“Destructive sanctions”
Russia does not have limitless resources, especially now, given the sanctions in place. They face a choice: drain remaining dollar reserves, invest new revenue, or risk default. The aim of the American administration is to push Putin further away from Ukraine by depleting Russian resources and constraining the economy. A White House spokesperson argues the sanctions are already showing progress and are driving the Russian financial system toward collapse.
Psaki also announced the next sanctions package targeting the Russian Federation, including a ban on new investments.
“Tomorrow, in coordination with the G7 and the EU, we will unveil a tougher package that raises costs for Russia and pushes it toward economic, financial, and technological isolation. It will ban all new investments in Russia, broaden sanctions on financial institutions and state owned enterprises, and extend measures on Russian government officials and their families,” the White House spokesperson stated.
Psaki noted that the specifics on institutions and officials to be sanctioned would be announced later.
“Expect targets to include Russian government officials, their family members, Russian owned financial institutions, and state controlled businesses,” the spokesperson added.
US Treasury “hysterical”
State Duma Chairman Vyacheslav Volodin contends that US sanctions will not achieve their goals. He says hysteria is rising within the US Treasury and confidence in the dollar is waning. Volodin notes that ruble denominated accounts for natural gas with unfriendly countries and the discussion of expanding ruble trading were viewed as threats by the US Treasury.
“Washington’s plan has failed. The heavy sanctions did not collapse the economy or paralyze Russia’s banking system. It did not work,” Volodin wrote on his Telegram channel.
He recalled that the US Treasury banned Russia from paying public debt with frozen reserves, and asserted that funds remain in Russia to meet obligations even under sanctions. He argued the situation creates pressure on the United States and its citizens.
The MP also suggested that the International Monetary Fund did not overlook that anti-Russian sanctions undermine confidence in the dollar because its role in global settlements is shrinking.
“Today, anyone keeping money in dollars cannot be sure that the United States will not seize it. This signals the beginning of the end of the dollar monopoly in the world,” he asserted.
Ban on paying dollars to public debt
On April 4, Reuters reported a US Treasury source saying the ministry would prohibit Russia from paying dollars to government debt in US banks.
“Today is the deadline for Russia to make a debt payment. From this moment, the US Treasury will not allow the Russian government to make any dollar denominated debt payments from its accounts in US financial institutions.”
The report noted that the Treasury did not permit JPMorgan to process the final coupon payments on bonds maturing in 2022 and 2042. The bank handles coupon payments for Russia and routes them to foreign bondholders via the payment agent.
The article also states that on March 16, Russia must pay a total coupon of 117.2 million dollars on two sovereign Eurobond issuances, with the first payment due after parts of reserves were frozen. Earlier, Bloomberg cited US Treasury statements that the current sanctions regime did not prevent dollar payments, at least until the license expires at the end of May.