US sanctions on Russia affect defence, tech, finance

The White House unveiled measures to isolate Russia from the global financial, tech and trade system.

US President Joe Biden takes questions while delivering remarks on Russia's attack on Ukraine.
US President Joe Biden said Russia would face major economic and financial repercussions for its attack on Ukraine [Leah Millis/Reuters]

The United States said that it is imposing ‘severe’ economic sanctions on Russia in response to President Vladimir Putin’s attack on Ukraine, aimed at crippling the Russian economy, its financial institutions and its access to technology.

US President Joe Biden at the White House Thursday said: ” Putin chose this war. And now he and his country will bear the consequences.”

Russia’s stock market tumbled to its lowest level in four and a half years on Thursday, and its currency, the rouble, reached a record low versus the greenback.

Now, the even stricter measures aim to squeeze Russia’s economy, stifle its growth, increase borrowing costs, raise inflation and intensify capital outflows.

The Biden administration said in a statement Thursday afternoon that sanctions target all 10 of Russia’s largest financial institutions and impose export control measures that will more than halve Russia’s high-tech imports.

The moves include cutting off Russia’s largest bank from the US financial system and imposing sanctions on Russia’s second-largest bank, and freezing any of its assets touching the US financial system.

The sanctions on Russia’s top financial entities include the imposition of “full blocking and correspondent and payable-through account sanctions, and debt and equity restrictions, on institutions holding nearly 80 percent of Russian banking sector assets”, the White House said.

“The scale of Putin’s aggression and the threat it poses to the international order require a resolute response, and we will continue imposing severe costs if he does not change course,” the Biden administration added in a statement.

The US applauded Australia, Canada, the European Union, Japan, and the United Kingdom for having agreed to take “similarly forceful” actions against Russia.

Here’s a list of the US sanctions:

  • Severing the connection to the US financial system for Russia’s largest financial bank, Sberbank, including 25 subsidiaries, by imposing measures that cut off Sberbank’s access to transactions made in the dollar. Sberbank holds nearly one-third of Russia’s banking sector assets.
  • Sanctions on Russia’s second-largest financial institution, VTB Bank (VTB), and its subsidiaries, freezing assets touching the US financial system and banning US persons from doing business with them. Heavily exposed to the US and western financial systems, VTB holds nearly one-fifth of Russia’s banking sector assets.
  • Similar full-blocking sanctions on Bank Otkritie, Sovcombank OJSC, and Novikombank and dozens of its subsidiaries, with measures freezing any of these institutions’ assets touching the US financial system and also prohibiting Americans from doing business with them.
  • New debt and equity restrictions on 13 critical Russian financial entities, including restrictions on all transactions in, provision of financing for, and other dealings in new debt of greater than 14 days maturity and new equity issued by 13 Russian state-owned enterprises. Sberbank, AlfaBank, Credit Bank of Moscow, Gazprombank, Russian Agricultural Bank, Gazprom, Gazprom Neft, Transneft, Rostelecom, RusHydro, Alrosa, Sovcomflot, and Russian Railways are on the list. With estimated assets of about $1.4 trillion, these entities will be unable to raise money via the US market.
  • Additional full-blocking sanctions on Russian elites and their family members and individuals “who have enriched themselves at the expense of the Russian state”. Heads of Russia’s largest financial institutions and those responsible for providing the resources needed to support the invasion of Ukraine are also targeted.
  • Two dozen Belarusian individuals and entities were also sanctioned for supporting the attack on Ukraine. Two prominent Belarusian state-owned banks, nine defence firms, and seven individuals are among those affected.
  • Russia’s military and defence ministry restricted from buying nearly all US items and items produced in foreign nations using certain US-origin software, technology, or equipment.
  • Defence, aviation, and maritime technology subject to Russia-wide restrictions aimed at choking off Moscow’s import of tech goods. That also includes a Russia-wide denial of exports of some technology. The US sanctions will also impose Russia-wide restrictions on some US technologies produced in other countries including semiconductors, encryption security, lasers, sensors, navigation, avionics and maritime technologies.
  • Licensing exemptions for countries that adopt export restrictions on Russia will be implemented, eliminating US licensing requirements for items produced in their countries. The EU, Australia, Japan, Canada, New Zealand and the UK have already communicated their plans for parallel actions.
Source: Al Jazeera