The Biden administration imposed sanctions on Russia’s banking sector and its leader Vladimir Putin’s daughters. These new measures will not only raise the cost of doing business in Russia, but will also restrict access to foreign capital markets for Russian banks and potentially make it more difficult for Russian firms to finance their international operations.
Following the horrific images from the Ukrainian city of Bucha, the US is stepping up economic pressure on Russia and President Vladimir Putin, announcing new sanctions on Russian financial institutions and individuals, including Putin’s adult daughters and the wife and daughter of his foreign minister.
“Today, we’re drastically intensifying the financial shock by putting full blocking sanctions on Sberbank, Russia’s biggest financial institution, and Alfa Bank, Russia’s largest private bank,” a senior administration official briefing reporters said.
According to the source, Sberbank has approximately a third of Russia’s entire banking sector assets, and the US has now totally banned “more than two-thirds of the Russian banking industry.”
“In agreement with the G7 and the EU, we’re declaring a prohibition on new investment in Russia,” the senior official said. An executive order issued by US President Joe Biden will put this into effect.
Putin’s adult daughters Mariya Putina and Katerina Tikhonova, Foreign Minister Sergey Lavrov’s wife and daughter, and members of Russia’s Security Council, including former President and Prime Minister Dmitry Medvedev and Prime Minister Mikhail Mishustin, are among those targeted by the administration. According to the senior source, the US has sanctioned over 140 oligarchs and their family members, as well as over 400 Russian government officials.
The US will also impose complete blocking sanctions on vital Russian state-owned firms, according to the Department of Treasury, which will be disclosed on Thursday. The insider also mentioned the Department of Treasury’s statement on Tuesday that Russia would no longer be able to pay its debts using dollars held in US institutions.
Since Russia’s invasion of Ukraine, US sanctions have had a crushing impact on the Russian economy, according to the senior source.
“This year, Russia’s GDP is expected to decline by double digits… It is not currently being treated as a pariah state. The IMF (International Monetary Fund) estimates that the economic shock this year will wipe away the previous 15 years of economic advances,” the source stated.
When asked about the effectiveness of sanctions in halting Putin’s conflict in Ukraine, the senior official attempted to emphasize the impact sanctions are having on daily life in Russia, saying Putin will have to face his people at some point.
“Even an autocrat like Putin has a social contract with the people of Russia.” He took away their independence in return for a promise of stability, but he isn’t delivering on that promise,” the official said.
“The question isn’t so much: What can we do and when will it have an impact as it is: What can we do and when will it have an effect?” I believe it is: What is Putin’s goal here? “For what is he playing?” Added the official. “This is definitely turning into a failure for him, and he will have to accept that fact at some time.”