US sanctions on Russia could adversely affect not only Russia but the entire global financial system, analysts warn. (File image)
The sanctions that Americans are mulling against Russia over the Ukraine crisis could lead to high inflation and other forms of economic recession that would affect not only Russia but the entire global financial system, warns a report.
The "swift and severe" response that the US officials have warned in the event of Russiaís invasion of Ukraine "could roil major economies, particularly those in Europe, and even threaten the stability of the global financial system," The New York Times reported on Sunday, citing analysts.
The concerns come amid relentless threats by Washington to unleash searing economic measures against Moscow, "including sanctions on its largest banks and financial institutions, in ways that would inevitably affect daily life in Russia" the newspaper report noted.
"Some analysts also warn of a potential escalatory spiral. Russia might retaliate against an economic gut punch by cutting off natural gas shipments to Europe or by mounting cyber attacks against American and European infrastructure," it further underlined.
"Moscow could conduct new cyberattacks against the United States and American financial giants," the daily added, citing former State Department official Samuel Charap, who is now an analyst with a major US government contractor and think tank, the RAND Corporation.
"We go after their big banks," Charap said, "they would likely go after ours."
The US Department of Homeland Security issued a bulletin last weekend warning of Russian "cyber retaliation."
Many experts, however, believe that the boldest sanctions against Russiaís financial industry, if enacted, could take a meaningful toll.
In a sign of growing seriousness, the daily adds, "officials from the National Security Council have been talking with executives from some of Wall Streetís largest banks, including Goldman Sachs, Citigroup, JPMorgan Chase and Bank of America, about the stability of the global financial system in the wake of potential sanctions."
The European Central Bank has also warned bank lenders to Russia about risks if the United States imposes sanctions and has asked about the volumes of their loans.
For now, according to the report, American officials are not considering any immediate sanctions on the foundation of Russiaís economy: oil and gas exports.
European nations rely on natural gas from Russia, and several US allies, notably Germany, prefer that Washington refrain from disrupting the Russian energy industry.
The daily further cites analysts as saying that sanctions that limit Russiaís ability to export oil and gas would be by far "the most powerful weapon against the Russian economy, and perhaps the most effective economic deterrent against an invasion of Ukraine", adding that "they would also cause pain in Europe and the United States."
As per the newspaper report, US officials "are sensitive to the notion that they could be viewed as punishing the Russian people - a perception that might fuel anti-Americanism and Mr. Putinís narrative that his country is being persecuted by the West."
From Cuba to North Korea to Iran, it noted, US sanctions have "a mixed record at best of forcing a change in behavior," emphasizing that while the Joe Biden administration and its European allies are attempting to deter Putin with tough talk, "some experts question whether they would follow through on the most drastic economic measures" if Russian troops invaded Ukraine as US fears.
The daily also points out that the American officials are trying to devise a sanctions response that would deal a damaging blow to Russia while limiting the economic shock waves around the world - including in the US.
Officials say that for now, the Biden administration does not plan to target Russiaís enormous oil and gas export industry, as doing so could drive up gasoline prices for Americans already grappling with inflation and create a schism with European allies.
Russia has persistently rejected recent US publicity campaign accusing it of pursuing plans to invade neighboring Ukraine.