U.S. slaps new sanctions on Russia, targeting services, media, defense industry

Washington on Sunday unveiled a new layer of sanctions on Russia, targeting services, defence industry and the Kremlin's propaganda machine on the eve of Putin's planned Victory Day speech.

The move came as leaders from the G7 countries held a virtual summit with Ukrainian president Volodymyr Zelenskiy in a show of solidarity.

Putin "has failed in his initial military objective to dominate Ukraine – but he has succeeded in making Russia a global pariah" the White House said in a fact sheet.

The new sanctions include:

- Targeting State-Controlled Media Within Russia That Bolster Putin’s War.

- Banning Services that Help Finance Putin’s War and Aid Sanctions Evasion.

- Technology export bans including industrial engines, bulldozers and other items that can be used by Russian defence factories

- Visa restrictions on another 2,600 Russian and Belarusian individuals, including military officials, and executives from Sberbank and Gazprombank

In imposing a ban on services the US is falling into line with its European allies. The Biden administration sees U.S. service providers as potential tools Russia could use to sidestep the punitive measures already imposed.

“They’ve been asked by Russian companies to help them figure out how to reformulate their business strategies in the wake of sanctions, in some cases how to get around these sanctions, or in the case of accountants how to hide some of their wealth, and we’re shutting that down,” a senior administration official told reporters Sunday afternoon.

"Taken together, today's actions are a continuation of the systematic and methodical removal of Russia from the global financial and economic system. And the message is there will be no safe haven for the Russian economy if Putin's invasion continues," the official told reporters.

The new technology export bans on industrial items such as heavy engines and bulldozers are intended to have an impact on Russian war efforts by hitting the supply chain for defence manufacturers. The US claims that two major Russian tank plants, Uralvagonzavod Corporation and Chelyabinsk Tractor Plant, have already been forced to halt production due to a lack of foreign components.

The new media sanctions will target three Kremlin-controlled propaganda outlets: Channel One, Russia-1 and NTV. American companies will no longer be allowed to sell equipment like video cameras or microphones to them, and US advertising on their channels will be banned. Last year, US companies bought $300m in advertising in the Russian market.

“A lot of these advertisers have announced since the invasion that they’re going to cut their business activity with these stations, but we want to make sure that decision endures and just send a broader signal that US companies should not be in the business of funding Russian propaganda,” the official said.

The 2,600 new visa restrictions on individuals include military officials and Russian proxies deemed to have played a part in the invasion and there will be a new visa policy which would apply automatically to military or proxy officials involved in human rights abuses.

The targeted sanctions will also hit eight executives from Sberbank, Russia's largest financial institution, and 27 from Gazprombank, owned by Russia’s giant gas industry. Until now Gazprombank has been left untouched because of its role in facilitating European purchases of Russian natural gas.

"Preventing Russia from accessing the United States' valuable professional services increases the pressure on the Kremlin and cuts off its ability to evade sanctions imposed by the United States and our partners," US Treasury Secretary Janet Yellen said in a statement. "We are also targeting Putin's ability to generate revenue that enables his aggression, as well as entities and their leaders who support his destructive actions."

The State Department said in a statement that the individuals were targeted because they "are believed to have been involved in human rights abuses, violations of international humanitarian law, or public corruption in Ukraine, including in the so-called 'Donetsk People's Republic' or 'Luhansk People's Republic.'"

The raft of U.S. and Western sanctions imposed since Russia's invasion of Ukraine earlier this year has pushed the Russian economy into a deep recession as it makes the difficult transition to becoming a closed economy.

"This is already a failure for Putin, and we're going to continue to honor the brave fighting that's taking place by Ukraine's people and listen to President Zelensky and recommit to staying the course," the senior administration official said.

The official also added that the call would also highlight how Russian President Vladimir Putin is "dishonoring" the sacrifices made by Soviet Russian citizens, millions of whom sacrificed their lives to defeat fascism during World War II.

"Putin is dishonoring those sacrifices by spreading his lies, his disinformation about the barbarism he is committing in Ukraine ... It's really a chance to speak the truth and demonstrate our continued unity," the official said of the call.

Notably, U.S. legal services were not included in Sunday's ban. Washington, according to the official, has decided to continue to permit the seeking of "due process," but added that the government would continue to reevaluate this "every day" and that it is waiting to see what happens following the initial services ban. The official noted that the United Kingdom also has not instituted such a ban.

The official also made sure to note that the sanctions against Gazprombank executives are just that: actions against leaders of the important financial institution and not a full sanction against the bank itself, which Europeans must do business with to continue to purchase Russian gas.

"This is not a full block. We're not freezing the assets of Gazprombank or prohibiting any transactions with Gazprombank. What we're signaling is that Gazprombank is not a safe haven. And so we're sanctioning some of the top business executives, they're the people who sit at the top of the organization, to create a chilling effect," the official said.

The decision to restrict exports of industrial products to Russia is intended to hamper the Kremlin's industrial capacity and war-making ability, similar to how Western restrictions on microchips are limiting Russia's ability to make precision guided missiles, the official said.

The G7 leaders said in a statement Sunday that they had pledged to "step up" short-term financial aid to Ukraine in the weeks ahead, as well as continue to develop options for the country's long-term reconstruction.

"In the coming weeks, we will step up our collective short-term financial support to help Ukraine close financing gaps and deliver basic services to its people, while also developing options -- working with the Ukrainian authorities and international financial institutions -- to support long-term recovery and reconstruction," the statement said.

Meanwhile, Secretary of State Antony Blinken spoke with Ukrainian Foreign Minister Dmytro Kuleba on Sunday to discuss further sanctions on Russia and about the impact of the war in Ukraine on global food security.

The Secretary also informed Kuleba that U.S. Charge d’Affaires Kristina Kvien and a small group of diplomats, accompanied by State Department security, traveled to Kyiv to conduct diplomatic engagement in advance of the planned resumption of Embassy Kyiv operations, according to the department's readout about the call.

Alex Raufoglu

Washington D.C.