War in Ukraine: Ruble in free fall – central bank doubles key interest rate

Created: 03/01/2022Updated: 03/01/2022 07:03

By: Teresa Toth, Johannes Nuß, Karolin Schäfer, Max Schäfer, Nico Scheck, Christian Stör

The West is reacting harshly to the Ukraine war instigated by Putin.

The sanctions are having an impact in Russia.

• The West reacted to the attack from Russia* on Ukraine* with sanctions.

• Together with its allies from Europe, the USA* decide to exclude Russian banks from the international banking communication network Swift.

• Germany and the EU are threatening Vladimir Putin* with further sanctions if he does not end the war of aggression against Ukraine.

Update from Tuesday, March 1st, 2022, 6:50 a.m.:

The sanctions imposed on the Russian central bank are having an effect, and the ruble continues to fall despite attempts to contain Russia.

In order to counteract the effects of the economic sanctions against Russia, the Russian central bank has doubled the key interest rate from 9.5 percent to 20 percent.

Higher interest rates can stabilize prices and combat inflation.

However, they also make investments in the country more expensive.

The Moscow Stock Exchange remained closed on Monday (02/28/2022) in an attempt to halt the currency's depreciation and stabilize markets.

Russian financial institutions are to be supported with capital injections and foreign currency transactions.

The Ministry of Finance has also introduced an obligation for companies to sell part of their proceeds in foreign currency.

This measure is also intended to stem the fall of the rouble.

War in Ukraine: Canada halts crude oil imports from Russia

+++ 11:02 p.m .:

Because of the Russian attack on Ukraine, Canada is temporarily stopping all crude oil imports from Russia.

"We announce our intention to ban imports of crude oil from Russia - an industry that has greatly benefited President (Vladimir) Putin and his oligarchs," Prime Minister Justin Trudeau said at a news conference on Monday.

According to media reports, Canada has imported crude oil from Russia worth several hundred million Canadian dollars in recent years.

+++ 9.45 p.m .:

According to the Russian UN representation, the USA has declared twelve diplomats in New York to be undesirable people.

These employees at Russia's UN mission would have to leave the country by March 7, UN Ambassador Vasily Nebensia said in New York on Monday.

The United States would thereby "grossly violate its obligations under the host country agreement."

In fact, at least some diplomats working at the United Nations in New York have special protections because the UN is an international organization to which all member countries must have access.

The US-UN Host Country Agreement states that “in the event of abuse of such residency privileges” US laws and regulations may be applied.

The US Deputy Ambassador to the UN, Richard Mills, referred to this passage.

Ukraine war: EU and allies ready for further sanctions against Russia

+++ 9:20 p.m .:

The Europeans and their allies are ready for further sanctions against Russia because of the invasion of Ukraine.

This was announced by the Elysée Palace in Paris on Monday evening after a video conference of the heads of state and government of France, Germany, Great Britain, Italy, Poland, Romania, the USA, Canada and Japan as well as representatives of the EU and NATO.

"Further sanctions" could be imposed "in the coming days," said the French Presidency.

+++ 8:57 p.m .:

After the Russian attack on Ukraine, the Turkish government under Recep Tayyip Erdogan* prohibited Russian warships from passing through the Bosphorus and Dardanelles straits.

In addition, the other countries bordering the Black Sea have been warned against using warships on the inland sea, as the Turkish Foreign Minister Mevlut Cavusoglu announced on Monday evening (February 28, 2022).

After the start of the Russian invasion of Ukraine, Erdogan clearly sided with Kiev.

"We reject Russia's military action," Erdogan said last week.

The invasion was a "devastating blow to peace and stability in the region."

In recent years, Turkey has repeatedly emphasized its close ties with Ukraine.

Erdogan repeatedly criticized the Russian annexation of Crimea in 2014, also because of the historical presence of ethnic Turkish Tatars on the peninsula.

In addition to concrete consequences for sanctioned companies and individuals, the economic sanctions have also caused the Russian currency to crash.

© Dimitar Dilkoff/AFP

Sanctions against Russia because of the Ukraine war: Switzerland is also involved

One decision that could hit the affected oligarchs, millionaires and super-rich particularly hard is Switzerland's announcement that it will join EU sanctions.

Switzerland is also a particularly important financial center for Russians.

According to figures from the National Bank, Russian assets worth around CHF 15 billion (EUR 14.5 billion) were held in Swiss accounts in 2021.

In addition, additional billions are to flow into Switzerland every year.

On Monday, the government in Bern decided to join the EU sanctions.

The assets of all companies and individuals that are on European sanctions lists are blocked with immediate effect, as President Ignazio Cassis said.

War in Ukraine: France wants to confiscate villas, yachts and luxury cars

+++ 16.10 p.m .:

In the Ukraine war, the West continues with sanctions against Russia.

Now France wants to confiscate real estate, yachts and luxury cars from Russians close to the government.

"We will identify all Russian personalities who have property in France and who can be added to EU sanctions because of their closeness to the government," French Economy Minister Bruno Le Maire said in Paris.

"We will use legal means to confiscate all these goods," he said.

At the request of President Emmanuel Macron, all possessions of Russians already affected by sanctions are currently being checked, Le Maire said.

These included real estate, yachts and luxury cars in particular.

Many wealthy Russians have summer residences on the French Côte d'Azur.

There are also many luxury yachts from Russian owners in the ports.

Vladimir Putin has isolated Russia internationally after invading Ukraine.

© Yurin Kadobnov/dpa

Ukraine war: Switzerland accepts EU sanctions against Russia

+++ 2.50 p.m .:

In the Ukraine war, Switzerland fully accepts the EU sanctions against Russia.

This was decided by the Federal Council in Bern on Monday in view of the ongoing Russian war in Ukraine.

In addition, the country imposed entry bans on people close to Russian President Vladimir Putin.

The assets of all companies and individuals that are on European sanctions lists are blocked with immediate effect, as President Ignazio Cassis said.

The financial sanctions against Putin, Prime Minister Mikhail Mishustin and Foreign Minister Sergey Lavrov would also be taken over.

The government did not take the decision lightly because it was a one-off step for Switzerland on this scale.

"We couldn't take that lightly from the point of view of neutrality," said Cassis.

But: "Playing into the hands of an aggressor is not neutral," he said.

Ukraine war: The USA also impose tough sanctions on the Russian central bank

+++ 2.40 p.m .:

In the Ukraine war, the West relies on sanctions against Russia.

Now the US has also targeted the Russian central bank.

US citizens and institutions are now banned from transactions with the central bank, and the Fed can no longer conduct US dollar transactions worldwide, a senior White House official said.

This effectively blocks most of Russia's foreign exchange reserves: "Putin's $630 billion war chest of reserves only matters if he can use them to defend his currency, particularly to trade those reserves in exchange for rubles Selling.

And after today's actions, that will no longer be possible.

“Fortress Russia” will be debunked as a myth.”

Ukraine war: China warns Putin to calm down after nuclear threat

+++ 11.55 a.m .:

In the Ukraine conflict, Russian President Vladimir Putin played another card on Sunday (02/27/2022).

He put armed forces on alert, which are also responsible for the use of nuclear weapons, among other things.

The announcement was generally taken as a threat, even though Putin did not explicitly mention nuclear weapons in the video distributed by the Kremlin.

Now Russia's close partner China* has responded.

"All sides should remain calm, show restraint and avoid further escalation," Foreign Ministry spokesman Wang Wenbin said Monday in Beijing when asked about President Vladimir Putin's announcement.

China supports all efforts for détente and a peaceful political solution, the Chinese spokesman told the press.

Wenbin also stressed that China and Russia are "strategic partners" but not "allies."

China decides its own attitude and policy on a case-by-case basis.

Ukraine war: An overview of the sanctions against Russia

+++ 10.45 a.m .:

After Russia’s attack on Ukraine, Western countries imposed numerous sanctions.

New ones are added all the time.

An overview of the current state of affairs:

• Sanctions against financial institutions:

  Western allies have decided to exclude Russian banks from the Swift international financial communications system in order to isolate them from international financial flows.

• Sanctions against the transport sector:

  The EU has imposed an export ban on goods, technology and services for the aerospace industry.

  EU countries have decided to close their airspace to all Russian planes.

  Russia's state airline Aeroflot and Russian private planes are also not allowed to land in Great Britain.

• Sanctions against the energy sector:

  The EU prohibits the sale, supply, transfer or export of certain goods and technologies used in oil refinement.

• Sanctions against the technology sector:

  Certain goods and technologies may no longer be easily brought into Russia from the EU and other western countries.

  The US also bans the export of high-tech products to Russia.

• Sanctions against media:

  The Russian state media RT and Sputnik are banned in the EU.

• Sanctions against oligarchs:

  Oligarchs must expect all assets in the EU to be frozen.

  There was criticism that in Great Britain, which is no longer a member of the EU, sanctions were only imposed on eight Russian super-rich and Putin confidants.

  Secretary of State Liz Truss has now announced that there is already a "black list" that will be processed.

  “We will target the oligarchs’ private jets.”

• Sanctions against politicians:

  The EU and the US are directly targeting the assets of Russian President Putin and his Foreign Minister Lavrov.

  Possibly existing assets of the two politicians in the EU are to be frozen.

  The sanctions are more symbolic.

Ukraine conflict: EU imposes sanctions on Russian central bank

+++ 7 a.m.:

The European Union put its severe sanctions against the Russian central bank into effect on Monday night.

This emerges from the EU Official Journal.

Update from Monday, February 28th, 2022, 6.35 a.m .:

After increasing criticism from home and abroad, Switzerland is expected to freeze Russian assets on Monday.

It is "very likely" that the Federal Council will decide this at an extraordinary meeting on Monday, Swiss President Ignazio Cassis told the Swiss television station SRF on Sunday.

He cannot yet anticipate the result, but the final decision will definitely take Switzerland's neutrality into account. 

Putin's war: Russia's decoupling from the Swift system planned

+++ 7.30 p.m .:

After the federal government’s change of course to deliver weapons to Ukraine, work is apparently also being done on decoupling Russia from the Swift system.

The dpa reported, citing the information provided by several ministers.

"We are working on decoupling Russia from the Swift system in such a way that collateral damage remains as small as possible," said Federal Justice Minister Marco Buschmann (FDP) on Twitter.

Foreign Minister Annalena Baerbock and Economics Minister Robert Habeck * (both Green) formulated a similar tweet that was distributed by the Foreign Office channel.

“At the same time, we are working flat out on how to limit the collateral damage of decoupling from SWIFT in such a way that it affects the right people.

What we need is a targeted and functional restriction of SWIFT.”

Russia sanctions: Swift ban?

Selenskyj puts pressure on Scholz

First report from Saturday, February 26th, 2022, 3:21 p.m.:

Kiev/Berlin – After the outbreak of the Ukraine war, western states introduced sanctions against Russia.

However, a possible punitive measure has not yet been taken: Russia's exclusion from the international banking communication network Swift, which is necessary for foreign trade.

Great Britain*, among others, is in favor of this, but there are reservations in the EU.

In view of the fighting for the capital Kyiv, Ukrainian President Volodymyr Zelenskyj is calling for consistent action by the EU.

Specifically, he calls on Germany and Hungary to support Russia's exclusion from Swift.

Zelenskyy said in a video message on Saturday (February 26, 2022) that he hoped that Berlin and Budapest “will have the courage” to join a similar demand from numerous other European countries.

“There is already almost full support from EU countries to decouple Russia from Swift,” Zelenskyy said.

At the same time, he again called for Ukraine to join the EU.

EU disagrees on sanctions against Russia: Swift ban coming?

Within the EU, there was initially disagreement about the Swift exclusion as a sanction against Russia.

Luxembourg's Foreign Minister Jean Asselborn defended the move on Friday (February 25, 2022).

"We cannot provoke another world trade crisis alongside this crisis that we are having now," said Asselborn.

Sanctions because of the Ukraine war: Swift exclusion of Russia more and more likely

However, the resistance of individual EU states against the Swift exclusion of Russia as a sanction in the Ukraine conflict* is decreasing.

According to the social democratic party leader Enrico Letta, Italy is now in favor of this measure.

Prime Minister Mario Draghi now supports the exclusion.

Draghi himself did not comment on this, but let it be known that Italy fully supports the EU's line on sanctions against Russia, "including those affecting Swift".

Earlier, Ukraine's President Zelenskyy tweeted that during a phone call, Draghi told him that Italy supported Russia's detachment from Swift.

In Germany, too, the pressure on the federal government to agree to the exclusion of Russia from Swift is growing.

An exclusion of Russia from Swift is conceivable if the EU members collectively agree that the pressure on Russia can be further increased, Finance Minister Christian Lindner* (FDP) said on Friday (February 25, 2022) at the meeting of EU finance ministers Finance Minister explained.

Ukraine crisis: pressure on Scholz because of Russia's Swift exclusion

In his own party, too, the pressure on Chancellor Olaf Scholz* (SPD) is growing because of his no to Russia's exclusion from Swift.

Juso chairwoman Jessica Rosenthal called on Saturday (February 26, 2022) to clear the way for this sanction.

“We must not shy away from imposing all sanctions at our disposal.

This also includes the exclusion of Russia from Swift, ”said the head of the SPD youth association* of the German Press Agency.

“We can really hurt the Russian government with this.

We should meet the demands of our Eastern European partner countries here.” (red with dpa/AFP)