(NewsNation Now) — In response to Russian aggression in Ukraine, the U.S. announced sanctions that target civilian leaders in Russia’s leadership hierarchy as well as two Russian banks, considered especially close to the Kremlin and Russia’s military, with more than $80 billion in assets.
According to the Treasury Department, Russia does about $46 billion worth of foreign exchange transactions a day. And these sanctions will directly target them.
“These sanctions, they are strong, they’re tough,” Former Deputy Assistant Secretary of State Joel Rubin said. “And they really are the appetizer to what could become a very, very heavy meal of sanctions served up very soon if Vladimir Putin goes forward.”
The sanctions directly impact VEB, which is Russia’s fifth-largest bank, and PSB, the bank responsible for funding the majority of all Russian defense contracts.
VEB is “the largest bank to ever be sanctioned in the history of the sanctions program towards Russia,” Rubin said. “So this has to get Putin’s attention.”
These sanctions prevent all U.S. businesses and individuals from working with these institutions. They also freeze all of the bank’s U.S. assets, blocking it from trading its debt on American and European markets.
So how do these sanctions “cut off the Russian government from western financing” as President Joe Biden said Tuesday?
Here’s what we know:
- Under these sanctions, Russia can’t sell anyone in the U.S. its bonds, severely limiting its ability to raise money for its economy.
- The Treasury Department also issued specific sanctions on the selling of Russian bonds on the secondary market. This cuts Russia off from any profits related to those sales as well.
The punitive actions also target Russian oligarchs, the family members of those in Putin’s inner circle and their children.
“They share in the corrupt gains of the Kremlin policies and should share in the pain as well,” Biden said.
According to Rubin, “Those oligarchs have been stealing money from the Russian people now for several decades. And they have been feeding their families, the money off the backs of Russians who are in many ways in desperate need for financial support and economic gains.”
By sanctioning individuals, “It’s telling those people, the Russian people, that these oligarchs are not on your side, they are the problem,” Rubin said. “And it’s telling the families of the oligarchs that you have nowhere to hide.”
A point made by the Biden administration is that the Russian elite have a tendency to abuse laws to buy property in the U.S. and hide their ill-gotten gains, sometimes with their children.
“Well, now these children are being targeted,” Rubin said. “And they should be targeted in terms of preventing them from being used as a front for their parent’s illicit activities.”
According to Rubin, there are many more oligarchs on the list that the Treasury Department has at its disposal.
In another blow to Putin, Germany halted certification of the Nord Stream 2 gas pipeline from Russia.
Biden backed the move, as the multibillion-dollar pipeline being cut off — where Russia would be sending twice as much gas into Europe than it currently does — is a significant economic tool now being wielded against Putin.
“This is a major diplomatic win for the United States and for the Biden team,” Rubin said. “The Nord Stream 2 pipeline, it’s been in the works for years, it’s 95%, complete, and Germany didn’t want to do what it just did. And they did it because of diplomacy with the United States.”
Targeting Russia’s huge energy industry will almost certainly impact Germany’s energy outlook, but it’s deemed a necessary step to decrease Europe’s reliance on Russian energy supplies.
“It will cut off the potential for Russia to further extort Europe down the road,” Rubin said. “It’s a significant development. And what’s crucial is it’s done in unison with our allies. So it was not divisive. It has been divisive politically, but it was not when the decision came down. And that’s a major win.”
A key point of this conflict and any hopes of a diplomatic resolution is unity with the United States and its NATO allies on the course of collective sanctions.
“Will it change his calculus? That still depends on many other factors, but it’s going to cause him pain and those around him pain,” Rubin said.
Biden indicated that the U.S. could impose additional penalties if Russia continues escalating the crisis.