White House Bans Banks From Russian Debt Sales as Part of Sanctions

By:
Chris Gaetano
Published Date:
Apr 16, 2021
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President Joe Biden, in a shot across the bow, banned banks and other financial institutions from buying or selling Russian bonds in retaliation for "aggressive and harmful activities by the Government of the Russian Federation." These financial institutions will be prohibited from participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021, by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation. U.S. financial institutions will likewise not be allowed to lend ruble or non-ruble denominated funds to these three entities. These sanctions are on top of those already in place since 2019.

The executive order, signed Thursday, also included sanctions against specific Russian firms accused of being linked with the government's intelligence service: ERA Technopolis; Pasit, AO (Pasit); Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation (SVA); Neobit, OOO (Neobit); Advanced System Technology, AO (AST); and Pozitiv Teknolodzhiz, AO (Positive Technologies). U.S. companies are prohibited from engaging in transactions involving any property or interests in property of these companies, including the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods, or services from any such person. 

The Treasury Department gave a long list of reasons why it was adding sanctions to Russia. They include activities by Russia such as "undermining the conduct of free and fair elections and democratic institutions in the United States and its allies and partners; engaging in and facilitating malicious cyber activities against the United States and its allies and partners that threaten the free flow of information; fostering and using transnational corruption to influence foreign governments; pursuing extraterritorial activities targeting dissidents or journalists; undermining security in countries and regions important to the United States’ national security; and violating well-established principles of international law, including respect for the territorial integrity of states."

While the ban is tough-sounding, the New York Times said that it is largely a symbolic measure that will have little effect on the Russian economy. It noted that only $41 billion of Russian debt exists in the international market, with the majority of bonds being sold to domestic buyers instead. However, observers believe this is more of a warning shot than a full on attack, with the implication that measures could escalate later on.

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