US sanctions will isolate Russia from global financial system, says key White House official

The unprecedented set of financial sanctions imposed by the United States in coordination with its friends and allies will isolate Russia from the global financial system and close its access to advanced technologies, a key White House official has said.

Indian-American Daleep Singh, a top aide to US President Joe Biden, said on Thursday the measures include sweeping restrictions on Russian military end users and would also target defense, aerospace and of the Russian Navy.

Earlier, Biden announced a series of tough economic sanctions against Russia.

“Today, we are imposing an unprecedented set of financial sanctions and export restrictions in conjunction with our allies and partners that will isolate Russia from the global financial system, shut down its access to advanced technologies and undermine Russia’s strategic ambitions. Putin to diversify and modernize his economy,” Singh told reporters at a White House press conference.

“We will impose sanctions on the two largest Russian financial institutions, Sberbank and VTB, which together hold more than half of the assets of the Russian banking system, or more than 750 billion dollars in total,” said Singh, deputy adviser to the national security for the international economy and deputy director of the National Economic Council.

“For VTB, we will freeze all its assets touching the US financial system and prohibit US persons from doing business with the bank. For Sberbank, we will cut off its access to the US financial system. We will also freeze the assets of and prohibit any business dealings with three additional Russian banks with combined assets of over $70 billion,” he said.

“We will also block US investors from providing debt or equity financing to 13 of Russia’s most critical state enterprises, which together have assets estimated at nearly $1.5 trillion.

“And finally, we will also impose sanctions on the leaders of these public institutions, as well as other Russian elites complicit in Putin’s kleptocracy and their family members,” he added.

Export brakes

Singh said the United States would unveil an extensive and unprecedented set of export restrictions, developed in “historically close coordination” with the European Union, Australia, Japan, Canada, New Zealand , the United Kingdom and Taiwan.

“These new measures include sweeping restrictions on Russian military end users to harm (Russian President Vladimir) Putin’s military capabilities and will also prevent exports across Russia of sensitive advanced technologies, primarily targeting defense sectors, Russian Aerospace and Navy,” he said. .

According to Singh, the United States and its partners will effectively cut off more than half of all high-tech imports to Russia.

“This includes restricting Russia’s access to advanced semiconductors and other fundamental technologies that Russia needs to diversify and modernize its economy. Working in tandem, these financial sanctions and export controls will undermine Putin’s aspirations to project his power on the world stage, and those impacts have intensified dramatically today,” he said.

Singh said the Russian stock market plunged more than 30% at one point on Thursday before being shut down by local regulators. Russia’s currency, the rouble, has weakened to its lowest value on record against the dollar before central bank intervention and the price the market is asking the Russian government to borrow is now over 15% .

“These impacts over time will translate into higher inflation, higher interest rates, lower purchasing power, lower investment, lower productive capacity, lower growth and a level lower living standards in Russia. To be clear, this is not the outcome we wanted. This is both a tragedy for the Ukrainian people and a very raw deal for the Russian people,” he said. declared.

The United States intentionally extended its sanctions to have a severe impact on the Russian economy while minimizing costs to itself, as well as its allies and partners, Singh said.

Energy supply

“To be clear, our sanctions are not designed to disrupt the current flow of energy from Russia to the world. We have cut out energy payments on a time basis to allow for an orderly transition of those flows away from sanctioned institutions. , and we provided other licenses to ensure an orderly winding down of business,” he said.

“What we’re controlling is to make sure it’s going to be a strategic failure, not just because of sanctions but also because of export controls, because of Europe’s accelerated diversification away from Russia. in terms of energy supply, because of our strengthening of NATO’s eastern flank, and because of the West’s renewed energy, unity and determination to uphold our values ​​and advance our principles “, did he declare.

Published on

February 25, 2022

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Don F. Davis