The United States targeted Russian banks and elites with a new round of sanctions on Wednesday, including banning Americans from investing in Russia, in response to what President Joe Biden condemned as “major war crimes” by Russian forces in Ukraine.
The new sanctions hit Russia’s Sberbank, which holds one-third of Russia’s total banking assets, and Alfabank, the country’s fourth largest financial institution, U.S. officials said. But energy transactions were exempted from the latest measures, they said.
The United States is also sanctioning Russian President Vladimir Putin’s two adult daughters, Russian Foreign Minister Sergei Lavrov’s wife and daughter, and senior members of Russia’s security council, the officials said.
“There’s nothing less happening than major war crimes,” Biden said in a speech to labor leaders, referring to the Ukrainian town of Bucha retaken from Russian forces where civilians were found shot at close range.
“Responsible nations have to come together to hold these perpetrators accountable,” he said. “And together with our allies and our partners, we’re going to keep raising economic costs and ratchet up the pain for Putin.”
Russia, which says it launched a “special military operation” in Ukraine on Feb. 24, denies targeting civilians and said images of the deaths were a “monstrous forgery” staged by the West.
Wednesday’s “full blocking sanctions” will freeze the two major banks’ assets “touching the U.S financial system,” the White House said in a statement.
Britain also froze Sberbank’s assets, and said it would ban imports of Russian coal by the end of this year in the latest installment of sanctions coordinated with the United States and other Western allies to “starve Putin’s war machine.”
Sberbank and Alfabank said the new sanctions would not have a significant impact on their operations.
The White House also said Biden was signing an executive order to prohibit “new investment in Russia by U.S. persons wherever located, which will further isolate Russia from the global economy.” This will include a ban on venture capital and mergers, officials said.
'SOVIET-STYLE LIVING STANDARDS'
By cutting off Russia’s largest banks, the United States is “dramatically escalating” the financial shock on Russia, a senior administration official told reporters.
“The reality is the country is descending into economic and financial and technological isolation,” the official said. “And at this rate, it will go back to Soviet-style living standards from the 1980s.”
White House Economic Council Director Brian Deese said that, according to estimates, the Russian economy will contract by 10 to 15 per cent in 2022 and that inflation in Russia is running at 200 per cent.
Daniel Fried, a former State Department coordinator for sanctions policy in the Obama administration, said the latest package “basically makes Sberbank untouchable.” But he added: “What is missing is what are we going to do on oil and gas,” Russia’s most lucrative exports.
In the latest in a series of law enforcement actions against Russia, the U.S. Justice Department on Wednesday charged Russian oligarch Konstantin Malofeyev with violating sanctions imposed on Moscow after its invasion of Ukraine, saying he provided financing for Russians promoting separatism in Crimea.
Attorney General Merrick Garland said authorities had also disrupted a type of global malicious computer network known as a “botnet” controlled by a Russian military intelligence agency.
In addition, Garland announced the department is cooperating with prosecutors in Europe to start collecting evidence of possible war crimes committed by Russia in Ukraine.
Seeking to further ratchet up pressure on Putin, the United States is also imposing full blocking sanctions on what the White House called “critical major Russian state-owned enterprises,” which it said would damage the Kremlin’s ability to fund its war effort.
Those entities included United Aircraft and United Shipbuilding, Deese said.
Among those sanctioned on Wednesday were Dmitry Medvedev, a former Russian president and former prime minister and one of Putin’s closest allies. Others included Russian Prime Minister Mikhail Mishustin and Justice Minister Konstantin Chuychenko.
Medvedev said earlier on Wednesday, in a post on the Telegram social media network, that Moscow will fight attempts to seize Russian property abroad in courts around the world.
The U.S. government took action amid mounting accusations of war crimes by Russia in Ukraine.
Grim images emerging from Bucha include a mass grave and bodies of people shot at close range, prompting calls for tougher action against Moscow and an international investigation.
U.S. Secretary of State Antony Blinken on Tuesday said the killings were part of a deliberate Russian campaign to commit atrocities.
Neither Blinken nor Russia provided evidence to support the assertions.
(Reporting by Matt Spetalnick, Alex Alper, Nandita Bose; additional reporting by Sarah N. Lynch, Doina Chiacu and David Shepardson; editing by Heather Timmons, Howard Goller, Mark Porter and Jonathan Oatis)