It’s Russian banks and the US-sanctioned ‘elite’
Two Kremlin-backed banks and the sons of three cronies of Russian President Vladimir Putin are among the first targets of US sanctions for what President Joe Biden on Tuesday called “the start of a Russian invasion of Ukraine.”
Biden announced the punitive financial measures after Putin ordered his country’s military to “perform peacekeeping duties” in two breakaway regions in eastern Ukraine.
The sanctions prevent VEB and PSB banks from doing business in the United States, cut off their access to the American financial system and freeze all assets under American jurisdiction.
The targeted “elites” – whom the Treasury Department suspects of “participating in the kleptocracy of the Russian regime” – are barred from accessing any property or engaging in transactions in the United States.
In a statement following Biden’s announcement, Treasury Secretary Janet Yellen said the moves “would begin the process of dismantling the Kremlin’s financial network and its ability to fund destabilizing activities in Ukraine and around the world.” “.
Here is an overview of the banks and oligarchs facing sanctions:
The State Bank for Development and Foreign Economic Affairs Vnesheconombank was established in 2007 under an “ad hoc” federal law that allows it to operate independently from the government-controlled bank of Russia, according to Bloomberg News.
The Treasury Department called it “crucial to Russia’s ability to raise funds,” saying it works with commercial banks to finance large-scale infrastructure and industrial projects.
Its chairman is Igor Shuvalov, a former Russian first deputy prime minister whom Putin originally appointed in 2018 and gave a maximum term of five years in July, according to the state-run Tass news agency.
In 2014, Foreign Policy magazine reported that Shuvalov’s family fortune was worth around $220 million, with the source of his wealth believed to be tied to a deal involving two Russian oligarchs in 2004, when Shuvalov was Putin’s economic adviser.
Other VEB board members include former Russian President Dmitry Medvedev, according to Bloomberg.
Medvedev became the country’s figurehead in 2008 when Putin was barred from running for a third consecutive term and was named prime minister after Medvedev was elected.
Promsvyazbank Public Joint Stock Co., Russia’s eighth-largest financial institution, was nationalized in 2018 and reallocated to financing the defense industry and handling major defense contracts under a program aimed at avoiding sanctions against the government, according to the Treasury Department.
It has provided billions of dollars in support to Russian defense contractors and services nearly 70% of contracts issued by the Defense Ministry, and also underwrites mortgages and provides banking products to military personnel.
“In an effort to shield itself from U.S. sanctions, the [Russian government] also instructed PSB to provide credit to entities under U.S. and partner country sanctions so that other lenders, namely Sberbank and VTB Bank, can offload the risk of doing business with sanctioned entities,” the Department of Finance said. Treasure.
It would also create a new bureau de change for use by companies targeted by Western sanctions, according to the Treasury Department.
In addition to sanctioning PSB, the Treasury Department said it was taking action against five Russian-flagged ships — one freighter, two tankers and two container ships — owned by a blacklisted subsidiary of the bank.
Fradkov is the Chairman and CEO of PSB, and in this capacity he has held working meetings with Putin and participated in international roundtables where he has outlined the bank’s long-term strategic plans to support the Russian defense industry, according to the Treasury Department.
He was sanctioned “for having operated or having operated in the defense and related material and financial services sectors of the economy of the Russian Federation”, the Treasury Department said.
Fradkov is also the son of Mikhail Fradkov, former Russian Prime Minister and former director of the Russian foreign spy service, the SVR.
The elder Fradkov was subject to sanctions by the United States in 2018 for being a Russian government official.
Bortnikov is vice chairman of Russia’s state-owned VTB Bank Public Joint Stock Co. and chairman of the board of VTB bank, according to the Treasury Department.
Bortnikov’s father is Aleksandr Bortnikov, the director of Russia’s FSB, the dreaded federal security service formerly known as the KGB, in which Putin served as a mid-level agent in the former East Germany before embark on his political career.
Aleksandr Bortnikov is also a permanent member of the Russian Security Council.
Denis Bortnikov was sanctioned for being a Russian government official and for being the “adult child” of Aleksandr Bortnikov, who was sanctioned last year for his role in the Russian government.
Sanctions against the elder Bortnikov were also renewed, the Treasury Department said.
Kiriyenko is the CEO of VK Group, which owns VKontakte, a Facebook-style website that is Russia’s leading social media platform, and was previously vice president of Rostelecom, the Russian cable television, internet and state-controlled phone.
Kiriyenko’s father, Sergei Kiriyenko, is a former Russian prime minister who is now Putin’s first deputy chief of staff and would be his “domestic policy curator”, the Treasury Department said.
Both men were sanctioned for being Russian government officials and the sanctions imposed on Sergei Kiriyenko last year have been renewed.
Her son was also disciplined for being her “adult child”, the Treasury Department said.
Russian sovereign debt
In addition to targeting Russian banks and Putin’s cronies, the Treasury Department tightened restrictions on Russian sovereign debt trading, saying it would “significantly cut off a critical way for Russia to raise funds” to finance its government and Putin’s plans, “including his new invasion of Ukraine.
The move prevents sales on the US secondary market of bonds issued 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 after March 1.
Last year, Reuters reported that Russian sovereign debt was valued at around $185 billion, about a quarter of which was held by foreign investors and half by Americans.