The Treasury Department on Monday banned transactions with the Central Bank of Russia and the Russian foreign investment fund, imposing strict financial sanctions on a Russian economy already in free fall.
The new penalties effectively cut the Russian central bank from the U.S. dollar and severely limit Russian President Vladimir Putin’s ability to dampen the blow of previous sanctions.
U.S. individuals and businesses are now unable to make any financial transitions with or on behalf of the Central Bank of the Russian Federation, National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation. The sanctions also ban any foreign financial firm from sending U.S. dollars to the Russian central bank, finance ministry and wealth fund.
The Treasury Department said it would make exceptions for certain energy-related payments in a bid to prevent a sharp spike in global oil and natural gas prices. But U.S. officials said Monday the new penalties would still push the Russian economy deeper into a collapse they blame on Putin’s invasion into Ukraine.
“Our strategy, to put it simply, is to make sure that the Russian economy goes backwards as long as President Putin decides to go forward with his invasion of Ukraine,” said a senior Biden administration official on a call with reporters.
Treasury’s new sanctions come two days after the U.S. and western allies announced they would target more than $600 billion foreign reserves held by Russia’s central bank – which they described as Putin’s war chest to stave off sanctions.
Freezing Russia’s foreign reserves will prevent the country from selling other nations’ currency to bolster the plummeting ruble. The announcement of the pending sanctions alone caused the ruble to drop more than 30 percent against the dollar Monday and prompted the Russian central bank to hike its baseline interest rate.
“This is a vicious feedback loop that’s triggered by Putin’s own choices and accelerated by his own aggression. It’s a very raw deal Putin is giving to the Russian people, as the world’s disconnects Russia from the global financial system and all its benefits,” said a senior Biden administration official.
(THE HILL)
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