The U.S. said Friday that it was moving to punish foreign financial institutions that are helping Russia evade sanctions put in place following its invasion of Ukraine.
In an executive order signed by President Joe Biden, the U.S. said it was seeking to clamp down on transactions involving technology and other items that have dual purposes but are being used to bolster Russia’s military-industrial complex’s production of weapons.
The order also moves to ban the import of items produced in Russia but that are processed in other countries, specifically seafood and diamonds.
“We are taking steps to level new and powerful tools against Russia’s war machine. As a result of our restrictions, Russia has increasingly shifted certain trade and financial flows through third countries to evade sanctions and continue its procurement of critical items for their wartime production,” Treasury Secretary Janet Yellen said.
“We expect financial institutions will undertake every effort to ensure that they are not witting or unwitting facilitators of circumvention and evasion,” she said. “And we will not hesitate to use the new tools provided by this authority to take decisive, and surgical, action against financial institutions that facilitate the supply of Russia’s war machine.”
Following Moscow’s invasion of Ukraine in February 2022, the U.S. and European powers enacted wide-ranging sanctions against Russia, seeking to cut off its ability to fund its war efforts.
But as the war has dragged on, experts say the Kremlin has moved to find ways to procure foreign goods and sell sanctioned items abroad. China and several Middle Eastern countries did not join in the sanctions effort, and have emerged as significant financial partners for Russia.
As a result, Russia’s economy has shown surprising resilience in the face of global sanctions, contracting far less than expected. Still, the ruble has fallen sharply in value and inflation has risen sharply, despite efforts by the Kremlin to subsidize the cost of many consumer products.
The new wave of sanctions comes as the U.S. Congress has struggled to agree on whether to continue funding the Ukrainian war effort, leaving the White House scrambling to find other sources of revenue for Kiev’s military push.
One possibility being mulled in Washington is to tap into some $300 billion in Russian assets being held in foreign banks and turning it over to Ukraine.
