Biden Administration Goes the Sanction Route on Russia
Posted on 02/23/2022
The United States went the sanctions route on Russian President Vladimir Putin’s decision to recognize the so-called Donetsk and Luhansk People’s Republics (DNR and LNR) as “independent” states and to deploy troops to these regions by sanctioning two major Russian state-owned financial institutions, imposing additional restrictions on Russian sovereign debt, and sanctioning five Kremlin-connected elites. This action from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) builds on U.S. President Biden’s Executive Order imposing severe restrictions on economic activity with the DNR and LNR regions of Ukraine.
The U.S. Department of Treasury is sanctioning the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries.
Sanctions Go After Russian Bonds
OFAC also increased restrictions on dealings in Russia’s sovereign debt. Specifically, OFAC issued Russia-related Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (the “Russia-related Sovereign Debt Directive”), amending and superseding Directive 1 under E.O. 14024. This extends existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation. Many U.S.-related investors already face restrictions on buying Russian government bonds in the primary market. Now these investors won’t be allowed to buy in the secondary market any securities that are newly issued after March 1, 2022.
Meanwhile, German Chancellor Olaf Scholz put certification of the Nord Stream 2 gas pipeline on hold. Moscow will continue supplying gas to Europe and will not weaponize energy exports. Nord Stream 1 is a system of offshore natural gas pipelines in Europe, running under the Baltic Sea from Russia to Germany.
On a Background Press Call by a Senior Administration Official on Russia Sanctions on February 22, 2022 the U.S. Senior Administration Official stated “And let me be totally clear: No Russian financial institution is safe if this invasion proceeds. We are ready to press a button to take further action on the very largest Russian financial institutions, including Sperbank and VTB, which collectively hold almost $750 billion in assets — or more than half the total in Russia as a whole.
Third, together with our Allies, we’ve also cut off the Russian government, the Russian Central Bank, and its sovereign wealth funds from U.S. financing. Europe has taken a very similar measure. That means the Kremlin can no longer raise money from the U.S. and Europe, and its new debt can no longer trade in U.S. or European markets.
Fourth, we have fully sanctioned a group of Russian elites and their family members. These individuals have shared in the corrupt gains of the Kremlin, and they will now share in the pain. Other Russian elites and their family members are now on notice that additional actions could be taken on them as well.”
LINK: https://www.whitehouse.gov/briefing-room/press-briefings/2022/02/22/background-press-call-by-a-senior-administration-official-on-russia-sanctions/
