Individuals added to U.S. sanctions list over Russia’s war against Ukraine
(This is) a pretty significant development by the U.S. Treasury, and the message from the U.S. administration is fairly clear to Moscow, i.e, we can cooperate over Syria and against the global terrorist threat where it is in our interests but we are clearly separating this from the crisis in Ukraine, where we need to see much more cooperation in terms of implementation of Minsk II (peace agreement), and we still want you out of Crimea.
This “tightening” of the sanctions regime is in effect nuancing what is in place to ensure that where gaps have appeared and efforts may be being made to get around the existing regime we will close any loopholes.
I think also perhaps it shows U.S. displeasure with Moscow’s more recent efforts to derail the implementation of the (free-trade agreement) between Ukraine and the European Union from Jan. 1 and the deepening of the trade war between Russia and Ukraine – one might also add in there D.C.’s view that Russia’s actions with respect to the $3 billion Eurobond on Dec. 20 have been unhelpful (rejecting a very reasonable restructuring offer already made).
The sanctioning of offshore entities of Russian banks is quite significant in my view as a number of these are important counterparties for Western banks and the assumption had been that they would continue to be excluded from the sanctions regime.
I think this will send compliance departments in Western banks into a flurry of activity over Christmas now to close down any activity with these institutions.
D.C. also probably wants to act now, while it thinks that Russia is under added economic pressure with oil prices so low, and Russian policy officials appearing very nervous over future economy trends – the U.S. perhaps thinks they can use this to extract concessions from Russia over Ukraine.
Remember – whatever the EU does – everybody in the global financial system has to comply with the Security and Exchange Commission, so this is further tightening the rope around Russia.
Interesting how this new initiative on the sanctions front comes amid the ongoing problems in Ukraine in getting an International Monetary Fund-compliant tax code and budget through the Rada.
Therein note the statement yesterday by G7 ambassadors to Ukraine and also U.S. Treasury Secretary Jack Lew calling for passage of the budget and tax code to ensure IMF support remains in place – critical to macro stabilisation.
I think this latest sanctions effort, the change of IMF policy over lending into official arrears, EU news over visa-free travel and continued support for Ukraine over the free-trade agreement shows strong Western backing for Ukraine. The strong message to Ukrainian deputies in the Verkhovna Rada now is to pull your fingers out, help yourselves and your country and pass the IMF-friendly budget and tax code before year end.
I think all these efforts make approval therein more likely.
