Russia was hit with painful new sanctions on Thursday after invading Ukraine, but the United States and its allies have stopped imposing even harsher measures to punish Moscow.

The sanctions target Russia’s two largest banks, which will have their assets frozen and cut off from US-dollar transactions, while state-owned energy giant Gazprom and other big companies will be unable to raise funding in Western markets.

In addition, the allies imposed export controls on high-tech items aimed at crippling the country’s defense and aerospace sector, while Washington targeted another group of Russian oligarchs.

“This is going to impose a significant cost on the Russian economy, both immediately and over time,” US President Joe Biden said in a speech at the White House.

However, the sanctions fell short of what some observers expected, including failing to cut Russia off from SWIFT, the global messaging system used to move money around the world. .

This would have hampered the country’s ability to take advantage of the global energy market, which largely operates in US dollars.

“It’s always an option but right now it’s not the position the rest of Europe wants to take,” Biden told reporters.

But he said “the sanctions we have imposed exceed SWIFT. The sanctions we have imposed exceed anything that has ever been done.”

And Biden said sanctions aimed directly at Russian leader Vladimir Putin remained an option.

“It’s not a bluff, it’s on the table,” he said in response to a question.

“Piggy bank” protection?

Moscow has taken steps to protect its economy after it was hit with sanctions from 2014 when it invaded and annexed Crimea in southern Ukraine, including by stockpiling silver and gold.

Russia’s public debt is just 18% of the country’s GDP, far less than most major economies, and it has foreign exchange reserves of $643 billion at the end of last week, according to official data.

Elina Ribakova of the Institute of International Finance, a global banking association, told AFP that the stockpiling was “a very deliberate shift in macroeconomic policy to meet geopolitical ambitions”.

“They have a piggy bank that can protect them” and support the economy even if they go into deficit,” she said.

IIR Executive Vice President Clay Lowery said Russia will feel the pain, and while some steps have been missed, there is room for escalation.

“The bottom line is that these sanctions will have a significant impact on Russia’s overall economy, and average Russians will feel the cost,” Lowery, a former senior US Treasury official, said in a statement.

The sanctions target Sberbank and VTB Bank, the country’s two largest banks accounting for about half of the banking system and “$46 billion in foreign exchange transactions worldwide” every day, the Treasury said.

And the Commerce Department said coordinated export controls mean “denial of sensitive items that Moscow relies on for its defense, aerospace and marine industries.”

Restricted items include semiconductors, computers, telecommunications, information security equipment, lasers and sensors.