Russia's offensive against Ukraine on February 24 had severe repercussions in the international arena. America, like other countries, announced the sanctions one by one, with Russia's recognition of the separatist regions and sending peacekeepers. US President Biden has announced that he will impose more serious sanctions more swiftly as Russia's aggressive attitude continues. With Russia's entry into Ukraine, the US Treasury Department announced wide-ranging sanctions to shake Russia.
New Sanctions Announced by OFAC
America took steps to inflict severe damage to the Russian
economy and financial system both in the short term and in the long run and
imposed new sanctions that would cause heavy consequences for the war
effort. OFAC, along with its allies, enacted economic sanctions to
undermine all of Russia's largest financial institutions, including state
institutions' ability to disable the Russian economy and finance. While these
actions carried out by OFAC target approximately 80 percent of the banking
assets in Russia, they aim to cut off Russia's relationship with the global
market.
The newly announced sanctions will undermine Russia's ability to raise financial capital, which is the basis of its aggressive stance. It aims to break the Kremlin's ability to project power, not just now but in the future. At the same time, while this action will ease the pressure on the allies, it will add serious weight to Russia's economy. Today's actions were carried out in accordance with executive order 14024.
Economic Sanctions
The US sanctions target two of Russia's largest financial
institutions, the Public Joint Stock Company Sberbank of Russia and VTB Bank
Public Joint Stock Company. Daily, Russian financial institutions process
approximately $46 billion in foreign exchange transactions globally, 80 percent
of which are in US dollars. These two big banks are on target as they make up
more than half of the total banking system in Russia. It will no longer benefit
from the US financial system by preventing these two banks from processing
payments through the US financial system. At the same time, Sberbank
correspondent and accounts payable sanction, which is very important for Russia
and has the largest market for savings deposits in the country and holds about
one-third of all bank assets, has also been implemented.
OFAC requires US Financial institutions to close and reject all Sberbank correspondents and payable-through accounts within 30 days.
Transactions will be canceled unless authorized by OFAC or
exempted under EO 14024.
A full blocking sanction was imposed on VTB, which holds 20%
of the banking assets of the second largest, Russia. Accounts will be frozen
instantly, and the Kremlin will not be able to access them. 20 VTB bank
subsidiaries owned and controlled by VTB are subject to blocking even if they
are not identified in their affiliated banks, holding companies, and finance
companies located in Russia and eight other countries.
Apart from these, sanctions were imposed on three big
financial institutions, namely Otkritie, Sovcombank, and Novikombank.
Otrike is considered Russia's state credit institution and
is the 7th largest financial institution. Subject to blocking at 12
subsidiaries, directly or indirectly owned or controlled by Otkrite, according
to EO14024
Sovcombank is Russia's 3rd largest financial institution and
9th largest bank. Twenty-two subsidiaries of this bank are also subject to
blocking.
Novikombank is among the 50 largest financial institutions. In accordance with directive three-under EO13662, the institution already subject to restrictions is blocked.
The sanctions affect the 13 companies listed in the
Russian-related penny directive, companies critical to the Russian economy, and
the six largest financial institutions. OFAC expands the number of Russian
entities subject to new debt and equity-related bans.
OFAC has identified 11 Russian entities that are directly or indirectly controlled or owned by Russia;
- Sberbank
- Gazprombank Joint Stock Compan
- Joint Stock Company Russian Agricultural Bank
- Public Joint Stock Company Gazprom
- Public Joint Stock Company Gazprom Neft
- Public Joint Stock Company Transneft
- Public Joint Stock Company Rostelecom
- Public Joint Stock Company RusHydro
- Public Joint Stock Company Alrosa
- Joint Stock Company Sovcomflot
- Open Joint Stock Company Russian Railways
- Joint Stock Company Alfa-Bank
- Credit Bank of Moscow Public Joint Stock Company
Sanctions Targeting the Elites
- Families Close to Putin
- Sergei Sergeevich Ivanov, son of Sergei Borisovich
- Andrey Patrushev
- Nikoli Platonovich Patrushevin and his son
- Son of Igor Ivanovic Sechin Ivan Igorevic Sechin
- Finance Sector Elite
- Alexander Alexandrovich Vedyakhin
- Andrey Sergeyevich Puchkov
- Yuri Alekseyevich Soloviev and his companies Limited
Liability Company Atlant and Liability Company Inspira Invest
- Galina Olegovna Ulyutina
The USA joined the EU's decision and put Russian President Putin and Foreign Minister Lavrov on the sanction list. The most important move from the US and EU sanctions against Russia is expected to be removed from the international payment system SWIFT. There is no final decision on this issue yet.
