Explainer-How Western Sanctions Will Target Russia According to Reuters

© Reuters. A tank drives along a street after Russian President Vladimir Putin ordered the deployment of Russian troops to two breakaway regions in eastern Ukraine after they recognized independence, in the rebel-held city of Donetsk, Ukraine. control secession.

By Karin Strohecker

(Reuters) – The United States and its allies are coordinating new sanctions against Russia after Moscow recognized two regions in eastern Ukraine as independent, officials said.

Details have begun to emerge about steps taken or planned by the United States, European Union, Great Britain and other Western powers.

Here are the details of the proposed restrictions so far and other possible sanctions against Russia:


Britain announced sanctions against five banks – Bank Rossiya, Black Sea Bank, Genbank, IS Bank and Promsvyazbank – all of which are smaller lenders, with only Promsvyazbank on the list of central banks. important loans.

US President Joe Biden announced sanctions against Russia’s VEB bank and military bank, referring to Promsvyazbank, which conducts defense transactions. “All assets under U.S. jurisdiction will be immediately frozen and U.S. individuals and entities barred from doing business,” the Treasury Department said.

A senior US administration official added that Sberbank and VTB Bank will face sanctions if the Russian invasion continues.

Bank Rossiya has been under US sanctions since 2014 for having close ties to Kremlin officials.

The European Union has agreed to blacklist banks involved in financing separatist activities in eastern Ukraine.

Russia’s major banks are deeply integrated into the global financial system, meaning sanctions could extend far beyond the country’s borders. Data from the Bank for International Settlements (BIS) shows that European lenders hold the largest share of the nearly $30 billion foreign banks’ exposure to Russia.

According to data from Russia’s central bank, the total foreign assets and liabilities of Russian banks stand at $200.6 billion and $134.5 billion, respectively, with the share of US dollars accounting for about 53% of both, down from 76%-81% two decades ago.


According to a statement from the bloc, the EU package of measures will “target the ability of the Russian government and state to access EU capital and financial markets as well as services, in order to limit the financing of policies of escalation and aggression”.

It would ban EU investors from trading in Russian state bonds.

The United States also increased restrictions on transactions on Russian sovereign debt. Americans, who have been barred from investing directly in Russian sovereign debt, will now also be barred from buying it on the secondary market after March 1.

Last week, Britain threatened to block Russian companies from raising capital in London, Europe’s financial hub, for such transactions, though stopped doing so in Tuesday’s announcement.

Even before the latest events, access to Russian bonds was increasingly restricted.

US sanctions imposed in 2015 made future Russian dollar debt ineligible for many investors and key indices. In April 2021, Biden banned American investors from buying new Russian rubles bonds over allegations of Russian meddling in the US election.

The containment measures have cut Russia’s external debt by 33% since the start of 2014 – from $733 billion to $489 billion in the third quarter of 2021. Lower debt improves a country’s balance sheet on the surface. face, but deprives them of financial resources that can contribute to economic growth and development.


Sanctions with asset freezes and travel bans are a commonly used tool, and the US, EU and UK already have such sanctions in place against a number of Russian individuals.

The EU on Monday imposed sanctions on five people involved in Russia’s parliamentary elections in annexed Crimea in September 2021.

On Tuesday, the bloc said it would blacklist all lawmakers in Russia’s lower house who voted in favor of recognizing the breakaway regions, freezing any assets they within the EU and ban them from traveling to the bloc.

Meanwhile, Britain has imposed sanctions on three men, Gennady Timchenko and billionaires Igor and Boris Rotenberg – all allies of President Vladimir Putin from St.Petersburg, who have Personal wealth increased rapidly after Putin became president. All three men have been sanctioned by the United States.

The United States also imposed sanctions on Tuesday against Russian elites close to Putin.

Those sanctioned include Alexander Bortnikov, head of the Federal Security Service, Russia’s powerful domestic security and counterintelligence agency.

His son, Denis Bortnikov, vice president of Russian state financial institution VTB Bank Public Joint Stock Company and chairman of the bank’s management company, was also targeted in Tuesday’s move.

Also appointed were Putin’s First Deputy Chief of Staff and former Prime Minister of Russia, Sergei Kiriyenko. He was previously targeted by the US, EU and UK for the poisoning of Russian opposition leader Alexei Navalny. His son, Vladimir Kiriyenko, was also appointed on Tuesday.

The chairman and chief executive officer of Promsvyazbank were also targeted. The Finance Ministry accused Petr Fradkov of working to turn the bank into a bank serving the defense industry.

While the US has used the SDN designation in the past to punish oligarchs seen as “bad actors”, it has become more cautious in recent years after 2018 sanctions against with the owner of Rusal sent aluminum prices skyrocketing and forced Washington to back down.

A bill unveiled in January by Democrats in the US Senate aims to thoroughly sanction top Russian military and government officials, including Putin, and President Biden has said he will be ready. ready to consider individual sanctions against the President of Russia.

Moscow said any move to impose sanctions on Putin himself would not harm the Russian president personally but would prove “politically destructive”.


The United States and the EU already have sanctions on Russia’s energy and defense sectors, with state gas company Gazprom (MCX:), oil subsidiary Gazpromneft and oil producers Lukoil, Rosneft and Surgeonutneftegaz are facing various kinds of export/import restrictions and increased debt.

Sanctions could be broader and deeper, with one possible option preventing companies from paying in US dollars.

Nord Stream 2, a recently completed pipeline from Russia to Germany, is awaiting approval from European Union and German regulators before Berlin issues a certificate.

Europe’s reliance on Russian energy supplies weakens the West’s hand when considering sanctions in this area.


The White House has told the US chip industry to be ready for new restrictions on exports to Russia if Moscow attacks Ukraine, including potentially blocking Russia’s access to essential supplies. global electronics.

Similar measures were deployed during the Cold War, when sanctions made the Soviet Union technologically backward and stunted economic growth.


One of the harshest measures would be to disconnect the Russian financial system from SWIFT, the system that handles international financial transfers and is used by more than 11,000 financial institutions in more than 200 countries.

A senior US official said they are not removing the SWIFT sanctions.

In 2012, SWIFT disconnected Iranian banks as international sanctions tightened on Tehran because of its nuclear program. The Carnegie Moscow Research Center of the Carnegie Moscow Center says Iran has lost half of its oil export revenue and 30 percent of its foreign trade.

Among Western nations, the US and Germany would suffer the most from such a move, as their banks are the most frequent SWIFT users with Russian banks, Maria Shagina in China said. Carnegie Moscow Center said.

Calls to cut Russia’s access to SWIFT were made in 2014 when Moscow annexed Crimea, prompting Moscow to develop an alternative messaging system, SPFS.

According to Russia’s central bank, the number of messages sent via SPFS accounted for about one-fifth of Russia’s internal traffic in 2020.

Source link


News 7D: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button