Key Takeaways: 

• The United States and the West have executed an economic, financial, and technology sanctions blitzkrieg against Moscow that has few parallels in terms of speed and scale. The degree of Russia’s ability to adapt and substitute for the loss of economic, financial, and technology access will ultimately determine the costs of the imposed sanctions regime.
• Four types of financial sanctions—property blocking sanctions; non-property blocking debt and transaction sanctions; specialized financial messaging services-related restrictions; and measures targeting the Russian Central Bank—have been imposed on three sets of Russian actors—state-owned and private banks and other financial institutions; select individuals and non-financial corporate entities; and on economy-facing state bodies. Of the four, the ace-in-the-hole has been the early and coordinated measure by the West to target the hard currency reserves of the Central Bank of the Russian Federation (RCB). There is still headroom for more financial sanctions.
• A slew of new Russia-related licensing policies and license requirements have been introduced on the export controls front. Among the new requirements introduced, the two new sections of the Foreign-Produced Direct Product (FDP) Rule that is specific to Russia and to Russian ‘military users’ are the ace-in-the-hole. The two sections constitute the first instance when the FDP rule has been applied to a whole country; previously, the FDP rule had been applied to individual entities, such as Huawei. Together, these two sections are expected to substantially limit the availability of key microeconomic parts and components and degrade Russia’s technological base.
• On the trade policy front, Russia has been stripped of its Most Favored Nation (MFN) status and subjected to a number of product import bans. However, until an energy embargo is imposed, the trade measures will remain more or less inconsequential. Additional measures that have been imposed include visa restrictions, national airspace and port entry bans, sanctions on Russian state-linked broadcasters, etc.
• China must equip itself with the capability to deny an adversary the means to dominate the chokepoints of the global economy’s infrastructural plumbing to its detriment. Aside from a few tailored instances, this will counterintuitively require more, not less, globalized trade integration; more, not less, domestic and international financial deepening; and more, not less, engagement within cross-border technology ecosystems on Beijing’s part.