In a significant escalation of economic pressure, the United States has unveiled sweeping sanctions against Russia, targeting over 300 companies and individuals, as well as the Moscow Exchange and its subsidiaries, to disrupt Russia’s war effort in Ukraine. The sanctions, which come ahead of the G7 summit in Italy, are aimed at stifling Russia’s ability to finance its military operations and profit from investments in sovereign debt, Russian corporations, and leading Russian defense enterprises. US Treasury Secretary Janet Yellen emphasized that the measures will increase the risk for financial institutions that deal with Russia’s military economy and eliminate ways to circumvent sanctions. The sanctions also target entities involved in three liquefied natural gas projects and restrict the provision of IT services and cloud technologies to Russia. The Moscow Exchange has responded by suspending trading in dollars and euros, as well as instruments settled in these currencies, starting from June 13. This move is expected to cause a wider spread between the buying and selling prices of currencies, leading to additional costs for exporters and importers, and potentially a decline in the value of the ruble. The US has also expanded its secondary sanctions mechanism, which now includes secondary sanctions against 4,500 institutions, including Chinese companies, to prevent investors from profiting from Russia’s war. The sanctions have been met with criticism from Russia, which has called them illegal. Despite the sanctions, transactions in dollars and euros can still be conducted through Russian banks, and the Central Bank of Russia has assured that the exchange rate will remain stable.
Key points
- The US has imposed sanctions on over 300 Russian entities to hinder its war effort in Ukraine.
- Sanctions target the Moscow Exchange, ceasing trading in US dollars and euros.
- The expanded secondary sanctions regime could affect up to 4,500 entities, including Chinese companies.
- Despite sanctions, the Central Bank of Russia ensures the stability of the ruble and the continuation of dollar and euro transactions.
