US expands sanctions on Russia as questions about effectiveness rise

The White House on Wednesday announced a new round of sanctions targeting two of Russia’s biggest banks and the adult children of Russian President Vladimir Putin, as the Biden administration seeks to amplify financial pressure on the Kremlin following the invasion of the ‘Ukraine.

The sanctions against Sberbank and Alfa Bank are accompanied by a new US ban on any investment entering Russia by any American, as well as sanctions against several Russian state-owned companies, including an aircraft and shipbuilding company. The measures are announced in coordination with the G-7 and the European Union. Sanctions will also be imposed on family members of Russian Foreign Minister Sergey Lavrov and other senior Russian officials.

President Biden detailed the sanctions in a speech to North American building trades unions on Wednesday, accusing Russia of “war crimes” and saying the measures would further strain its economy.

“We will further increase Russia’s economic isolation,” Biden said. “The United States will continue to stand with the people of Ukraine in their fight for freedom.

But even as the administration imposes additional sanctions, questions have intensified about the effectiveness of the West’s uneven economic campaign against Moscow.

The Russian currency initially crashed after the US government and its allies first hit the Kremlin with sanctions several weeks ago. But the ruble has recently recovered and Europe continues to buy billions of dollars worth of Russian oil and gas. This helped Moscow offset the costs of the war. Although the Biden administration has banned imports of Russian energy to America, the United States has been slow to sanction Russian international energy transactions, fearing the impact of rising global energy prices on domestic inflation. . Ukrainian President Volodymyr Zelensky has urged the United States to adopt a number of measures that the White House has so far resisted, such as closing international ships to Russian ports.

“The measures taken today by the United States and the EU represent a significant toughening of an already difficult set of measures. … However, given the nature of the atrocities committed in Ukraine, it is fair to ask whether these measures go far enough,” said Daniel Glaser, who served in the Treasury Department’s Bureau of Terrorism and Financial Intelligence under the Obama administration and is now the global head of jurisdictional services at K2 Integrity, a risk compliance firm. “Oil and gas remain intact and Russia continues to have access to the international financial system.”

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White House officials have insisted that the sanctions are working despite such criticism, pointing to projections that Russia’s economy could shrink by up to 15% a year – which would be the biggest downturn in the economy. Russian since the beginning of the dissolution of the Soviet Union in 1989. They also said that inflation in Russia had increased by about 2% per week, which would translate to inflation of about 200% if it were worsened over a year.

“Anyone looking at the Russian economy right now and thinking it’s rebounding or showing signs of life, I think it’s missing the forests for the trees,” the head of the White House National Economic Council told reporters. , Brian Deese, Wednesday morning at an organized event. by the Christian Science Monitor. “They are completely ostracized.”

Additional sanctions against Russia could also add further strain to the global economy which is still trying to rebound from the coronavirus pandemic.

Russia is not only one of the largest energy suppliers in the world, but also plays a crucial role in supply chains for auto parts, foodstuffs and other commodities. Speaking to congressional lawmakers on Wednesday, Treasury Secretary Janet L. Yellen warned of rising energy and food prices around the world, with devastating effects on poorer countries. less equipped to absorb the blow and more dependent on Russian and Ukrainian wheat exports.

Yellen also suggested on Wednesday that the United States may not attend some G-20 meetings this year in Indonesia if Russia is present. Deese told reporters that Washington wanted Russia kicked out of the G-20, but that its economy could contract to the point that it would no longer be considered one of the wealthiest nations in the world.

“Russia’s actions, including the atrocities committed against innocent Ukrainians in Bucha, are reprehensible, represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions for the world,” Yellen said. . “Russia’s invasion disrupted the flow of food for millions around the world and caused prices to spike.”

Yellen faced aggressive questioning from lawmakers on Wednesday, with Rep. David Scott (D-Ga.) demanding an explanation as to why some wealthy Russian oligarchs had not yet been targeted. Yellen declined to answer questions about specific individuals, but said the administration had imposed sanctions on many members of Russia’s financial elites and was working to add more.

The latest US measures are “strong moves” that have hit Russia’s state-owned enterprises for the first time and increasingly cut off its banking sector from the global financial system, said Edward Fishman, a former State Department official who has worked on Russia’s sanctions policy during the Obama administration.

“They’re not addressing the sanctions’ greatest weakness: Russia’s continued oil and gas sales, which bring $1 billion to the Kremlin every day,” Fishman said. “As long as this gap exists, the sanctions pressure will face an upper limit.”

Other experts fear that sanctions against Russia could have a counterproductive effect, making Russian society hostile to the United States and more sympathetic to Putin.

NATO asks Ukraine to decide on a peace agreement with Russia – within certain limits

Putin’s daughters, Mariya Putina and Katerina Tikhonova, are the targets of the sanctions, according to a senior administration official, who briefed reporters on condition of anonymity on Wednesday. The administration official said US officials believe many of Putin’s personal assets are hidden with members of his family, which is why Western allies are targeting them.

Putina is a genetics researcher and Tikhonova was once deputy director of the Institute for Mathematical Research of Complex Systems at Moscow State University, according to a 2011 Washington Post article. White House officials and President Biden’s son, Hunter Biden.

The Wall Street Journal first announced that the sanctions against Putin’s daughters were coming.

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