‘Outraged by the atrocities’: U.S. aims new sanctions at Russia – POLITICO

A senior Biden administration official said, however, there will still be a carve-out for energy transactions, part of a continued effort to shield Europe from skyrocketing oil and gas prices. The Treasury Department is also sanctioning Alfa Bank, the largest private lender in Russia, as well as several key state-owned companies, on top of a broader move to cut off funding to the country.

We have seen an overwhelming move by companies to take actions on their own to pull out of Russia, Brian Deese, a top White House economic official, told reporters Wednesday morning at an event hosted by the Christian Science Monitor. Today, we will prohibit any new inbound investment.

The latest sanctions on Russias biggest banks aim to dramatically escalate the financial shock the country has faced in recent weeks, a senior administration official told reporters on a call, adding that more than two-thirds of the Russian banking industry is now fully blocked from transacting with U.S. financial firms.

The investment ban will make sure that the mass exodus from Russia that were seeing from the private sector which is now over 600 multinational companies and growing that it will endure, said the official, who requested anonymity to discuss administration strategy. Without investment from our private sector, Putin will lose private sector know-how and skills that travel with investment, and the knock-on effects to the ongoing brain drain from Russia will be profound.

The measures were taken in concert with European allies. The U.K. on Wednesday imposed new asset freezes against Sberbank and Credit Bank of Moscow and announced a phase-out of Russian coal before the end of 2022, to go alongside a similar plan for Russian oil announced last month. It slapped new bans on exports, including oil-refining equipment as well as iron and steel products, and targeted sanctions at more oligarchs tied to the Russian fuel sector.

A new package of EU sanctions, which was to be put to member countries for a vote on Wednesday, would also phase out Russian coal deliveries from the blocs energy imports, ban Russian vessels and trucks from entering the EU and impose tougher sanctions on four key Russian banks. But the plan stops short of a full ban on Russian oil imports, amid resistance from countries led by Germany.

Our partners are outraged by the atrocities that are being committed in Russia, as we are, Treasury Secretary Janet Yellen said Wednesday at a House Financial Services Committee hearing. And we are working very actively with them to impose new sanctions that will cause Russia significant pain.

Also targeted in Wednesdays actions: Putins adult children, Foreign Minister Sergei Lavrovs wife and daughter and members of Russias Security Council, including former President and Prime Minister Dmitry Medvedev and current Prime Minister Mikhail Mishustin.

The Treasury confirmed Monday that it is now banning Russia from using its frozen central bank reserves to make payments to bondholders. That means the Kremlin will have to find new sources of funding and new payment routes other than U.S. banks to avoid defaulting on its debt, the official said.

The official said the sanctions are having an impact on Russia, citing soaring inflation and interest rates that are now above 20 percent. Russias economy is expected to shrink by as much as 15 percent this year, more than twice the contraction it experienced following the 1998 currency crisis, when the country defaulted on its debt.

But unlike then, when Russia was in the process of getting integrated into the global economy, its now in the process of being isolated as a pariah state, the official said.

At this rate, Russia will go back to Soviet-style living standards from the 1980s. Russians will find it difficult to travel abroad, their debit cards may not work and store shelves may be empty, the official said.

The Biden administration already took some steps in February to cut off Sberbank from the U.S. financial system after Russias initial invasion, but it stopped short of the type of full blocking sanctions that it placed on VTB, Russias second-largest bank.

Although the administration has banned oil and gas imports from Russia into the U.S., the carve-out allows U.S. financial institutions to continue sending payments for Russian energy to Sberbank on behalf of European countries, which rely heavily on those imports.

Importantly, these measures are designed to reinforce each other to generate intensifying impact over time, the administration said in a fact sheet.

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'Outraged by the atrocities': U.S. aims new sanctions at Russia - POLITICO