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What are the US sanctions on Russia over the war in Ukraine?

President Biden on Thursday announced a new wave of US economic sanctions on Russia, after President Putin initiated a full-scale invasion of Ukraine.

US President Joe Biden speaks in the East Room of the White House about Ukraine after Russian troops entered separatist regions February 22, 2022, in Washington, DC. - Biden said Tuesday that Russia has begun to invade Ukraine and plans to go much further

President Joe Biden on Thursday announced the United States was imposing a further package of economic sanctions on Russia, after Russian President Vladimir Putin launched an all-out invasion on Ukraine earlier in the day. The new penalties target Russia’s largest financial institutions, several major state-owned enterprises, members of the Russian elite, and exports from the US.

Putin and Russia "will bear the consequences" - Biden

"Putin is the aggressor," Biden said as he unveiled the sanctions. "Putin chose this war. And now he and his country will bear the consequences." The US president added: "This is going to impose severe costs on the Russian economy, both immediately and over time. We have purposefully designed these sanctions to maximize the long-term impact on Russia and to minimize the impact on the United States and our allies."

Russian banks cut off from US financial system

The US has cut off Sberbank, Russia’s largest bank, from its financial system. In a statement, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) said: “Within 30 days, OFAC is requiring all U.S. financial institutions to close any Sberbank correspondent or payable-through accounts and to reject any future transactions involving Sberbank or its foreign financial institution subsidiaries. Payments that Sberbank attempts to process in U.S. dollars for its clients […] will be disrupted and rejected once the payment hits a U.S. financial institution.”

The US has additionally implemented full blocking sanctions on VTB Bank, Russia’s second-largest financial institution, and Bank Otkritie, Sovcombank OJSC, and Novikombank, three other major Russian banks. “These sanctions freeze any of these institutions’ assets touching the U.S financial system and prohibit U.S. persons from dealing with them,” a White House statement said.

Sberbank is also among 13 state-owned Russian enterprises and entities that have been hit with debt and equity restrictions. “These entities, including companies critical to the Russian economy with estimated assets of nearly $1.4 trillion, will not be able to raise money through the U.S. market,” the Biden administration said.

In addition, full blocking sanctions have been imposed on several Russian elites and their family members, cutting them off from the US financial system and freezing any assets they have in the States. These individuals include “financial figures who sit atop Russia’s largest financial institutions and are responsible for providing the resources necessary to support Putin’s invasion of Ukraine”, the White House explained.

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Tech imports from the US restricted

The US has also restricted Russia’s ability to import cutting-edge American technology, in a move “primarily targeting the Russian defense, aviation, and maritime sectors”, the administration said.

“Between our actions and those of our allies and partners, we estimate that we’ll cut off more than half of Russia’s high-tech imports,” Biden said. “It will strike a blow to their ability to continue to modernize their military. It’ll degrade their aerospace industry, including their space program. It will hurt their ability to build ships, reducing their ability to compete economically. And it will be a major hit to Putin’s long-term strategic ambitions.”

US sanctions on Russia "really taking a hatchet to Russian financial markets"

Speaking to CNN, Julia Friedlander, the director of economic statecraft at the Atlantic Council, described the sanctions against Russia as “completely unprecedented in their strength”. "It really is taking a hatchet to Russian financial markets and the ability to move money around,” Friedlander said.

What are the US sanctions on Russia over the war in Ukraine?

SWIFT restrictions not among US, EU Russia sanctions

However, there has been criticism of the fact that the sanctions imposed on Thursday, both by the US and the European Union, which also unveiled a package of penalties, do not included blocking Russia from the SWIFT international payment system. “We demand the disconnection of Russia from SWIFT,” Ukrainian President Vlodymyr Zelenskyy has tweeted.

Asked about the issue, Biden said a SWIFT ban is “not the position that the rest of Europe wishes to take”, and argued: “The sanctions that we have proposed on all their banks is of equal consequence - maybe more consequence." However, he added that cutting Russia off from the system "is always an option".

US sanctions follow first wave earlier this week

On Tuesday, Biden had announced a first tranche of sanctions that targeted the Russian banks VEB and PSB, as well as five Kremlin-connected members of Russia’s elite. They also imposed restrictions on Russian sovereign debt.