President Joe Biden announced a series of new sanctions against Russia on Monday evening and Tuesday afternoon after Russian President Vladimir Putin ordered Russian troops to cross Ukraine’s borders under the pretense of protecting separatist areas in eastern Ukraine.
On Monday, Biden issued an executive order formally blocking U.S. investments to, from and within the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR), the pair of separatist regions Russia declared as sovereign.
On Tuesday, the U.S. Treasury Department described further sanctions actions against Russia. These sanctions include new restrictions on Russian sovereign debt, and specific sanctions targeting Russian financial institutions and five “Kremlin-connected elites.”
The Treasury Department specifically described sanctioning the Russian Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and the Promsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries. According to the Treasury Department, VEB “is crucial to Russia’s ability to raise funds” while PSB “is critical to Russia’s defense sector.”
The Treasury said PSB is Russia’s eighth-largest bank. The Russian government reportedly nationalized PSB in 2018 and has since repurposed it to finance the Russian defense industry. PSB reportedly services nearly 70 percent of Russia’s defense contracts and provides banking and personal finance to Russian military personnel.
The Treasury also said PSB’s services help Russia evade sanctions.
“In an effort to insulate itself from U.S. sanctions, the [Government of Russia] has also tasked PSB with providing credit to entities under U.S. and partner nations’ sanctions so that other lenders, namely Sberbank and VTB Bank, can offload the risk of conducting business with sanctioned entities,” the Treasury said.
PSB is also believed to be setting up a separate currency exchange to service companies targeted by Western sanctions.
The five Russian elites the Treasury sanctioned are:
- Aleksandr Vasilievich Bortnikov (Aleksandr Bortnikov): The Director of Russia’s Federal Security Service (FSB).
- Denis Aleksandrovich Bortnikov (Denis Bortnikov): The son of Aleksandr Bortnikov and the deputy president of Russian-state owned financial institution VTB Bank Public Joint Stock Company (VTB Bank) and a Chairman of the VTB Bank Management Board.
- Petr Mikhailovich Fradkov (Petr Fradkov): The Chairman and CEO of PSB. Petr Fradkov is also the son of Mikhail Efimovich Fradkov (Mikhail Fradkov), a former Russian Prime Minister and former Director of the Russian Foreign Intelligence Service (SVR).
- Sergei Vladilenovich Kiriyenko (Sergei Kiriyenko): The First Deputy Chief of Staff of the Russian Presidential Office.
- Vladimir Sergeevich Kiriyenko (Vladimir Kiriyenko): The son of Sergei Kiriyenk, who previously worked as a vice president at the Russian state-controlled telecom service, Rostelecom. Vladimir Kiriyenk currently serves as the CEO of VK Group, the parent company of Russia’s top social media platform, VKontakte.
As part of its actions against PSB, the Treasury also flagged five PSB-owned cargo ships as blocked property.
“Today’s actions, taken in coordination with our partners and allies, begin the process of dismantling the Kremlin’s financial network and its ability to fund destabilizing activity in Ukraine and around the world,” Treasury Secretary Janet L. Yellen said of Tuesday’s sanctions actions. “We continue to monitor Russia’s actions and if it further invades Ukraine, the United States will swiftly impose expansive economic sanctions that will have a severe and lasting impact on Russia’s economy.”
According to a White House readout of a call between Biden and Ukrainian Foreign Minister Dmytro Kuleba, Biden discussed the new U.S. sanctions efforts against Russia, “affirmed that the United States would continue providing security assistance and macroeconomic support to Ukraine” and “reiterated the readiness of the United States, in close cooperation with our Allies and partners, to respond swiftly and decisively to any further Russian aggression against Ukraine.”