By – Md. Mahib Khan

President Biden announced tough new sanctions on Thursday aimed at crippling Russian banks such as Russian banks and financial institutions, freezing assets of some elite businessmen of Russia, cutting off the Russian economy from much of the global financial system and preventing the country from importing technology critical to its defense, aerospace, and maritime industries.

The new US sanctions include Russia’s two major financial institutions, which account for more than half of the country’s total assets. The Biden administration pledged to impose harsher economic sanctions on Russia over its invasion of Ukraine, which began on Thursday morning. The US government’s package is expected to echo throughout Russian businesses and households, whereas the financial consequences of Mr. Putin’s full-scale invasion of Ukraine has already begun to show with the Russian currency hitting record lows and stock prices to crash. 

List of the US sanctions:

• Severing Russia’s global financial transactionsby adopting measures that cut off Sberbank’s access to dollar transactions, the US financial system has denied access to Russia’s largest financial bank, Sberbank, and its 25 subsidiaries. Sberbank controls approximately a third of the banking sector’s assets in Russia.

• Sanctions on Russia’s VTB Bank (VTB) and its subsidiaries, the world’s second-largest financial institution, have their assets frozen which are connected to the US financial system and barred US citizens from conducting business with them. VTB has almost one-fifth of Russia’s banking sector assets and is heavily exposed to the US and western financial systems.

• Similar full-blocking sanctions on assets from Bank Otkritie, Sovcombank OJSC, and Novikombank and dozens of its subsidiaries, with measures blocking any of these institutions as well as the assets that encounters the US financial system and forbidding Americans from doing business with them.

• New debt and equity restrictions on all transactions that are incoming, provision of financing, and other dealings in new debt and new equity issued by 13 Russian state-owned enterprises, including restrictions on all transactions in, provision of financing for, and other dealings in new debt and new equity issued by 13 Russian state-owned enterprises. On the list are Sberbank, AlfaBank, Moscow Credit Bank, Gazprombank, Russian Agricultural Bank, Gazprom, Gazprom Neft, Transneft, Rostelecom, RusHydro, Alrosa, Sovcomflot, and Russian Railways. These businesses will be unable to raise money on the US market due to their projected assets of $1.4 trillion (about $4,300 per person in the US).

• Additional full-blocking sanctions against Russian leaders, Elites and their families, as well as people “who have profited at the expense of the Russian state.” The heads of Russia’s main financial institutions, as well as those in charge of supplying the funds required to finance the invasion of Ukraine, are among those targeted.

• Two dozen Belarusian individuals and entitieswere also sanctioned for supporting the attack on Ukraine. Two prominent Belarusian state-owned banks, nine defense firms, and seven individuals are among those affected.

• Russia’s military and Defense ministry restricted from buying nearly all US items and items produced in foreign nations using certain US-origin software, technology, or equipment.

• Defense, aviation, and maritime technology subject to Russia-wide restrictions aimed at choking off Moscow’s import of tech goods. That also includes a Russia-wide denial of exports of some technology. The US sanctions will also impose Russia-wide restrictions on some US technologies produced in other countries including semiconductors, encryption security, lasers, sensors, navigation, avionics, and maritime technologies.

• Licensing exemptions for countries that adopt export restrictions on Russia will be implemented, eliminating US licensing requirements for items produced in their countries. The EU, Australia, Japan, Canada, New Zealand and the UK have already communicated their plans for parallel actions.

The global economy remains precarious at the start of the third year of the pandemic, and many governments are grappling with the highest inflation rates in decades. At the same time, Ukrainian leaders and some US lawmakers urged Biden to go even further to punish Moscow and Putin for the attack on Ukraine.

There was disappointment that the round of sanctions unveiled by the US and Europe following the Russian invasion did not remove Russia from the SWIFT financial messaging system. Removal from the secure messaging system, which serves as the backbone of global banking payments, trades and currency exchanges, has long been viewed as the equivalent of a financial nuclear weapon — the harshest penalty that could be imposed on a country integrated in global markets.