US Escalates Sanctions With a Freeze on Russian Central Bank Assets

The carve-out means that energy payments will continue to flow, mitigating risks to global energy markets and Europe, which is heavily reliant on Russian oil and gas exports. U.S. officials said that they want energy prices to remain steady and that they do not want a spike in prices to benefit Mr. Putin, however they noted that they are considering measures that would restrict Russia from acquiring technology that it needs to be an energy production leader in the long term.

The measures announced on Monday were born from lessons that the United States learned since imposing sanctions on Russia following its annexation of Crimea in 2014. A senior Biden administration official said that Mr. Putin began amassing international reserves after 2014 to blunt the impact of future sanctions and that the United States, in preparing to exert new pressure on Russia’s economy, determined during months of preparation with European allies that it would need to target Russia’s central bank directly.

“The U.S. and other Western economies have deployed a set of highly potent financial weapons against Russia with remarkable speed,” said Eswar Prasad, a Cornell University economics professor and former International Monetary Fund official. “Cutting off access to global financial markets and to a country’s war chest of international reserves held in currencies of Western economies amounts to a crippling financial blow, especially to an economy like Russia’s that relies to such a large extent on export revenues.”

The sanctions also replicate some of the economic warfare that the United States has used against Iran in recent years, which included sanctions on its central bank and blocking its financial institutions from the SWIFT financial messaging system.

On Saturday, the European Commission, Britain, Canada, France, Germany, Italy and the United States said they would remove some Russian banks from SWIFT, essentially barring them from international transactions, and impose new restrictions on Russia’s Central Bank to prevent it from using its large international reserves to sidestep sanctions.

Biden administration officials said on Monday that the full list of Russian banks that are being cut off from SWIFT is still being finalized in coordination with European countries.

Article source: https://www.nytimes.com/2022/02/28/us/politics/us-sanctions-russia-central-bank.html