US and Allies Impose Sanctions on Russia

US Congress backs Biden on Russia sanctions, presses for more.

Washington DC: The US moved to cut off Russia’s government from Western finance, sanctioning two of its banks and blocking it from trading in its debt on American and European markets.

The Biden administration’s actions hit civilian leaders in Russia’s leadership hierarchy and two Russian banks considered especially close to the Kremlin and Russia’s military, with more than $80 billion in assets. That includes freezing all of those banks’ assets under U.S. jurisdictions.

U.S. officials made clear they were holding in possible reserve more devastating measures, in case Russia escalates actions threatening Ukraine’s territory and sovereignty. The Biden administration says those more sweeping penalties would cripple Russia’s ability to do business at home and abroad, and likely bring on a recession there.

The toughest US sanctions facing Russia

President Biden on Tuesday rolled out the first of what the U.S. says could be an ever-fiercer, ever-broader cascade of financial sanctions and penalties over Russia’s moves against Ukraine.

Tuesday’s first installment of sanctions hit members of Putin’s inner circle and their families and two banks that the U.S. considers especially crucial to the Kremlin and Russia’s military. Another new U.S. measure limits Russia’s power to raise money abroad.

U.S. officials suggested that the latest sanctions were only a hint of how far it could go in targeting Russian companies and individuals.

Tuesday’s actions included hitting civilian leaders in Russia’s leadership hierarchy and two Russian banks considered especially close to the Kremlin and Russia’s military, with more than $80 billion in combined assets. That includes freezing all of those banks’ assets under U.S. jurisdiction.

But US officials’ emphasized Washington still could take more of Russia’s banks, including its biggest, offline with a push of a button. Sanctions are imposed on individuals listed on a Specially Designated Nationals and Blocked Persons List through the Treasury Department’s Office of Foreign Assets Control.

Additionally, sectoral sanctions are an option to damage the economy. Sectoral sanctions apply to specific Russian firms — such as energy, finance, technology, and defense — to be included on the Sectoral Sanctions Identifications List. Sectoral sanctions will limit some trade but will permit some transactions.

Dollar Clearing

The United States holds one of the most powerful financial weapons to wield against Putin — blocking Russia from access to the U.S. dollar. Dollars still dominate in financial transactions around the world, with trillions of dollars in play daily. Crucially for Putin, that means foreign banks have to be able to access the U.S. financial system to settle dollar transactions.

Export Controls

U.S. export controls could cut off Russia from the high tech that helps warplanes and passenger jets fly and make smartphones smart, along with other software and advanced electronic gear that make the modern world run. That could include adding Russia to the most restrictive group of countries for export control purposes, together with Cuba, Iran, North Korea, and Syria, officials said.

European Union Sanctions

The European Union announced sanctions taking aim at the 351 Duma legislators who voted in favor of recognizing separatist regions in Ukraine, as well as 27 other Russian officials and institutions from the defense and banking world. They also sought to limit Moscow’s access to EU capital and financial markets. “This package of sanctions … will hurt Russia and it will hurt a lot,” EU foreign policy chief Josep Borrell said after chairing a meeting of EU foreign ministers in Paris.

Outside the EU, British Prime Minister Boris Johnson named five Russian banks and three wealthy Russian businessmen whom the U.K. hit with sanctions on Tuesday.

Australia on Wednesday said it would align with the U.S. and Britain by targeting two Russian banks. It also imposed sanctions and travel bans on eight members of Putin’s Security Council. Prime Minister Scott Morrison said these are the first batch of measures in response to Russian aggression toward Ukraine.

Japan also announced sanctions, with Prime Minister Fumio Kishida saying Wednesday that his government will ban the new issuance and distribution of Russian government bonds in Japan. He said Japan will also ban travel by people linked to the two Ukrainian rebel regions and freeze their assets in Japan, and will ban trade with the two areas.

And if Putin pushes farther into Ukraine, NATO chief Jens Stoltenberg insisted, “There will be even stronger sanctions, even a higher price to pay.”

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