Russia Facing Comprehensive Sanctions Over Ukraine Invasion

The US is targeting all ten of Russia’s largest financial institutions; Russian access to most major markets has been restricted. 

The US, EU, UK, Canada, Japan, Australia and New Zealand have all taken action against Russia in response to what is described as a full-scale invasion of Ukraine.

Russia has been tightening its military grip around Ukraine since last year, with more than 150,000 troops encircling the country on three sides. On Thursday, several areas across Ukraine came under attack following a declaration by Russian President Vladimir Putin of the start of a “special military operation”.

Earlier this week, the US, EU, UK, and Japan announced sanctions against Russian state-owned banks, officials, oligarchs, and new debt issued by the central bank, sovereign wealth fund or government – in response to a decree signed by Putin recognising two regions in Ukraine as independent states.

Following the decree, Russian troops were ordered into the two regions, Donetsk and Luhansk, in what was widely seen as an opening salvo to a broader military confrontation, though Russia repeatedly denied it was planning an assault.

New US sanctions announced by President Joe Biden on Thursday target all ten of Russia’s largest financial institutions and their subsidiaries, cutting them off from US dollar transactions and freezing any assets that touch the US financial system.

The measures against Russian banks include “full blocking and correspondent and payable-through account sanctions, and debt and equity restrictions, on institutions holding nearly 80 percent of Russian banking sector assets”, the White House said.

The debt and equity restrictions include restrictions on dealings in new debt of greater than 14 days maturity and new equity issued by 13 Russian state-owned enterprises. Additional blocking sanctions are placed on Russian elites and their family members, as well as other individuals “who have enriched themselves at the expense of the Russian state”.

In addition, the US has imposed export control measures that will cut off certain strategic imports to Russia to limit its ability to advance its military and aerospace sector, as well as sanctions targeting individuals in Belarus for supporting the attack on Ukraine.

The EU has meanwhile published conclusions previewing new sanctions against Russia covering the financial sector, the energy and transport sectors, dual-use goods as well as export control and export financing, visa policy, additional listings of Russian individuals and new listing criteria.

EU leaders have agreed to freeze Russian assets in the bloc and halt its banks’ access to European financial markets as part of what EU foreign policy chief Josep Borrell described as “the harshest package of sanctions we have ever implemented”.

The sanctions announced earlier in the week targeted 351 Russian lawmakers who voted to recognise Luhansk and Donetsk as independent, as well as 27 other Russian officials and entities from the defence and banking industries.

Russian access to EU capital and financial markets was also restricted, and Germany halted the approval process for the Nord Stream 2 gas pipeline project, a deal long sought by Russia but criticised by the US for increasing Europe’s reliance on Russian energy.

The UK has announced sanctions covering Russian elites, companies and financial institutions. The UK assets of all Russian banks are being frozen, shutting off access to the UK’s financial markets. “Banks subject to this measure will be unable to process any payments through the UK or have access to UK financial markets,” said UK Foreign Secretary Liz Truss.

The UK is also banning Russian state-owned and key strategic private companies from raising finance on the UK financial markets, and imposing a GBP 50,000 limit on bank balances held in the UK by wealthy Russians.

Truss said more than 100 companies and oligarchs at the heart of Putin’s regime are being hit with sanctions worth hundreds of billions of pounds, asset freezes and travel bans. In addition, punitive new restrictions on trade and export controls are being imposed against Russia’s hi-tech and strategic industries, and Russia’s national airline Aeroflot is banned from UK airspace.

Truss said the UK is working with allies to exclude Russia from the SWIFT financial system. “We are inflicting devastating economic pain on Putin and Russia following its unprovoked and illegal invasion of Ukraine,” she said.

Canada’s Prime Minister Justin Trudeau announced sanctions targeting 58 individuals and entities, including members of the Russian elite and major banks. Canada is also sanctioning members of the Russian Security Council, including the defence minister, the finance minister and the justice minister.

In addition, no new export permits for Russia will be issued, and existing permits will be cancelled. Earlier in the week, Canada announced measures prohibiting its citizens from purchasing Russian sovereign debt and dealing with two state-backed Russian banks.

Japan had already announced sanctions this week that included a prohibition on the issuance of Russian bonds in Japan, asset freezes against certain Russian individuals, visa suspensions and a trade ban. Following the invasion of Ukraine, Prime Minister Fumio Kishida said Friday (25 February) said Japan would join efforts by the US and EU to pressure Russia.

The new package of sanctions includes export controls on semiconductors and other products, a freeze on assets held by Russian financial institutions, and a suspension of visa issuance for certain Russian individuals and entities.

Australia’s first tranche of sanctions imposed travel bans and targeted financial sanctions on eight members of Russia’s Security Council, effectively freezing their assets in Australia. Australian individuals and entities were also prohibited from doing business with five Russian banks.

Following Russia’s invasion of Ukraine, Prime Minister Scott Morrison said Australia would add 25 military individuals, four weapons technology companies and four more banks to its sanctions list. He said there will be further measures, including sanctions against over 300 members of the Russian parliament.

New Zealand is imposing travel bans on Russian government officials and other individuals associated with the Russian invasion of Ukraine, while also limiting diplomatic engagements and prohibiting the export of goods to Russian military and security forces.

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