Russia’s economy continues to be crippled by sanctions.
As punishment for their ongoing invasion of Ukraine, Russia has been hit from all sides by sanctions, penalties, and cut-offs by multiple major first-world countries. The latest move from the United States, in particular, has been to completely cut off US dollar transactions from the Russian Central Bank, an aggressive move intended to prevent Russia from taking countermeasures against existing sanctions.
According to White House officials, Moscow maintains a large pool of USD that it can rely upon to fund the government and war efforts in the event that Russia’s primary currency, the ruble, loses value. As a result of the sanctions, as well as other factors, the ruble has indeed plummeted in value, but with the Russian Central Bank cut off from the USD, they can’t make use of this emergency fund.
“No country is sanction proof,” a White House official said. “Putin’s war chest of $630 billion in reserves only matters if you can use it to defend his currency, specifically by selling those reserves in exchange for buying the ruble.”
The U.S. Treasury Department announced new sanctions targeting the Russian central bank and state investment funds in the latest hard-hitting retaliation for Russia’s invasion of Ukraine.
The sanctions come as the ruble plummets, dropping 30% Monday. https://t.co/kxTQtiFUWv
— The Associated Press (@AP) February 28, 2022
In a phone conference, a senior administration official explained that this move was “the culmination of months of planning and preparation across our respective governments across technical, diplomatic and political channels, including at the highest levels.”
“We were ready and that’s what allowed us to act within days, not weeks or months, of Putin’s escalation,” the official said.
“Our strategy, to put it simply, is to make sure that the Russian economy goes backward as long as President Putin decides to go forward with his invasion of Ukraine,” another senior administration official added.