The official said the broad package would “incur significant costs for Russia and send it further down the path of economic, financial and technological isolation”.
The new package of sanctions will ban all new investments in Russia, strengthen sanctions against financial institutions and state-owned enterprises in Russia, and impose sanctions on Russian government officials and members of their families.
The new package of sanctions will mark the latest escalation of efforts by the United States and its allies to impose costs on Russia for its invasion and, over time, cut off critical sectors of the economy that the country uses to wage the ongoing war. They are also following new revelations of further atrocities committed by Russian troops in northern Ukraine, with images of atrocities committed in Bucha serving as accelerators of ongoing discussions between the United States and its European allies to increase economic spending, officials said.
“These measures will lead to the degradation of key instruments of Russian state power, will cause acute and immediate economic damage to Russia and bring to justice the Russian kleptocracy that finances and supports Putin’s war,” the official said. “These measures will be taken in conjunction with our allies and partners, demonstrating our determination and unity in imposing unprecedented spending on Russia for its war against Ukraine.”
The expected sanctions came after the US Treasury Department announced it would no longer allow Russia to pay off its debt with dollars accumulated in US banks. While Washington has imposed sanctions on Russia’s central bank, which has frozen their foreign currency in US banks, the finance ministry has previously allowed Russia to use those reserves to repay its debt.
It is a move that officials say will significantly increase the risk of default and undermine the central bank’s immediate efforts to stop the economic bleeding that immediately delayed the Russian economy following the West’s response to the invasion.
Since Russia’s invasion of Ukraine in late February, the United States and its allies have imposed sanctions on hundreds of Russian elites and lawmakers, restricted access to Western technologies important to its defense and technology sectors, frozen about half of Russia’s foreign reserves and reduced among other steps to exclude certain Russian banks from the SWIFT banking network. The United States has also banned imports of Russian oil, natural gas and other energy sources.
Although the severity and speed of Western sanctions against Russia have been unprecedented, key deviations remain as US officials continue to monitor supply chains in the US and Europe and try to limit the impact of sanctions on Western economies struggling with record high inflation. . .
Sanctions “take time” to “grind” the Russian economy
Although the United States and its allies have imposed the toughest sanctions regime against a country the size of Russia in history, officials acknowledge that it has done little to change Putin’s calculation.
The threat of sanctions did not deter the invasion itself, and the accumulation of economic sanctions did not bring Russia closer to either withdrawing or settling in negotiations.
However, the sanctions policy of the administration, led by many veterans who responded to Russia’s latest invasion of Ukraine in 2014, is designed to cut off critical components of Russia’s economy over time and, perhaps most importantly, in a unified and multilateral way. .
The common intention to maintain unity with more than 30 countries on the four continents that have joined the sanctions has limited their coverage on the central engine of the Russian economy: energy.
EU members’ dependence on Russian oil and gas has held back the scale of sanctions against the energy sector, even if the United States has unilaterally banned Russian oil imports. It has also created pressure to address rising energy prices around the world, which could create internal tensions that undermine what has so far been a united front.
However, the brazen nature of the Russian attack has dramatically changed the willingness of some European leaders to go for expanding economic sanctions. The EU is currently planning to ban Russian coal imports, and despite some persistent resistance, the move to extend the embargo on oil and gas continues to gain momentum, officials said.
However, despite all the focus on the direct impact of sanctions, officials note that key parts of their efforts have the greatest impact as the conflict gets longer. Export controls aimed at critical sectors of the economy are designed to block access to the technologies needed by Russia’s industrial base to continue production in the defense, aerospace and biotechnology spheres.
Sanctions against the central bank will, over time, systematically cancel Russia’s long-standing efforts to isolate its economy from foreign exchange reserves, which are now either frozen or urgently needed to avoid default.
Extending individual sanctions beyond key Russian officials and financiers to include family members is designed to block key opportunities to protect wealth from new fines.
“It will take time to crush the elements of Russian power in the Russian economy, hit hard on their industrial base, strike at the sources of income that supported this war and supported … kleptocracy in Russia,” Biden’s national adviser told reporters on Monday. security Jake Sullivan. “But there is no better time than now to work on it to end up incurring costs, and this has ultimately exacerbated Russia’s choice.”
The United States is imposing sanctions on Russia’s “most famous” Dark Web market
The U.S. Treasury Department on Tuesday sanctioned what it called Russia’s “most famous” market for dark networks, a place where cybercriminals sold hacking tools and where millions of dollars were spent on ransomware.
The sanctions coincided with a move by German police to shut down Hydra’s computer servers, as the Dark Web market is known, and seize $ 25 million in cryptocurrency.
The Ministry of Justice on Tuesday also announced a criminal case against 30-year-old Russian resident Dmitry Olegovich Pavlov for conspiracy over drugs and money laundering in connection with his alleged involvement in the management of Hydra’s computer servers.
According to researchers and US officials, since its emergence in 2015, the Dark Web Hydra market – an online network accessible through specialized software – has become a haven for illegal trade. According to Elliptic, a cryptocurrency tracking firm, Hydra has had more than $ 5 billion in bitcoin transactions.
This includes about $ 8 million in ransoms made by hackers who deployed three known strains of ransomware in attacks on U.S. companies.
“The global threat of cybercrime and extortion programs emanating from Russia, and the ability of criminal leaders to act there with impunity, is deeply troubling for the United States,” said Finance Minister Janet Yellen.
After a series of ransomware attacks on U.S. critical infrastructure last year, the Biden administration tried to stifle funding for cybercrime groups. The Treasury Department in September sanctioned Suex, a cryptocurrency exchange that U.S. officials have accused of doing business with hackers over eight types of ransomware programs.
This story has been updated with more information.