with state-owned gas company Gazprom (GAZP.MM), its oil arm Gazpromneft and oil producers Lukoil, Rosneft and Surgutneftegaz (SNGS.MM) facing various types of curbs on exports/imports and debt-raising.

CURBING TECHNOLOGY

Sanctions proposed by the European Union on Tuesday, which the bloc’s 27 member states must approve, would bar Russian imports worth 9 billion euros ($9.8 billion) and exports to Russia worth 10 billion euros, including semiconductors and computers, and stop Russian ships entering EU ports. read more

The EU earlier vowed to introduce measures to crimp Russia’s technological position in key areas – from high-tech components to cutting-edge software.

The U.S. Commerce Department imposed export controls that severely restrict Russia’s access to semiconductors, computers, telecommunications, information security equipment, lasers, and sensors that it needs to sustain its military capabilities.

Similar measures were deployed during the Cold War, when sanctions kept the Soviet Union technologically backward and crimped economic growth.

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Reporting by John McCrank in New York, Michelle Price in Washington, Karin Strohecker and Catherine Belton in London; Editing by Chris Reese

Our Standards: The Thomson Reuters Trust Principles.

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Ukraine Live Updates: Biden Taps U.S. Oil Reserves as War Disrupts Supply

Under growing pressure to bring down high energy prices, President Biden announced on Thursday that the United States would release up to 180 million barrels of oil from a strategic reserve to counteract the economic impact of Russia’s invasion of Ukraine.

With midterm elections just months away, gasoline prices have risen nearly $1.50 a gallon over the last year, undercutting consumer confidence. And the cost of diesel, the fuel used by most farmers and shippers, has climbed even faster, threatening to push up already high inflation on all manner of goods and services.

“I know how much it hurts,” Mr. Biden said Thursday as he announced the plan. “As you’ve heard me say before, I grew up in a family like many of you where the price of a gallon gasoline went up, it was a discussion at the kitchen table.”

Mr. Biden has few tools to control commodity prices that are set on global markets, so he is turning to the Strategic Petroleum Reserve, ordering the largest release since that emergency stockpile was established in the early 1970s. But the move will most likely have a modest impact because it cannot make up for all the oil, diesel and other fuels that Russia used to sell to the world but is no longer able to.

“Our prices are rising because of Putin’s action,” Mr. Biden added, referring to President Vladimir V. Putin of Russia. “There isn’t enough supply. And the bottom line is if we want lower gas prices, we need to have more oil supply right now.”

Mr. Biden’s plan, to release one million barrels of oil a day for 180 days, would represent roughly 5 percent of American demand and 1 percent of global demand. To put that in context, Russian oil exports are down about three million barrels a day. The U.S. benchmark oil price fell about 6 percent on Thursday.

The administration’s announcement came as Russia conveyed mixed signals about its aims for the war in Ukraine, now in its sixth week. Despite Kremlin claims that it was withdrawing from the outskirts of Kyiv, the capital, fighting continued in that area on Thursday, and Western officials said they saw little evidence of a Russian pullback.

“Russia maintains pressure on Kyiv and other cities, so we can expect additional offensive actions, bringing even more suffering,” the NATO secretary general, Jens Stoltenberg, said at a news conference.

Russian officials also said they would allow a respite for greater humanitarian access to the devastated southeast port of Mariupol, once home to 400,000 people, which has come to symbolize Russia’s battlefield tactic of indiscriminate destruction. Previous agreements for pauses in fighting around Mariupol have repeatedly broken down.

Largely as a result of the ceaseless war, energy experts expect oil prices to stay high for a while without big interventions like the U.S. reserve release.

Reaction from the oil industry to Mr. Biden’s announcement was muted. The reserve has mostly been used to increase the supply of oil during wars, foreign threats to energy supplies or natural disasters. Smaller reserve releases by the Biden administration starting late last year have had little impact on the prices that drivers and businesses pay for fuel.

“It will lower the oil price a little and encourage more demand,” said Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas oil company. “But it is still a Band-Aid on a significant shortfall of supply.”

The American Petroleum Institute, which represents oil and gas companies, said Mr. Biden ought to encourage domestic oil production by reducing regulations. The reserve “was put in place to reduce the impact of significant supply chain disruptions,” said Mike Sommers, the group’s president, “and while today’s release may provide some short-term relief, it is far from a long-term solution to the economic pain Americans are feeling at the pump.”

After sinking to historically low levels during the early months of the coronavirus pandemic, oil prices have been climbing for the last year, reaching their highest levels in nearly a decade.

Oil exploration and production in the United States and elsewhere slid during the pandemic, and still has not quite recovered. American companies, under pressure from investors, have been cautious about spending too much money to drill new wells, lest prices fall again. Instead, many have been paying out larger dividends and buying back their stock.

While that calculation might make sense for individual businesses, it has caused political problems for Democrats who had hoped to reduce the use of fossil fuels to address climate change. Now, under attack from Republicans for high prices, Mr. Biden and Democrats are trying to get the oil industry to drill more.

Credit…Tannen Maury/EPA, via Shutterstock

Both sides of the political divide are eyeing the November congressional election, when inflation is expected to be a major issue.

Reacting to news of the release from the reserve, a spokesman for Representative Kevin McCarthy, the Republican leader in the House, accused the president of “attacks on American energy production in order to fulfill his campaign promise to ‘get rid of fossil fuels.’”

Mark Bednar, the spokesman, added: “As a result, the American people are paying the price, as gas is more than $4 per gallon, and we are more reliant on other countries for energy.”

But Senator Joe Manchin III, Democrat of West Virginia, welcomed the Biden announcement, saying it would “provide much-needed relief while also allowing for the simultaneous ramping up of domestic oil and gas production to backfill Russian energy resources.”

Aides to Mr. Biden are hoping to blunt Republican criticisms by taking actions to try to lower prices. In a statement about the oil release Thursday morning, the White House said that Mr. Biden was “committed to doing everything in his power to help American families who are paying more out of pocket as a result.”

They are also trying to pin some of the blame for high prices on oil companies, which the administration argues are not producing more energy to increase their profits. The administration plans to call on Congress to require companies to produce oil on more than 12 million acres of federal lands that are already permitted for extraction or pay fines, a proposal that will probably face an uphill climb.

Energy experts said the reserve release would pack more punch if other countries, like China, also sold oil from their stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases from national reserves.

Russian oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.

The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.

Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of progress. Energy traders are also concerned that demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.

“The price effect is likely to be short term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”

Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.

But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing reserves to ease shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.

The release is not without risk. Goldman Sachs analysts wrote in a research note that a large discharge could cause “congestion” on the Gulf Coast, keeping new oil production from fields in West Texas out of pipelines and storage tanks.

Mr. Biden’s move could also discourage Saudi Arabia and other producers from increasing supply to reduce prices. OPEC Plus, a group led by Saudi Arabia that includes Russia, on Thursday decided to maintain a policy of only modestly increasing supply.

Bob McNally, who was an energy adviser to President George W. Bush, said the release was “not big enough to offset the potential loss of Russian oil exports should the conflict and sanctions pressure continue to extend.”

The oil market tends to go in cycles, so the release may allow the government to sell high and, later, buy low, potentially earning billions of dollars for the Treasury. The government will use the money it makes from oil sales to refill the reserve, which in turn could help raise prices again.

While pushing up those prices, Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy and a former aide to President Barack Obama, said an eventual refill could also “send a signal to shale producers that may help encourage them to invest in more production, which may help with today’s potential shortages.”

The U.S. reserve contains nearly 600 million barrels, approximately a month of total American consumption, and it can release up to 4.4 million barrels a day. The stockpile was established after the 1973 energy crisis, when Saudi Arabia and other Arab producers proclaimed an oil embargo.

Megan Specia contributed reporting from Krakow, Poland, and Steven Erlanger from Brussels.

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Biden will tap oil reserve, hoping to push gasoline prices down.

Energy experts said the reserve release would pack more punch if other countries, like China, also sold oil from their stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases from national reserves.

Russian oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.

The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.

Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of progress. Energy traders are also concerned that demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.

“The price effect is likely to be short term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”

Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.

But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing reserves to ease shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.

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Uber, Lyft Drivers Struggle With High Gas Prices

When Adam Potash started driving for Lyft six months ago to help make ends meet, he was happy with the pay. The business was far from lucrative, but he was making about $200 a day before paying for costs like gas and car maintenance.

But as gas prices have risen in recent weeks, Mr. Potash has barely been breaking even. To compensate, he has focused on driving during peak customer hours and tried to fill up at cheaper gas stations in the area around San Francisco where he works. He has also reduced his driving time from about 45 hours each week to roughly 20 hours.

“It hurts. I don’t have money coming in,” Mr. Potash, 48, said of his reduced hours. “But I’m not willing to operate at a loss.”

Gig workers who drive for ride-hailing and delivery companies like Uber, Lyft and DoorDash have been hit hard by rising gas prices, because their ability to earn money is tied directly to driving hundreds of miles each week. And because the drivers are contract workers, the companies do not reimburse them for the cost of fueling up.

blog post on Monday.

DoorDash announced a gas rewards program on Tuesday. Those who use a prepaid debit card designed for DoorDash workers will get 10 percent cash back at gas stations, the company said, and DoorDash is adding bonus payments depending on miles driven. Grubhub also said it would boost driver pay.

Both Uber and Lyft say drivers have been making more money since lockdowns lifted than they did earlier in the pandemic or even prepandemic, even when accounting for rising gas prices. And both companies are promoting a partnership with an app called GetUpside that offers some cash back rewards for getting gas.

Gridwise, an app that helps drivers track their earnings and tallies data, found that drivers’ earnings had risen nationally in recent months, from an average of $308 per week in early January to $426 in early March. But gas costs for ride-hailing drivers have also gone up, from $31 per transaction to nearly $39 in the same period.

Uber and Lyft say the entirety of their new gas fees — 35 to 55 cents per trip for Uber and 55 cents for Lyft — will go to the drivers. But some drivers say the action is inadequate. Gas prices, on average, have increased 49 percent in the past year, according to AAA.

“That literally insulted every driver, and that was their first communication since gas prices were going up,” said Philippe Jean, an Uber and Lyft driver in Coopersburg, Pa.

Jennifer Montgomery, an UberEats driver in Las Vegas, where gas costs $5 per gallon, agreed that the gas fee “doesn’t even put a dent” in the cost of fuel, which for her has been at least $30 more each day since prices began to increase.

Ms. Montgomery, 40, said she was becoming disillusioned with the job, and had begun looking for other work that didn’t require her to drive. She has cut her six-hour, daily shifts in half, because “it’s really not a profit anymore.”

“I don’t want to deliver anymore,” she said. “Especially when you have bills to pay and rising cost of rent and mortgage, groceries — it affects everything.”

Mr. Jean mostly drives for Uber and Lyft during the winter and spring, when his work as a handyman tends to slow down. He said he enjoyed interacting with passengers and usually made $300 to $400 per week, with about $60 of that going to filling his tank.

Lately, though, Mr. Jean has been paying twice that amount for gas, and has had to cut back elsewhere to compensate — including by reducing his car insurance coverage.

“I’m driving Uber now hoping not to get in an accident, because if I do, I’m going to lose my car completely,” he said.

The gas price woes have actually caused Mr. Jean to drive more in the short term, because people with cars that get poor gas mileage have told him they have stopped driving. With his hybrid Toyota Prius, he figured he would be able to snap up some of their business and still be able to make some money. But Mr. Jean said he would most likely give up Uber altogether later in the spring when his handyman work picks up again, because of the high gas prices.

He questioned whether he or other drivers were even profiting from the ride-hailing business at all, after all of the costs involved.

“I think personally if I sat down and did the numbers, it would be break-even,” Mr. Jean said. “I don’t think we’re making money on it anymore. I think I’m afraid to admit it to myself, because then I would definitely stop doing it.”

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Shell to stop buying Russian crude oil, issues apology, article with image

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  • Shell to stop all spot purchases of Russian crude oil
  • Says it’s sorry it bought Russian crude cargo last week
  • Shell says Russia withdrawal could slow some refinery output

March 8 (Reuters) – Shell (SHEL.L) stopped buying Russian crude on Tuesday and said it would phase out its involvement in all Russian hydrocarbons from oil to natural gas over Ukraine, becoming one of the first major Western oil companies to abandon Russia entirely.

While Russian crude and gas has been exempt so far from Western sanctions, oil soared above $139 a barrel on Monday to its highest since July 2008 as the United States and European allies began to consider banning Russian oil imports.

U.S. lawmakers have called for bans but President Joe Biden’s administration has only sanctioned Russian oil tankers. Britain and Canada have also barred Russian vessels from landing at their ports in protest at Moscow’s invasion of Ukraine.

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Shell apologised on Tuesday for buying Russian oil last week after it had said it would pull out of its Russian operations, including the Sakhalin 2 LNG plant in which it holds a 27.5% stake and which is operated by Gazprom . read more

“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil … was not the right one and we are sorry,” Chief Executive Officer Ben van Beurden said.

A 3D printed natural gas pipeline is placed in front of displayed Shell logo in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/

Shell bought a cargo of Russian crude oil from Swiss trader Trafigura at a record low of dated Brent minus $28.50 a barrel, traders said on Friday. read more

British rival BP said last month it was abandoning its 19.75% stake in Russian oil giant Rosneft (ROSN.MM) in an abrupt move that could cost it up to $25 billion. read more

TotalEnergies (TTEF.PA) Chief Executive Patrick Pouyanne said on Monday that the French company had stopped buying oil from Russia, although one its landlocked refineries in Germany continued to receive Russian crude by pipeline. read more

Shell said it would change its crude oil supply chain to remove volumes from Russia “as fast as possible” and shut its service stations in Russia, as well as its aviation fuels and lubricants operations in the country.

The company said the supply chain change could take weeks to complete and would lead to reduced output from some of its refineries while its withdrawal from Russian petroleum products, pipeline gas and liquefied natural gas (LNG) would be phased.

The company also plans to end its involvement in the Nord Stream 2 Baltic gas pipeline linking Russia to Germany, which it helped finance as a part of a consortium.

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Reporting by Yadarisa Shabong in Bengaluru; Additional reporting by Ahmad Ghaddar in London. Editing by Shinjini Ganguli, Louise Heavens and David Clarke

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How the West Marshaled a Stunning Show of Unity Against Russia

Europeans were similarly reluctant about shipping lethal weapons to the Ukrainian Army, even those categorized as defensive. Fearing a backlash at home, Germany and its neighbors limited themselves to sending protective gear like helmets or flak jackets.

But their resolve quickly stiffened with the start of the war. Shortly before Germany, the Netherlands offered Ukraine Stinger missiles and other weapons. Last Saturday, the European Union set up a nearly $500 million fund for members to send weapons. It was the first time the bloc jointly purchased lethal weapons to arm another country’s army under the E.U. banner — another Rubicon crossed.

“I don’t remember a time when the target of Western sanctions was so economically integrated into the West,” said Tom Keatinge, a senior researcher with the British Royal United Services Institute, a research group in London. Punishing Russia, he said, became an imperative for world leaders and everyday consumers. “It became about, ‘What are you, man on the street, going to sacrifice for Ukraine?’”

Countries that are geographically closer to Russia, like Poland, Estonia, Latvia and Lithuania, as well as the Netherlands — backed by the United States and Canada — pressed for a single huge set of sanctions that would genuinely hurt Mr. Putin, according to European officials who took part in the talks.

In particular, these countries were pushing for personally penalizing Mr. Putin and his foreign minister, Sergey V. Lavrov, and suspending Russian banks from SWIFT, a kind of financial nuclear option that had by that point become a rallying cry for protesters on the streets of Europe and on social media. But SWIFT was still a no go for the Germans, several officials said.

It was before dinner on Feb. 24, on the evening after the invasion began, when Mr. Zelensky’s image flickered on a video screen. European leaders were meeting under the highest level of secrecy, without advisers or electronic devices. Clad in suits and ties, they were seated in the comfort of a high-tech conference room in Brussels. Mr. Zelensky appeared to be in a bunker, somewhere in Kyiv, wearing his now-famous military-green T-shirt. The contrast was not lost on anyone in the room.

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Western Sanctions Aim to Isolate Putin by Undermining the Ruble

By targeting Russia’s central bank with sanctions, experts said, American and European leaders have taken aim at what could be one of President Vladimir V. Putin’s greatest weaknesses: the country’s currency.

In Russian cities, anxious customers started lining up on Sunday in front of A.T.M.s, hoping to withdraw the money they had deposited in banks, fearful it would run out. The panic spread on Monday. To try to restore calm, the Bank of Russia posted a notice on its website: “The volume of bank notes ready for loading into A.T.M.s is more than sufficient. All customer funds on bank accounts are fully preserved and available for any transactions.”

Even before the sanctions were announced over the weekend, the ruble had weakened. On Monday it plunged further, with the value of a single ruble dropping to less than 1 cent at one point. As the value of any currency drops, more people will want to get rid of it by exchanging it for one that is not losing value — and that, in turn, causes its value to drop further.

In Russia today, as the purchasing power of the ruble drops sharply, consumers who hold it are finding that they can buy less with their money. In real terms, they become poorer. Such economic instability could stoke popular unhappiness and even unrest.

nuclear forces on a higher level of alert. The United States, the European Commission, Britain and Canada agreed to remove some Russian banks from the international system of payments known as SWIFT and to restrict Russia’s central bank from using its storehouse of hundreds of billions of dollars’ worth of international reserves to undermine the sanctions.

Kicking banks out of SWIFT has gotten the most public attention, but the measures taken against the central bank are potentially the most devastating. Ursula von der Leyen, the president of the European Commission, said it would “freeze its transactions” and “make it impossible for the central bank to liquidate its assets.”

On Monday, the U.S. Treasury Department offered more details on how the sanctions would work, saying they would paralyze the Bank of Russia’s assets in the United States and stop Americans from engaging in transactions involving the central bank, Russia’s National Wealth Fund or the Russian Ministry of Finance. As expected, there are exemptions for transactions related to energy exports, on which Europe relies.

British government banned transactions with the Russian central bank, the foreign ministry and the sovereign wealth fund.

But if the allies were to impose a full-fledged freeze of the vast amount of dollars, euros, pounds and yen that are owned by Russia but held in Western banks, it could devastate the Russian economy, causing spiraling inflation and a severe recession.

At the heart of the move to restrict the Bank of Russia are its foreign exchange reserves. These are the vast haul of convertible assets — other nations’ currencies and gold — that Russia has built up, financed in large part through the money it earns selling oil and gas to Europe and other energy importers.

Lenin himself reportedly made more than a century ago, which was repeated by the economist John Maynard Keynes: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”

The Bank of Russia can try to prop up the value of the ruble by using its reserves to buy up rubles that people are selling. But it can do that only as long as it has access to foreign reserves.

dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.

Yet the central bank has just about $12 billion of cash in hand — an astonishingly small amount, he said. As for the rest of Russia’s foreign exchange reserves, roughly $400 billion is invested in assets held outside the country. Another $84 billion is invested in Chinese bonds, and $139 billion is in gold.

took steps on Monday to restore confidence, and more than doubled interest rates to 20 percent from 9.5 percent in order to offset the rapid depreciation of the ruble. The bank also released an additional $7 billion worth of reserves that had been set aside as collateral for loans and closed down the Moscow stock exchange for the day. Meanwhile, the foreign ministry moved to order companies to sell 80 percent of their foreign currencies, in a bid to gin up demand for rubles and prevent them from stockpiling dollars and euros.

Mr. Bernstam warned that the West’s attack on the Russian ruble needed to be handled with care. “We don’t want to destroy them,” he said. “We don’t want the political system to collapse.”

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