Financial institutions that support the Russian military industrial complex are to be blacklisted in the US after president Joe Biden signed an executive order yesterday to deny banks under sanctions access to the American financial system.
“This announcement makes clear that those financing and facilitating the transactions of goods that end up on the battlefield will face severe consequences,” deputy US treasury secretary Wally Adeyemo wrote in a Financial Times op-ed.
One senior US official told the FT that Russia had spent “considerable time and resources” – using “both witting and unwitting” financial intermediaries – to sidestep restrictions.
The apparent success of these tactics has led the US to up the ante, and threaten to close the door on institutions which are party to the circumvention of sanctions aimed to weaken Russia amid its war with Ukraine.
What we’re trying to do is go after materials that are key to Russia’s ability to build weapons of war.
- In order for them to get those materials, they need to use the financial system, which makes the financial system a potential choke point and this is a tool that’s targeted at that choke point.
Our overall goal here is to put sand in the gears of Russia’s supply chain, which we think is one of the most effective ways to slow Russia down. But in order for the Ukrainians to speed up frankly and go faster, they need our support and that’s going to require Congress to act.
Russian troops have made small territorial gains in recent weeks on the frontlines in eastern Ukraine, with their manpower advantage seen as one decisive factor, reports the New York Times.
Russia’s recent advances near Avdiivka, as well as around other cities such as Kupiansk, Bakhmut and Marinka, are also further evidence that Russia has firmly seized the initiative on much of the battlefield.
“Currently, the situation on the front line is difficult and is gradually deteriorating,” Yehor Chernev, the deputy chairman of the Ukrainian Parliament’s committee on national security, defense and intelligence, said in an interview.
- “Without American ammunition, we are beginning to lose territory that was hard won this summer.”
Since launching offensive operations near Avdiivka in October, Russia has gained a total of about seven miles in all directions around the city, according to the Institute for the Study of War.
- “But it has cost them dearly,” Oleksandr Shtupun, a spokesman for the Ukrainian Army, told national television on Wednesday.
- He noted that Russia had suffered 25,000 casualties in the east over two months, most of them around Avdiivka.
“I would say the motto of their attacks is ‘We have more people than you have ammunition, bullets, rockets, and shells,’”
Tykhyi, a major fighting with the Ukrainian National Guard in Avdiivka, said in audio messages, using only his call sign to identify himself, as per Ukrainian military rules.
The Kremlin yesterday threatened Europe and the US with “serious consequences”, including tit-for-tat financial seizures or even a break in diplomatic relations, if Russian assets held abroad are given to aid the Ukrainian budget and war effort.
A spokesperson for Vladimir Putin said that if the Biden administration and European leaders planned to seize Russian central bank assets believed to be in excess of $300bn (£236bn), which were frozen after Moscow’s invasion of Ukraine in February 2022, they should “realize that Russia will never leave those who do it alone”.
- The New York Times reported on Thursday that the Biden administration had begun urgent discussions with G7 nations on how it could plan the unprecedented seizure of the funds, which are mostly believed to be held in Europe, and whether the funds could be spent directly on the Ukrainian military effort or just for reconstruction and budgetary use.
Joe Biden was said not to have signed off on the strategy, the newspaper reported.
- But the discussions have accelerated as Republicans have blocked a deal in Congress to provide new military aid to Ukraine, potentially defunding the Ukrainian war effort at a desperate moment after a Ukrainian counteroffensive failed to provide a decisive breakthrough in the war.
“The illegitimate seizure of our assets invariably remains on the agenda both in Europe and in America,” said the Putin spokesperson, Dmitry Peskov, on reports that the Biden administration is pressing European countries to draw up plans for a potential seizure by February, the two-year anniversary of Russia’s full-scale invasion.
“This issue is unacceptable to us. Potentially, it is extremely dangerous to the global financial system.”
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