U.S. and Allies Place New Economic Costs on Russia

'To further isolate Russia from the global financial system'

On March 11, 2022, U.S. President Joe Biden and the leaders of the G-7 from Canada, France, Germany, Italy, Japan, and the United Kingdom, as well as the European Union (EU), prepared to announce new economic actions against Russia, "to hold Putin accountable for his continued assault on Ukraine and further isolate Russia from the global financial system."

The statement from the White House continued: "These actions will collectively ramp up pressure on Putin and build on the unprecedented package of economic sanctions and export controls the United States and over 30 countries have already imposed on Russia ... we're seeing a mass exodus from Russia by the private sector—the result of our historic, multilateral coordination and commitment to ensure that Putin's war of choice is a strategic failure. Russia has now become a global economic and financial pariah."

Key Takeaways

  • The U.S., the G-7, and the EU are announcing new economic measures against Russia.
  • They include further restrictions on trade, investment, and financial activities.
  • They also include further actions against members of Russian elites and measures to prevent the evasion of sanctions by Russia.
  • Russia's most favored nation trading status is being revoked, as well as its access to funding from the IMF and the World Bank.

New Sanctions Being Imposed on Russia

Key elements of the White House's announcement are excepted below.

Revoking Russia's Most-Favored Nation Status

"President Biden will work closely with Congress to deny Russia the benefits of its WTO membership and ensure that Russian imports do not receive most favored nation treatment in our economy ... Together with similar actions by the G7, following our respective national processes, this collective action by more than half of the global economy will deliver another serious economic blow to Russia."

Deny Borrowing Privileges at Multilateral Financial Institutions 

"The G7 Leaders will agree to ensure Russia cannot obtain financing from the leading multilateral financial institutions, such as the International Monetary Fund and the World Bank."

Full Blocking Sanctions on More Russian Elites

"This action will follow up on multiple efforts, along with those of our allies and partners, to target Russian elites and their family members who are profiting from this war of choice, and cuts them off from the U.S. financial system, freezes any assets they hold in the United States and blocks their travel to the United States. We will work through the international task force announced on February 26 to pursue the ill-gotten gains of these elites."

Ban Export of Luxury Goods to Russia

"President Biden will sign an Executive Order (E.O) that will end the exportation of luxury items to any person located in the Russian Federation. This will ensure that U.S. persons are not providing luxury items, such as high end-watches, luxury vehicles, high-end apparel, high-end alcohol, jewelry, and other goods frequently purchased by Russian elites."

Ban U.S. Imports From Signature Sectors of Russia’s Economy

"President Biden’s E.O. will also prohibit the import of goods from several signature sectors of Russia’s economy—including seafood, spirits/vodka, and non-industrial diamonds."

New Guidance to Thwart Sanctions Evasion

"The Department of the Treasury, through new guidance, will continue to make clear that Treasury’s expansive actions against Russia require all U.S. persons to comply with sanctions regulations regardless of whether a transaction is denominated in traditional fiat currency or virtual currency."

Banning New Investment in Any Sector of the Russian Economy

"President Biden has already banned new U.S. investments in the Russian energy sector. This E.O. will establish the legal authority for future investment restrictions in any sector of the Russian economy, as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, by a United States person."

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  1. The White House. "Fact Sheet: United States, European Union, and G7 to Announce Further Economic Costs on Russia."

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