The United States has strengthened its sanctions on Russia, taking new measures to crack down on banks that engage with sanctioned entities. This expansion builds upon a program initiated in December that targeted foreign banks supporting Russia’s military actions in Ukraine. Additionally, the US has imposed sanctions on the Moscow stock exchange, prompting the suspension of trading in dollars and euros, as well as restricting Russia’s access to technology, such as chips and software.
President Joe Biden signed an executive order last December that imposed sanctions on banks dealing with approximately 1,200 individuals and firms believed to aid Russia’s military operations, a number that has now increased to about 4,500 entities. The US is also focusing on curtailing gold-laundering activities. Former White House senior director for international economics, Peter Harrell, mentioned that the US appears to be moving towards enforcing a global financial embargo on Russia.
In a significant move, the US announced sanctions on parts of Russia’s financial system, including the Moscow Exchange, a prominent stock exchange in Russia. As a result of these sanctions, the Moscow Exchange ceased trading in major currencies. The restrictions on technology aim to impede the supply of US-made chips and other technology found in Russian equipment used in Ukraine, such as drones, radios, missiles, and armored vehicles. The US is particularly targeting shell firms in Hong Kong that sell chips to Russia.
Despite the series of sanctions imposed on Russia since its invasion of Ukraine in 2022, the International Monetary Fund predicts a 3.2% economic growth for Russia this year. However, analysts believe that these measures will gradually hinder Russia’s ability to sustain its military actions and weaken its economy over time. Treasury Secretary Janet Yellen emphasized the isolation of Russia’s war economy from the global financial system, highlighting the challenges faced by the Kremlin’s military in accessing essential materials and equipment.
The US announcement coincided with President Biden’s preparation for a G7 summit in southern Italy, where leaders from the UK, Canada, France, Germany, Italy, and Japan convened to discuss providing more support to Ukraine, which has been resisting Russia’s invasion for three years. The priority for G7 leaders is to enhance assistance to Ukraine amidst the ongoing conflict.
