The US is taking additional steps to increase economic pressure on Russia and President Vladimir Putin over horrific images from the Ukrainian city of Bucha, who on Wednesday announced new sanctions against Russian financial institutions, as well as some people, including Putin’s adult daughters and the wife and daughter of his Secretary of State.
“Today, we are dramatically escalating the financial shock by imposing full lockdown sanctions on Russia’s largest financial institution, Sberbank, and its largest private bank, Alfa Bank,” a senior government official said.
Sberbank owns nearly a third of the total assets of the Russian banking sector, the official noted, adding that the US has now completely blocked “more than two-thirds of the Russian banking sector”.
Second, the senior official announced: “In agreement with the G7 and the EU, we are announcing a ban on new investments in Russia.” That will be carried out with an executive order signed by US President Joe Biden.
The government is also imposing full blocking sanctions on a new set of Russian elites and their families, including Putin’s adult daughters Mariya Putina and Katerina Tikhonova, the wife and daughter of Foreign Minister Sergey Lavrov and members of the Russian Security Council, including former president and Prime Minister of Russia Dmitry Medvedev and Prime Minister Mikhail Mishustin. The US has already sanctioned more than 140 oligarchs and their relatives and more than 400 Russian government officials, the senior official said.
The US will also apply full lockdown sanctions on critical major Russian state-owned companies, announced by the Treasury Department on Thursday. The official also noted Tuesday’s announcement that the Treasury Department has blocked Russia from paying debts with dollars held by US banks.
The senior official noted the crippling effect of US measures on the Russian economy since the invasion of Ukraine.
“Russia’s GDP is expected to shrink by double digits this year… It is not in the process of becoming isolated as a pariah state. This year’s economic shock alone is projected by the International Monetary Fund (IMF) to wipe out the economic gains of the past 15 years,” the official said.
Pressured by the effectiveness of sanctions in ending Putin’s war in Ukraine, the senior official tried to underline the effect they are having on life in Russia and said Putin should ultimately be mindful of his people.
“Even an autocrat like Putin has a social contract with the Russian people. He took their freedom in exchange for promising stability and so he is not giving them stability,” the official said.
“The question is actually not so much: what can we do and when will that have an effect? I think it’s: What’s the endgame for Putin here? What is he playing for?” added the official. “This is very clearly going to be a failure for him and at some point he will have to recognize that reality.”