The Treasury Department on Monday moved to further cut Russia off from the global economy, announcing that it would immobilize Russian Central Bank assets held in the United States and sanction the Russian Direct Investment Fund, a sovereign wealth fund run by a close ally of President Vladimir Putin.
The moves are intended to limit Russia’s ability to use its military stash of international reserves to cushion the effects of sanctions imposed by the United States and its European allies in response to Russia’s invasion of Ukraine.
“The unprecedented actions we are taking today will significantly limit Russia’s ability to use assets to fund its destabilizing activities and target the funds that Putin and his inner circle depend on to invade Ukraine,” said Treasury Secretary Janet L. Yellen. statement.
As a result of the sanctions, Americans are prohibited from participating in any transactions involving the Central Bank of Russia, the National Welfare Fund of Russia, or the Russian Ministry of Finance.
The moves represent a significant escalation of US sanctions, although the Treasury Department said it was making an exception to allow Russia’s energy export operations to continue. It issues a “general license” to authorize certain energy-related transactions with the Central Bank of Russia.
On Saturday, the European Commission, the UK, Canada, France, Germany, Italy and the US said they would remove some Russian banks from the SWIFT financial messaging system, effectively banning them from international transactions, and impose new restrictions to prevent it from using its large international reserves to bypass sanctions.
Russia has spent the past few years bolstering its defenses against sanctions, amassing $643 billion in foreign exchange reserves, in part by redirecting its oil and gas revenues. New restrictions by the US and its allies on the sale of rubles to Russia aim to undermine the country’s ability to maintain its currency in the face of new sanctions on its financial sector.