Biden to tell Putin he'll face toughest sanctions yet if he invades Ukraine

By Steve Holland and Andrew Osborn

WASHINGTON/MOSCOW – U.S. 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 it has also said it is increasingly vexed by Western military aid to Ukraine and what it calls creeping NATO expansion.

It has likewise queried 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 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 on Monday discussed the sanctions plan with European allies, 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 de-escalate 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.

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.

The United States has urged both countries to return to a set of largely unimplemented agreements signed in 2014 and 2015 which were designed to end the war in eastern Ukraine.

“He (Biden) will make clear that there will be very real costs should Russia choose to proceed, but he will also make clear that there is an effective way forward with respect to diplomacy,” the senior Biden administration told reporters.

The two leaders head into the talks with scant room for compromise.

Putin has said he wants legally binding guarantees NATO will not expand further eastwards and a pledge that certain types of weapons will not be deployed in countries close to Russia, including Ukraine.

Putin is expected to raise the possibility of holding another U.S.-Russia summit with Biden too. They last met face-to-face at a summit in June in Geneva.

U.S. General Mark Milley, Chairman of the Joint Chiefs of Staff, on Monday met virtually with all the NATO chiefs of defence about “significant security developments across Europe”.

Ukraine’s defence ministry on Tuesday accused Russia of deploying tanks and additional sniper teams to the frontline of the conflict in eastern Ukraine.

Russia in 2014 annexed Ukraine’s Crimea region.

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