WASHINGTON/MOSCOW: US President Joe Biden will tell Russian President Vladimir Putin in a video conference later on Tuesday that Russia and its banks could be hit with the toughest economic sanctions yet if it invades Ukraine, U.S. officials said.
They said the sanctions, which one source said could target Russia’s biggest banks and Moscow’s ability to convert roubles into dollars and other currencies, were designed to dissuade Putin from using tens of thousands of troops massed near the Ukrainian border to attack its southern neighbour.
The Kremlin, which said before the meeting it did not expect any breakthroughs, has denied harbouring such intentions and has said its troop posture is defensive.
But Moscow has voiced rising vexation over Western military aid to Ukraine, a fellow former Soviet republic that has tilted towards the West since a popular revolt toppled a pro-Russian president in 2014, and what it calls creeping NATO expansion.
Moscow has likewise questioned Ukrainian intentions and said it wants guarantees that Kyiv will not use force to try to retake territory lost in 2014 to Russia-backed separatists, a scenario Ukraine has ruled out.
“We’re looking for good, predictable relations with the United States. Russia has never intended to attack anyone, but we have our concerns and we have our red lines,” said Kremlin spokesperson Dmitry Peskov.
Calling for everyone to keep “a cool head”, Peskov said it was vital that Putin and Biden speak given what he called the extraordinary escalation of tensions in Europe.
The Russian rouble weakened slightly on Tuesday, with some market analysts predicting the talks would de-escalate tensions and others saying that the U.S. sanctions threat eroded hopes of finding common ground.
Ahead of his first direct talks with Putin since July, Biden discussed the sanctions plan with European allies on Monday, seeking a strong joint stance in support of Ukraine’s territorial integrity and sovereignty.
He spoke to French President Emmanuel Macron, German Chancellor Angela Merkel, Italian Prime Minister Mario Draghi and British Prime Minister Boris Johnson.
They called on Russia to defuse tensions and return to diplomacy and said their teams would stay in close touch, including in consultation with NATO allies and EU partners, on a “coordinated and comprehensive approach”, the White House said.
Biden’s team has identified a set of economic penalties to impose should Russia launch an invasion, a senior Biden administration official said.
A separate source familiar with the situation said targeting Putin’s inner circle has been discussed but no decision made. Sanctions against Russia’s biggest banks and curbing the conversion of roubles into dollars and other currencies were also being considered, another source said.
German Gref, the chief executive of Russia’s top bank Sberbank, on Tuesday called that idea “nonsense” and “impossible to execute”.
CNN reported sanctions could include the extreme step of disconnecting Russia from the SWIFT international payment system used by banks around the world.
Bloomberg reported that the United States and European allies were weighing measures targeting the Russian Direct Investment Fund. The United States could also restrict the ability of investors to buy Russian debt on the secondary market, Bloomberg said, citing people familiar with the matter.
The White House declined to comment, while Latvia’s foreign minister said in an interview in London on Tuesday that Moscow needed to know before it acted what “the economic price tag” would be, something he said should extend to Russia’s $11 billion Nord Stream 2 gas pipeline to Germany.
DIPLOMACY
The secure video call, with Biden speaking from the White House Situation Room, is expected to occur at about 1500 GMT.
White House spokeswoman Jen Psaki said it remained unclear whether Putin had made a final decision to invade Ukraine.
Ukraine and NATO powers accuse Russia of building up troops near the border, sparking fears of a possible attack. Moscow denies any such plan and accuses Kyiv of massing its own forces in its east, where Russian-backed separatists control a large part of Ukrainian territory.
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