Russia hit by new round of US sanctions as Biden denounces major war crimes

WASHINGTON (Reuters) – The United States targeted Russian banks and elites with a new round of sanctions on Wednesday, including preventing Americans from investing in Russia, in response to what U.S. President Joe Biden called “major war crimes” by Russian forces. in Ukraine.

New sanctions hit Russia’s Sberbank (SBER.MM)which owns a third of Russia’s total banking assets, and Alfabank, the country’s fourth-largest financial institution, US officials said. But they said energy transactions are excluded from the latest measures.

Officials said the United States is also imposing sanctions on Russian President Vladimir Putin’s two adult daughters, the wife and daughter of Russian Foreign Minister Sergei Lavrov, and senior members of Russia’s Security Council.

“Nothing is less than major war crimes,” Biden said in a speech to labor leaders, referring to the Ukrainian town of Bucha, which was wrested from Russian forces where the bodies of shot civilians were found.

“Responsible countries must cooperate to hold these perpetrators to account,” he said. And with our allies and partners, we will continue to raise economic costs and add to Putin’s pain.

The grim images emanating from Bucha include a mass grave and the bodies of people shot at close range, some bound, leading to calls for tougher action against Moscow and an international investigation. Read more

Russia, which says it launched a “special military operation” in Ukraine on February 24, denies targeting civilians and has said the photos of the dead were a “grotesque fraud” by the West.

The White House said Wednesday’s “full embargo sanctions” would freeze the assets of Sberbank and Alfabank “that touch the American financial system.”

Britain also froze Sberbank’s assets and said it would ban imports of Russian coal by the end of this year as part of a coordinated Allied effort to “starve Putin’s war machine”.

Sberbank and Alphabank said the new sanctions would not have a significant impact on their operations. Read more

Also among those facing sanctions is Dmitry Medvedev, a former Russian president and prime minister and one of Putin’s closest allies. Others include Russian Prime Minister Mikhail Mishustin and Justice Minister Konstantin Chuchenko.

Later on Wednesday, Biden signed an executive order banning “new investment in the Russian Federation by an American, wherever located.” This includes a ban on venture capital and mergers, officials said.

Even with the imposition of new sanctions, Ukrainian President Volodymyr Zelensky criticized some in the West and said he could not tolerate “any hesitation”.

“The only thing we are lacking is the principled approach of some leaders – political leaders and business leaders – who still believe that war and war crimes are not as horrific as financial losses,” he told Irish lawmakers. Read more

On Wednesday, sources said, EU diplomats failed to agree on new sanctions, as technical issues needed to be addressed, including whether a coal ban would affect existing contracts.

Soviet-style living standards

A senior Biden administration official said Washington targeted Putin’s daughters because it believed many of his assets were “hidden with members of his family.”

Katerina Vladimirovna Tikhonova, Putin’s daughter, is a technology executive whose work supports the Russian government and its defense industry, according to details released by the US Treasury.

The Treasury said his other daughter, Maria Vladimirovna Vorontsova, “leads state-funded programs that have received billions of dollars from the Kremlin toward gene research and is personally supervised by Putin.”

A senior administration official told reporters that by cutting off Russia’s largest banks, the United States “significantly escalates” the financial shock to Russia.

“The reality is that the country is descending into economic, financial and technological isolation,” the official said. “At this rate, you’ll be back to Soviet-style living standards from the ’80s.”

Director of the White House Economic Council, Brian Daisy, said that according to estimates, the Russian economy will shrink by 10% to 15% in 2022 and that inflation in Russia is 200%.

The latest package “makes Sberbank essentially untouchable,” said Daniel Fried, the former State Department coordinator for sanctions policy in the Obama administration. But he added, “What we’re missing is what we’re going to do about oil and gas,” Russia’s most lucrative export.

Under the recent sanctions, special US Treasury licenses have exempted transactions with target banks involving purchases by European allies of Russian oil and gas.

US Treasury Secretary Janet Yellen said flexibility in Russian energy transactions is essential because many European countries remain highly dependent on Russian oil and gas “and are committed to moving away from that dependence as quickly as possible.”

In the latest series of law enforcement actions against Russia, the US Justice Department on Wednesday accused Russian oligarch Konstantin Malofeyev of violating sanctions imposed on Moscow after its invasion of Ukraine, saying he provided funding to Russians promoting separatism in Crimea. Read more

Attorney General Merrick Garland announced that the department is cooperating with prosecutors in Europe to begin collecting evidence of possible Russian war crimes.

In an effort to increase pressure on Putin, the United States is also imposing full-fledged opposition sanctions on what the White House has described as “major Russian state-owned enterprises.” Those entities include United Aircraft and United Shipbuilding, Daisy of the White House said.

(Additional reporting by Matt Spitalnick, Alex Alber, and Nandita Bose); Additional reporting by Sarah N. Lynch, Doina Chiaco, David Shepherdson and David Lauder; Editing by Heather Timmons, Howard Guler and Jonathan Otis

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