The United States is taking immediate action on Monday to ban U.S. dollar transactions with Russia’s central bank and completely block Russia’s direct investment fund, senior administration officials said, targeting some of the most potent ways to Russia to mitigate the effect of the sanctions.
The moves are aimed at preventing Russia from accessing a “rainy day fund” that officials say Moscow expected to rely on during the invasion of Ukraine. Instead of using the reserves to cushion a plummeting rouble, Russia will no longer be able to access the funds it keeps in US dollars.
The sweeping new sanctions, taken with Germany, France, the United Kingdom, Italy and Canada, the European Union and others, come as Russia’s economy is already in freefall.
“No country is immune from sanctions,” a White House official said. “Putin’s war chest of $630 billion in reserves only matters if you can use it to defend his currency, especially selling those reserves in exchange for buying the rouble.”
“After today’s actions, this will no longer be possible, and the Russian fortress will be exposed as a myth.”
In a phone call with reporters Monday morning, a senior administration official said the move was “the culmination of months of planning and preparation within our respective governments through technical, diplomatic and political channels. , including at the highest levels.
“We were ready and that’s what allowed us to act within days, not weeks or months after Putin’s escalation,” the official said.
“Our strategy, to put it simply, is to make the Russian economy shrink as long as President Putin decides to go ahead with his invasion of Ukraine,” said a second senior official. ‘administration.
In an effort to mitigate the impact of sanctions on U.S. and European energy consumers, the Treasury Department will exempt most energy-related transactions from sanctions, an important sanctions exclusion.
One official called the ongoing sanctions “a vicious feedback loop triggered by Putin by his own choices and accelerated by his own aggression.”
The sanctions also completely block the Russian Direct Investment Fund and its CEO, Kirill Dmitriev. Officials said they were “symbols of deep-rooted Russian corruption and global influence peddling”.
“Today’s actions represent the most significant actions taken by the US Treasury against an economy of this size and assets of this size,” another official said. “What also makes this asset important is not just the amount of assets or the size of the country we are targeting, but the speed at which our partners and allies have worked with us to implement this response.”
Asked about possible additional sanctions against Belarus, which looks set to increase its role in Russia’s invasion of Ukraine, an official said the United States was monitoring events “very closely”. and that the sanctions against Belarus “would continue to increase much more”.