United States, Canada Impose Sanctions On Russia

The United States and Canada announced several economic sanctions on Russia last week before and after Russian President Vladimir Putin invaded the Ukraine.

Broadly, Russia is now blocked from doing business in dollars, euros, pounds and yen and Russia’s two largest financial institutions, Sberbank and VTB Bank, are barred from processing payments through the U.S. financial system. And on Monday, February 28, leaders in Europe, the United States, and Canada announced new restrictions on Russia’s central bank that will cut off Russia’s access to most of the roughly $630 billion in emergency reserves.

The U.S. Chamber of Commerce international relations team has explained the breadth of the sanctions, which also include:

• Blocking 42 subsidiaries of Sberbank and VTB Bank from doing business in the United States;
• Restrictions on Russian sovereign debt and Russian elites;
• Severing the connection to the U.S. financial system for Russian banks; and
• New debt and equity restrictions on 13 of the most critical major Russian enterprises and entities.

The U.S. Department of Commerce also published new export controls applicable to Russia. These restrictions took effect on February 24.

This rule aims to cut off Russia’s access to cutting-edge technology, primarily targeting the Russian defense, aviation, and maritime sectors. It also imposes two new Foreign Direct Product (FDP) rules that restrict access to sensitive U.S. technologies produced in foreign countries using U.S.-origin software, technology, or equipment.

Finally, the Commerce Department action also imposes new license requirements, a review policy of denial to license applications for the in-country movement of certain products, and expands other restrictions on items subject to the export administration regulations.

Read more here.

Notably, the Biden administration has not included Russian energy exports in its package of sanctions. President Biden has said “we specifically designed energy payments to continue” and that his administration is “closely monitoring energy supplies for any disruption.” The president did impose sanctions on the company behind the controversial Russian natural gas pipeline Nord Stream 2, however, and its corporate officers.

On February 25, the United States and European countries even took the rare step of directly sanctioning Putin, Minister of Foreign Affairs Sergei Lavrov, and other members of Russia’s Security Council. Read about that set of sanctions, what they mean, and who is involved here.

Read more about the U.S. sanctions here and here.

IndustryWeek has an analysis of supply chain risks because of the conflict here.

Canada also announced extensive sanctions, which include targeting 62 individuals and entities, including members of the elite and major banks, and cancelling all export permits following Russia’s attack on Ukraine. Canada also will sanction members of the Russian parliament who voted to recognize two breakaway territories in eastern Ukraine. Canadians are banned from financial dealings with the Luhansk and Donetsk regions and from purchasing Russian sovereign debt.

Find all of Canada’s measures here. Experts said the measures the country took should not have a significant impact on the Canadian economy since the country does not conduct much trade with Russia.