How the US could tighten sanctions on Russia

The United States has imposed several sanctions on Russia for its invasion of Ukraine two weeks ago, targeting its central bank, major lenders, oligarchs, elites and President Vladimir Putin, while saying all options are on the table to take action. additional.

Here are some ways the United States could further increase sanctions against Russia.

Stronger sanctions on banks, companies

Experts have said that the United States may tighten its existing sanctions on Russian banks and also expand its punitive measures to other Russian banking institutions.

The United States said last month that US banks must break its correspondent banking ties, which allow banks to make payments to each other and move money around the world, with Russia’s biggest lender Sberbank, but did not freeze its assets. .

The United States also expanded the scope of existing restrictions on Americans dealing in the debt and equity of Russian state-owned companies. The restrictions apply to 13 companies, including Gazprombank, the Russian Agricultural Bank and Gazprom.

If the United States chooses to tighten its sanctions against banks and businesses that are already subject to restrictions, it could use its most powerful sanctions tool and add them to the list of Specially Designated Nationals (SDN).

Such a move would effectively kick them out of the US banking system, prohibit their trade with Americans, and freeze the country’s assets.

The United States could also target large state-owned companies in other sectors, including energy, mining, metals and shipping, said Edward Fishman, who worked on Russia sanctions at the State Department under President Barack Obama.

Washington could also put large Russian companies on a trade blacklist, forcing their suppliers to seek special licenses to sell them anything made in the United States. Licenses would generally be denied.

Energy

President Joe Biden on Tuesday imposed an immediate ban on imports of Russian oil and other energy.

The United States could further tighten energy-related sanctions by adding major companies such as oil giant Rosneft or gas producer Gazprom to the SDN list.

Another avenue to tighten energy-related sanctions would be to threaten secondary sanctions against other countries that buy Russian oil, Fishman said, effectively stopping Russian oil buying globally.

Secondary sanctions

The United States could also impose secondary sanctions against designated Russian entities and individuals, which would threaten anyone in the world who transacts with Russia, Fishman said.

Fishman said the first step would be to add all major Russian banks, companies and government agencies to the SDN list before imposing “aggressively” secondary sanctions to those who do business with the designated entities.

If countries like China, India or others help Russia undermine sanctions, Fishman said the Biden administration could come under pressure to apply secondary sanctions.

Additional Swift Restrictions

The European Union (EU) said last week that it was excluding seven Russian banks from the Swift messaging system that supports global transactions, but stopped short of including those that handle energy payments.

The United States and its allies could further tighten those restrictions and block most or all Russian banks from accessing Swift, the world’s leading international payments network.

Fishman said only one major bank, VTB, had been cut so far. “There’s so much more we could do there”, he added.

oligarchs

The United States has imposed several rounds of sanctions on Russia’s oligarchs and elites, including metals and telecommunications tycoon Alisher Usmanov and Nikolay Tokarev, CEO of energy giant Transneft, among others.

The United States could continue to impose sanctions on Russian oligarchs that have not yet been targeted and could also take steps to align its sanctions with those of the EU or the UK, which have targeted several Russian oligarchs not yet designated by Washington.

They include Chelsea football club owner Roman Abramovich, tycoon Mikhail Fridman and billionaire Petr Aven. Aven and Fridman co-founded LetterOne, or L1, which has long-term investments in the technology, energy, healthcare and retail commerce. Fridman is also a co-founder of the Alfa Group, which owns Russia’s leading private bank, Alfa Bank.

In his State of the Union address last week, Biden said the United States would work to seize the yachts, luxury apartments and private planes of wealthy Russians with ties to Putin.

Financial embargo, investment ban

Another measure could be to impose a full financial embargo on Russia, likely by issuing another executive order that would bar Americans from exporting or importing goods, services or technologies from Russia, said Brian O’Toole, a former Treasury Department official. “So Russia becomes Iran”, he added.

Short of a full financial embargo, the United States could issue an investment ban that could also have a chilling effect on Russia’s economy, O’Toole said, adding that it could be difficult to implement. Such a move would bar Americans and American banks and companies from investing in Russia.

The White House on Tuesday banned new US investment in Russia’s energy sector.