On Tuesday, the US declares sanctions against Russia, cutting the country off from Western Financing after the announcement of the European Union sanctions as a unified effort to pressure the Russian government.
In an unusual and potentially harsh step, Washington blocked Moscow from raising new money from Western banks by prohibiting trading in Russian debt as of March 1.
The measures target Vnesheconombank (VEB), Russia’s state development bank, and Promsvyazbank (PSB), another state-supported institution. The US Treasury says both hold tens of billions of dollars in assets and “play specific roles to prop up Russia’s defense capability and its economy.”
Washington also penalized Russian oligarchs and their families, parts of Putin’s inner circle who “pillage the Russian state, (and) enrich themselves… at the expense of the Russian people,” the Treasury Department said in a statement.
The “full blocking sanctions” on VEB and PSB, and their subsidiaries, as well as the moves against five individuals, will freeze any of their assets held in the United States, and they will also be prohibited from using the US banking system.
Washington’s response did not seem to go as far as the European Union, nor as far as some expected.
But US President Joe Biden said Washington could ratchet up the pressure, going beyond the “first tranche” of sanctions if Russia “continues its aggression” in Ukraine.
The initial US penalties cover fewer financial institutions than the EU’s, omitting the country’s largest and most important bank Sberbank, but did not sever Russia from the SWIFT system used to move money around the globe.
Nor did Biden resort to export controls, which would have cut Russian firms off from key high-tech equipment and software, which some analysts said was a possibility.
senior US administration official said, “all options remain on the table” including targeting Putin himself.
“We are starting high. These are severe costs we are imposing,” the official told reporters. “The pain is building.”
And Treasury Secretary Janet Yellen said in a statement, “We continue to monitor Russia’s actions and if it further invades Ukraine, the United States will swiftly impose expansive economic sanctions that will have a severe and lasting impact on Russia’s economy.”
Andrew Lohsen, a Russia expert at the Center for Strategic and International Studies, expressed his disagreement on the move of the US government that these announced steps are not enough to deter Russia from initiating an attack on Ukraine’s sovereignty but rather encourage them more. Furthermore, his observations note that the US administration’s main purpose behind the sanctions could be to keep some options as an upper hand in case of an escalation.
