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Sanctions against Russia follow its troop movements into Ukraine

A MARTINEZ, HOST:

President Biden says Russian President Vladimir Putin has now moved against Ukraine. Biden says the invasion began when Putin authorized troops to go into eastern portions of its neighboring country.

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PRESIDENT JOE BIDEN: He bizarrely asserted that these regions are no longer part of Ukraine and they're sovereign territory. To put it simply, Russia just announced that it is carving out a big chunk of Ukraine.

MARTINEZ: Hours after Biden spoke, Secretary of State Antony Blinken canceled a meeting set for later this week with his Russian counterpart, Sergey Lavrov.

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ANTONY BLINKEN: We will not allow Russia to claim the pretense of diplomacy at the same time it accelerates its march down the path of conflict and war.

MARTINEZ: The U.S. and its allies have launched new sanctions that the White House says are aimed at preventing Moscow from going further. But will these - what will the impact of these sanctions be?

Here to talk us through all that this morning - we're going to hear from two correspondents - NPR's chief economics correspondent, Scott Horsley, and national political correspondent Mara Liasson. Mara, let's start with you. Walk us through these sanctions, please.

MARA LIASSON, BYLINE: The sanctions block two Russian banks with more than $80 billion in assets from doing any business with the U.S. or Europe. They also lock out Russia's central bank and the Russian government from raising any new money from U.S. and European investors. They also sanctioned five Russian individuals, oligarchs and their families. And they worked with Germany to agree to shut down the Nord Stream 2 gas pipeline from Russia.

MARTINEZ: Now, in the weeks leading up to this point, the president had said the measures would be, in his words, swift and severe. Do these sanctions live up to that billing?

LIASSON: Well, they're certainly swift. But in terms of how severe they are, the experts are underwhelmed. These aren't the biggest banks in Russia. These aren't the biggest Russian political elites. And so far, there are no signs yet of some of the new types of sanctions that the White House had been talking about, like banning exports of strategic assets like semiconductors to Russia. In terms of those five oligarchs, they've already been sanctioned. And when administration officials were asked yesterday, why not sanction Putin, they just said, well, all options are on the table. It's unclear how much any of these sanctions will hurt Russia, hurt Putin, hurt his inner circle because Russia has been stockpiling assets, foreign currency and gold, so that they can weather sanctions, at least for a while. Well, the White House says the strategy is just to try to deter further Russian action.

Here's Daleep Singh, who is Biden's deputy national security adviser.

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DALEEP SINGH: They're meant to prevent and deter a large-scale invasion of Ukraine that could involve the seizure of major cities, including Kyiv. They're meant to prevent large-scale human suffering that could involve tens of thousands of casualties in a conflict. And they're meant to prevent the installation of a puppet government controlled by Moscow.

LIASSON: The White House says it's keeping more sanctions in reserve. The president said yesterday more are in the works. They say this is the beginning of the invasion, so it's the beginning of sanctions. If the invasion escalates, so will the U.S. response.

MARTINEZ: We're going to bring in Scott Horsley now. Scott, President Biden said that - in that speech yesterday that defending freedom for Ukraine will have costs for us as well as here at home. Tell us what he means by that.

SCOTT HORSLEY, BYLINE: The first place you're likely to see those costs, A, is at the gas pump. And price of gasoline, of course, was already one of the factors driving inflation to its highest level in nearly four decades. You know, Russia is a major exporter of both oil and natural gas. Oil expert Daniel Yergin, who's vice chairman at IHS Markit, says demand for crude oil has come back really strongly after the deep slump early in the pandemic, and so far, oil suppliers around the world have not really caught up.

DANIEL YERGIN: Then on top of that, you have this crisis. And so there's a geopolitical premium, or call it a fear premium, in the price of oil - an expectation that as this crisis spirals worse, that supplies of oil from Russia are going to be disrupted.

HORSLEY: President Biden has been urging other oil producers, both here in the U.S. and around the world, to boost their production. But in the short run, we could easily see higher prices at the gas pump. And gas prices have already jumped about 20 cents a gallon over the last month.

MARTINEZ: And, Scott, we've heard the impact will be worse in Europe. Is that what you expect?

HORSLEY: Well, Europe is already facing much higher prices for natural gas, which is used for heating and electricity generation. Europe's heavily dependent on natural gas from Russia, although Russia's chokehold is not as tight as it used to be. The U.S. has been increasing deliveries of liquid natural gas to Europe. And Yergin says last month those deliveries actually outpaced pipeline deliveries from Russia.

MARTINEZ: Mara, let's turn back to you. It took a lot of work to get buy-in from European allies on this plan. But let's look domestically now. Does President Biden have political support for this here at home?

LIASSON: Well, he has political support for sanctions. There is bipartisan support in Congress. And voters tell pollsters that they are in favor of sanctions. But there's also some danger for Biden, as Scott just described. You know, gas prices have - are already high. He said yesterday, defending freedom will have costs. We have to be honest about it. He said he's using everything at his disposal to protect Americans from prices at the pump. But that's a problem for him and could affect the support for his moves in Ukraine.

Now, for Republicans in general, their approach to this was supposed to be pretty simple - just to say that Biden is weak. The sanctions are not enough. They were too little, too late. But that's been complicated by the Trump wing of the party, which has been either empathetic or sometimes openly admiring of Vladimir Putin. You had Donald Trump give an interview yesterday where he said Putin's move in Ukraine was genius and that Putin was very savvy and smart. So there are splits inside the Republican Party. But overall, at least at this point, there is bipartisan support for the Biden administration policy.

MARTINEZ: And, Scott, we've talked about the potential impact on the West. But can Russia absorb the sanctions, or will they also maybe feel the pinch at some point?

HORSLEY: Russia has built up a lot of reserves that officials in that country say will enable Russia to weather whatever the U.S. and its allies throw in its direction. One thing you have to keep in mind is that for all of its tanks and nuclear weapons, Russia's economy is pretty tiny, really, and its trading relationship with the U.S. is very limited.

Jeffrey Schott, who's with the Peterson Institute for International Economics, says European countries have much closer commercial ties with Russia. In fact, they do about eight times the trading volume with Russia that the U.S. does.

JEFFREY SCHOTT: U.S. does very little trade of goods and services with Russia. So the cost of a disruption will have a more immediate and profound effect on the European economy than on the U.S. economy.

HORSLEY: Over time, of course, disruptions in Europe could have ripple effects on this side of the Atlantic. And the stock market's watching all this nervously, along with its other concerns about inflation and rising interest rates. The S&P 500 index fell about 1% yesterday. It's now in correction territory, meaning it's down 10% from its peak. That peak was way back at the beginning of January.

MARTINEZ: NPR's chief economics correspondent, Scott Horsley, and national political correspondent Mara Liasson. Thanks to both of you.

LIASSON: Thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
Mara Liasson is a national political correspondent for NPR. Her reports can be heard regularly on NPR's award-winning newsmagazine programs Morning Edition and All Things Considered. Liasson provides extensive coverage of politics and policy from Washington, DC — focusing on the White House and Congress — and also reports on political trends beyond the Beltway.
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