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Russia Hit with Economic Sanctions, More to Follow, But Will it Be Enough to Halt Putin’s War [u]

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As Russian President Vladimir Putin shocked the world with his horrific invasion of Ukraine, many nations enacted economic sanctions to punish the rogue country as Europe entered a state of war.

Following Putin’s effective annexation of Donetsk and Luhansk (Donetsk and Luhansk People’s Republics or DNR and LNR), the United States initially prohibited new investments into DNR and LNR, export or sale of goods to these regions, any financial transactions, effectively blocking commerce in the DNR and LNR.

The US Department of Treasury, sanctioned the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries. The sanctions were designed to ensure VEB and PSB can no longer do business in the United States and are cut off from the U.S. financial system.

Treasury said that all assets under US jurisdiction will be immediately frozen and US individuals and entities are prohibited from doing business with these institutions unless authorized by OFAC.

Several Russian “elites” were targeted too. Denis Aleksandrovich Bortnikov, son of Aleksandr Vasilievich Bortnikov, Petr Mikhailovich Fradkov and Vladimir Sergeevich Kiriyenko, son of Sergei Vladilenovich Kiriyenko were at the top of the list.

Aleksandr Bortnikov is the Director of the Federal Security Service (FSB). Denis Bortnikov is currently a Deputy President of Russian-state owned financial institution VTB Bank Public Joint Stock Company (VTB Bank) and a Chairman of the VTB Bank Management Board.

Fradkov is the Chairman and CEO of PSB and also the son of Mikhail Efimovich Fradkov, former Prime Minister of Russia and former Director of the Russian Foreign Intelligence Service (SVR).

Sergei Kiriyenko is the First Deputy Chief of Staff of the Presidential Office and apparently Putin’s domestic policy curator.

The European Union adopted a package of measures to punish Russia’s unwarranted aggression.

The EU applied sanctions to cover all the 351 members of the Russian State Duma, plus 27 high profile individuals and entities. Sanctions included an asset freeze and a prohibition from making funds available to the listed individuals and entities. In addition, a travel ban was applied to these individuals preventing them from entering or transiting through EU territory.

Restrictions by the EU were applied to a total of 555 individuals and 52 entities.

Similar to the US, the EU applied import bans and other restrictions on the DNR and LNR.  Sectoral prohibitions to finance the Russian Federation, its government, and Central Bank, were applied as well in an effort to deny access to financial markets and services.

The UK froze the assets and imposed travel bans on three leading members of the Russian elite as well as freezing the assets of 5 banks active in bankrolling the occupation and propping up Russia’s defence sector.

Liz Truss, the UK Foreign Secretary, said they are looking at sanctioning members of the Russian Duma and Federation Council adding that “nothing is off the table.”

While these economic sanctions may have impacted the designated targets, many Ukrainians felt they fell short, and more needed to be done – immediately.

Earlier today, Ukrainian Foreign Minister Dmytro Kuleba called for severe sanctions now.

 

Toma Istomina, Deputy Chief Editor of the Kyiv Independent, a digital news company that is covering the war, criticized the West’s inability to enact more severe sanctions. On Twitter, she indicated that she was currently in a bomb shelter like most Kyiv residents.

The Kyiv Independent, an English language publication, has set up donation pages to help support their ongoing, in country reporting – as long as they can.

Become our patron: patreon.com/kyivindependent

Donate: gofundme.com/f/kyivindepend

Gary Kasparov, once active in elected politics in Ukraine, said the world needed to target Putin’s “mafia” calling their wealth Putin’s Achilles heel.

Rachel Vindman, called for maximum sanctions to cut off Putin’s “blood money” demanding that all of the houses, yachts and bank accounts be seized now.

Following a discussion with French President Emanuel Macron, Ukrainian President Volodymyr Zelensky called for the immediate separation of Russia from SWIFT.

There are many, many others demanding extreme sanctions. Disconnecting Russia from SWIFT, the cooperative society that serves as an intermediary and executor of financial transactions between banks worldwide would sever Russia from most all global banks. President Joe Biden is scheduled to speak later today when he will outline another round of coordinated actions designed to cut off Russia and Putin’s cronies from global markets that could be devasting, over time.

But will it be enough? Is it too little too late? Most observers expect Russia to take over all of Ukraine and install a puppet government. Some are concerned that the conflict will spill over into other former, East bloc countries turning into WW3.

Meanwhile, all Ukrainians, over 40 million citizens, are suffering due to the insanity of the President of Russia; lives devastated, families destroyed, unnecessary death and destruction.

Update: New Sanctions Announced. No SWIFT Block for Russia Yet.

Yesterday the United States and the UK announced a new series of sanctions. Today, the European Union joined in by adding more sanctions as well designed to cripple Russia and its rogue actions against Ukraine.

In a nationally televised presentation, President Joe Biden outlined the new sanctions. To quote the White House:

“With today’s financial sanctions, we have now targeted all ten of Russia’s largest financial institutions, including the imposition of full blocking and correspondent and payable-through account sanctions, and debt and equity restrictions, on institutions holding nearly 80% of Russian banking sector assets. The unprecedented export control measures will cut off more than half of Russia’s high-tech imports, restricting Russia’s access to vital technological inputs, atrophying its industrial base, and undercutting Russia’s strategic ambitions to exert influence on the world stage. The impact of these measures will be significantly magnified due to historical multilateral cooperation with a wide range of Allies and partners who are mirroring our actions, inhibiting Putin’s ambition to diversify Russia’s brittle, one-dimensional economy. 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 White House said that Putin’s war has led to intense pressure on Russia’s economy, freezing assets that touch the US financial system and undermining the access to the US dollar.

In brief, the additional sanctions by the US include:

  • Severing the connection to the U.S. financial system for Russia’s largest financial institution, Sberbank, including 25 subsidiaries
  • Full blocking sanctions on Russia’s second largest financial institution, VTB Bank (VTB), including 20 subsidiaries
  • Full blocking sanctions on three other major Russian financial institutions: Bank Otkritie, Sovcombank OJSC, and Novikombank- and 34 subsidiaries.
  • New debt and equity restrictions on thirteen of the most critical major Russian enterprises and entities. This includes 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 thirteen Russian state-owned enterprises and entities:  Sberbank, AlfaBank, Credit Bank of Moscow, Gazprombank, Russian Agricultural Bank, Gazprom, Gazprom Neft, Transneft, Rostelecom, RusHydro, Alrosa, Sovcomflot, and Russian Railways.
  • Additional full blocking sanctions on Russian elites and their family members: Sergei Ivanov (and his son, Sergei), Nikolai Patrushev (and his son Andrey), Igor Sechin (and his son Ivan), Andrey Puchkov, Yuriy Solviev (and two real estate companies he owns), Galina Ulyutina, and Alexander Vedyakhin.
  • Costs on Belarus for supporting a further invasion of Ukraine by sanctioning 24 Belarusian individuals and entities, including targeting Belarus’ military and financial capabilities by sanctioning two significant Belarusian state-owned banks, nine defense firms, and seven regime-connected official and elites.
  • Sweeping restrictions on Russia’s military to strike a blow to Putin’s military and strategic ambitions.
  • Russia-wide restrictions to choke off Russia’s import of technological goods critical to a diversified economy and Putin’s ability to project power.
  • Historical multilateral cooperation that serves as a force multiplier in restricting more than $50 billion in key inputs to Russia- impacting far more than that in Russia’s production.

The US Department of Treasury provided further details on the financial sanctions with Secretary of the Treasury Janet L. Yellen stating:

“Treasury is taking serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity.”

During the press conference, President Biden indicated that several European countries were hesitant to block Russia from SWIFT while claiming the sanctions against the banks would accomplish their objectives. Blocking Russia from SWIFT was not ruled out for a later date, as well as sanctions targeting Vladimir Putin.

In an address to Parliament, Prime Minister Boris Johnson joined the US government’s efforts.  Johnson stated:

“For our part, today the UK is announcing the largest and most severe package of economic sanctions that Russia has ever seen. With new financial measures we are taking new powers to target Russian finance. In addition to the banks we have already sanctioned this week … More broadly, these powers will enable us to totally exclude Russian banks from the UK financial system, which is of course by far the largest in Europe, stopping them from accessing Sterling and clearing payments through the UK. And with around half of Russia’s trade currently in US dollars and sterling, I am pleased to tell the House the United States is taking a similar measures. These powers will also enable us to ban Russian state and private companies from raising funds in the UK, banning dealing with their securities and making loans to them. We will limit the amount of money that Russian nationals will be able to deposit in their UK bank accounts.“

Similar sanctions were applied to Russia’s partner in war Belarus.

Further restrictions on trade with Russia is being applied while the UK will create a ‘Kleptocracy Cell’ in the National Crime Agency to target sanctions evasion and corrupt Russian assets hidden in the UK – targeting the oligarchs and elites – an exceptionally wealthy group that has used London as their playground in recent years.

Today, European Union President Ursula Gertrud von der Leyen held a press conference following a meeting of the European Council (February 24). President von der Leyen stated:

“The European Union stands united. Tonight, European Leaders were fully aligned in condemning the atrocious and unprovoked attacks. Now we have to meet the moment. We will hold the Kremlin accountable. The package of massive and targeted sanctions European Leaders approved tonight clearly demonstrates that. It will have maximum impact on the Russian economy and the political elite. It is built on five pillars: The first is the financial sector; second, the energy sector; the third is the transport sector; fourth are export controls and the ban of export financing; and finally, visa policy. Let me highlight some of the most important points.”

The EU is now “targeting 70% of the Russian banking market,” along with state-controlled companies. The EU is also targeting Russian oligarchs and elites by “curbing their deposits so that they cannot hide their money anymore in safe havens in Europe.”

President von der Leyen President von der Leyen said they are coordinating their actions with the US, the UK, Canada and Norway, and now also South Korea, Japan, and Australia.

“Our unity is our strength.”

 

Update 2: The European Union, the UK, and the US, will now target assets held by Vladimir Putin and his Foreign Minister Sergei Lavrov, freezing these assets. Details are anticipated later today.

Update 3: Chatter is that there is growing support for Russia to be blocked from SWIFT. Most holdouts have come around with reports indicating that Germany is open to cutting off Russia from SWIFT. Of course, Germany is worried about access to natural gas, etc., due to their myopic policies of the recent past.

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