US expands sanctions on Russia over banking crackdown

Image source, Getty Images

Article information

• Author, Tom Espiner
• Paper, BBC News

• 6 hours ago

The US has expanded its sanctions on Russia, including a new crackdown on banks that deal with sanctioned entities.

Expands a December program to target foreign banks believed to be aiding Russia’s war effort in Ukraine.

The US also imposed sanctions on the Moscow stock exchange, causing it to suspend trading in dollars and euros.

It also tried to restrict Russia’s use of technology, including chips and software.

US President Joe Biden signed an executive order in December that imposed sanctions on banks that deal with about 1,200 individuals and companies believed to be aiding Russia’s war machine.

These measures, which expose banks to the risk of being excluded from the US financial system, have now been extended to around 4,500 entities.

The US will also target gold laundering.

Peter Harrell, former senior director for international economics at the White House, told Reuters news agency that the US “is moving towards something that is beginning to look like an effort to establish a global financial embargo on Russia.”

As part of this effort, the US Treasury announced that it would impose sanctions on parts of Russia’s financial system, including the Moscow Exchange, which is one of Russia’s main stock exchanges.

The stock exchange, which is Russia’s biggest foreign exchange market, said the sanctions forced it to stop trading in dollars and euros.

The US has also focused on technology. Chips and other U.S.-made technology have been found in Russian equipment shot down on Ukrainian battlefields, including drones, radios, missiles and armored vehicles.

The sanctions aim to make it more difficult for companies to supply this technology.

The US will target shell companies in Hong Kong that sell chips to Russia.

In addition, software and IT services will also be restricted, although the US states that its actions are “not intended to disrupt civil society and civil telecommunications”.

Despite the wave of sanctions imposed against Russia since the large-scale invasion of Ukraine in February 2022, the International Monetary Fund predicts that the country will register economic growth of 3.2% this year.

But analysts say the measures will ultimately make it more difficult for Moscow to fight its war and, over time, weaken the Russian economy.

“Russia’s war economy is deeply isolated from the international financial system, leaving the Kremlin’s military desperate for access to the outside world,” said Treasury Secretary Janet Yellen.

“Today’s actions target remaining international material and equipment pathways, including their dependence on critical supplies from third countries,” he added.

The US announced the decision as Biden prepared for a G7 summit in southern Italy with the leaders of the United Kingdom, Canada, France, Germany, Italy and Japan.

One of the G7 leaders’ priorities is to increase support for Ukraine, which is now in its third year of resisting Russia’s invasion.

Source