U.S. Plans Sanctions, Export Controls Against Russia if It Invades Ukraine

While the officials didn’t specify the products, they said that the goal would be to hit critical Russian industrial sectors such as artificial intelligence, quantum computing and aerospace, denying Russian industry high-tech components the country cannot replace domestically or through alternate suppliers.

“The export control options we’re considering alongside our allies and partners would hit Putin’s strategic ambitions to industrialize his economy quite hard, and it would impair areas that are of importance to him,” a senior administration official said.

Administration officials declined to provide many specifics on the kinds of sanctions it would impose, but said the moves would exacerbate the selloff in Russian markets, increase the country’s cost of borrowing and hurt the value of Russia’s currency, raising the domestic political costs for Mr. Putin of moving on Ukraine.

“Any leader, no matter how rogue they are or whether they’re an autocrat or not, they have to care about popularity,” a senior administration official said. “And when you have inflation in the midteens and you have a recession, that doesn’t win hearts and minds. So [Mr. Putin’s] tolerance for economic pain may be higher than other leaders, but there is a threshold of pain above which we think his calculus can be influenced.”

In recent months, Russia has amassed more than 100,000 troops along Ukraine’s borders, moved tanks and other military gear westward from bases in the east, and deployed troops to neighboring Belarus, which also borders Ukraine. Russia is also holding naval exercises in the Atlantic and Pacific oceans, and in the Arabian Sea with Chinese naval forces. On Tuesday, Moscow announced new military exercises in the North Caucasus.

While Russian officials have denied the country plans to invade its neighbor, Ukrainian officials have said they fear a range of limited malign activities short of a full-scale invasion, and President Biden said last week he thought Mr. Putin would indeed “move in” in some manner.

White House officials are preparing for an incursion, with the Pentagon readying thousands of troops to deploy to Eastern Europe and the U.S. drawing down its embassy in Kyiv. A shipment of U.S. arms arrived at Kyiv’s airport Tuesday, including 300 Javelin anti-tank missiles, the latest in $200 million in defense assistance authorized by President Biden to bolster the Ukrainian military.

“I made it clear early on to President Putin that if he were to move into Ukraine that there’d be severe consequences, including significant economic sanctions, as well as I’d feel obliged to beef up our presence, NATO’s presence, in an eastern front, Poland, Romania, etc.,” Mr. Biden said Tuesday.

Russia, meanwhile, has described NATO’s eastward expansion since the end of the Cold War as a threat to its security. In recent weeks, Moscow has demanded NATO forswear expanding into former Soviet states including Ukraine, curb military ties there, and withdraw forces from Eastern Europe.

Several rounds of talks this month between Russia and the U.S. and European allies made little apparent progress. The U.S. has proposed discussions on reciprocal reductions in missile deployments and military exercises, while continuing to threaten sanctions. On Friday, the U.S. agreed to respond to Russia in writing, though officials have said they wouldn’t yield on Moscow’s central demands regarding NATO’s force posture and future expansion.

French, German, Russian and Ukrainian officials are scheduled to meet Wednesday in Paris in the so-called Normandy Format talks, a diplomatic channel established to settle outstanding issues related to Russia’s 2014 incursion into Ukraine.

French President Emmanuel Macron is scheduled to speak with Mr. Putin on Friday. He said Tuesday that he would seek clarification on what the Russian president intends to do in Ukraine.

After weeks of calls and meetings in European cities, U.S. officials said Tuesday they were seeing convergence on prospective sanctions among the U.S. and European nations, in part because of assurances that the U.S. is working to secure energy supplies should Mr. Putin invade Ukraine and cut off exports of energy westward.

U.S. officials said they are looking for energy stockpiles in North Africa, the Middle East, Asia and inside the U.S.

“If Russia decides to weaponize its supply of natural gas or crude oil, it wouldn’t be without consequences to the Russian economy,” one of the U.S. officials said Tuesday. “This is a one-dimensional economy, and that means it needs oil and gas revenue at least as much as Europe needs its energy supply.”

European officials said discussions with the U.S. and countries in the Middle East were progressing on how to fill the energy supply gap were the Kremlin to cut the flow of gas.

A senior EU official said the work is “quite advanced in understanding which are the options and how the gaps could be filled in a different way.” However, the task remains daunting. In midwinter and with energy prices already high, Europe would need to find alternatives for the 40% of its gas supply that comes from Russia.

Among the potential measures available to the U.S. and Europe would be blocking the opening of the Nord Stream 2 natural-gas pipeline from Russia to Germany. The pipeline was completed last year and awaits formal approval by German regulators. Officials in the new government of Chancellor Olaf Scholz have said privately that it would mothball Nord Stream 2 in case of Russian aggression, while the U.S. has referred to the pipeline as diplomatic leverage for the West.

The export controls under consideration, the U.S. officials said, would be implemented through a powerful U.S. policy tool known as the Foreign Direct Product Rule, which the Trump administration used to cripple China’s Huawei.

Using the rule to target a country or multiple industrial sectors as opposed to a single company is a novel strategy that could potentially have wide-ranging effects given the global dominance and ubiquity of U.S. chip-making tools and software. For example, the U.S. could use the rule to block a foreign company that made a phone in a different foreign country from selling that item to Russia if the device uses any U.S. chips.

The impact of the rule would depend on how broadly officials decide to apply the restrictions and on the precise wording in any regulation. The Trump administration made multiple attempts before settling on language for a regulation that ultimately exacted a meaningful impact on Huawei.

European officials have said they would also apply export bans, including on high-tech goods, although discussions continue about how wide-ranging they would be.

U.S. officials said Tuesday that the sanctions regime they are contemplating is far more severe than what was imposed by Europe and the U.S. in 2014, when Mr. Putin seized the Crimean peninsula from Ukraine and fomented a simmering separatist conflict in the country’s east that continues to this day.

In any case, a senior administration official noted that financial sanctions that year, which included restrictions on foreign capital flows to Russia, had battered the ruble and forced its economy into recession. The official said some analysts deemed Russia would have forayed much further into Ukraine had it not been for the financial cost.

Still, Russia’s ability to mitigate the impact of Western sanctions is significant—far higher than the likes of Iran, whose economy plummeted into a deep slump in 2018 after the Trump administration withdrew from a multilateral nuclear agreement and reimposed sanctions.

The Bank of Russia puts the country’s reserves at around $630 billion at the end of 2021 and European purchases of Russian gas bring in foreign currency. The U.S. and Europe are unlikely to cut off energy imports from Russia on their own unless forced to by the Kremlin. Russia’s trade and political links with China also make it less vulnerable to being isolated from the world economy.

—Matthew Luxmoore in Moscow and Catherine Lucey contributed to this article.

Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com, Gordon Lubold at Gordon.Lubold@wsj.com and Laurence Norman at laurence.norman@wsj.com