The U.S. to Sanction Financial Institutions Supporting Russia's War Machine; Moscow Threatens to Cut Ties

On Friday, December 22, the White House announced that President Joe Biden will sign a new executive order imposing severe sanctions on financial institutions that support the funding of Russia's war machine. In response, Russia has threatened to sever diplomatic relations with the United States if these sanctions are implemented. The executive order also grants authorities the necessary powers to expand restrictions on the import of certain Russian goods into the United States. The White House statement noted that the Biden administration has actively collaborated with U.S. allies and partners worldwide in response to Russia's war against Ukraine 'to hold Russia accountable for its ruthless and unjust war and to undermine its efforts to increase military capacity.' The statement emphasized that those who supply these goods or engage in transactions materially supporting Russia's military-industrial system are complicit in Russia's brutal violation of Ukraine's sovereignty and territorial integrity. The issuance of this executive order aligns with the G7 leaders' statement from December 6, which warned: 'We will work to further limit Russia's efforts to use the international financial system to facilitate the expansion of its military-industrial base.' U.S. Treasury Secretary Janet Yellen also stated that this executive order allows Washington to impose sanctions on financial institutions that assist Russia in evading sanctions. Yellen mentioned that 'this executive order, which is part of broader U.S. sanctions against such institutions, also enables Washington to sanction products like seafood and diamonds that originate from Russia but are processed in third countries.' The United States has repeatedly warned companies against circumventing U.S. sanctions on Russia and has targeted companies in the UAE, Turkey, and elsewhere accused of helping Moscow evade these measures. The new executive order aims to reduce Russia's revenues by making it more difficult for specific Russian goods processed in third countries to enter the United States. The White House statement indicates that 'in the coming months, the U.S. and our partners intend to impose import restrictions on certain diamonds mined, processed, or produced in Russia, based on the existing U.S. ban on imports of diamonds from Russian sources.' Similarly, the new executive order grants the authority to prohibit the import of specific products caught in Russian waters or caught by Russian-flagged vessels, even if these products are processed in a third country. The Treasury Department plans to issue a ruling on specific types of seafood that will be subject to this ban. Senior U.S. officials have also traveled to Turkey, the UAE, and other countries to warn that companies trading with institutions under U.S. sanctions may lose access to G7 markets. Meanwhile, Kremlin spokesman Dmitry Peskov told reporters on Friday that Biden's executive order would deal a heavy blow to the global financial system. Interfax reported, citing Russian Deputy Foreign Minister Sergey Ryabkov, that if Washington seizes Russia's frozen assets over the Ukraine war, Moscow may cut diplomatic ties with the United States. Some Western politicians insist that Russia's frozen assets, valued at about $300 billion, should be handed over to Ukraine to help rebuild its war-torn economy. Earlier, on Tuesday, December 12, the U.S. imposed new sanctions on over 250 individuals linked to the military attack on Ukraine. The U.S. also sanctioned the network supporting the drone program of the Islamic Republic in Iran and several other countries. A verification report by Voice of America regarding the transfer of electronic components for the production of Shahed drones in Russia. The European Union sanctioned six individuals and five entities related to the Islamic Republic's drone assistance to Russia. An American senator called for the immediate sanctioning of the manufacturer of Iranian drones in Russia.