US administration may increase sanctions in case of further aggressive actions of the Kremlin
The Biden administration is assessing the impact of the new sanctions on Russia and is ready to increase these penalties if the Kremlin does not stop hacker attacks and attempts to intervene in the political process in the United States, Bloomberg reported on Saturday, citing knowledgeable sources.
Among the options for tightening sanctions that President Joe Biden may resort to is a ban on American financial institutions from accessing the secondary market for ruble bonds issued by Russian state banks, according to sources, who agreed to comment on the situation on condition of anonymity.
The latest package of sanctions imposed by Biden this week has been linked to Moscow’s malicious actions, in particular, the hacking of SolarWinds software and interference in last year’s US elections.
The United States imposed sanctions on a number of businesses and individuals, expelling 10 Russian diplomats based in Washington, including some intelligence officials.
However, the new sanctions were introduced in order to punish the Kremlin for its actions in the past, avoiding further deterioration of relations, especially as tensions rise over the buildup of Russian military power near Ukraine.
White House press officials have not yet responded to a Bloomberg request for comment on the sources.
According to the agency’s interlocutors, the Biden administration is also monitoring global markets to see the impact of its latest measures, including on the ruble, and any changes in foreign investors’ interest in Russian ruble bonds. According to them, decisions of the Central Bank of Russia on interest rates and data on capital flows will also become important indicators.
The next meeting of the Bank of Russia, which will decide on the key interest rate, is scheduled for April 23.
In line with sanctions announced on Thursday, the Biden administration will bar US financial institutions from participating in the primary market for new debt issued by the Russian Central Bank, Treasury Department, and the Sovereign Wealth Fund. These restrictions will take effect on June 14th.
Russian bonds and the ruble hit their lowest levels since December last year after news of the imposition of sanctions, but the Russian currency recovered losses on Friday as investors concluded that the sanctions were more lenient than expected.
The White House was guided by a desire to limit the impact of the sanctions on the United States and the global financial system, as well as a reluctance to harm ordinary Russians, sources said.
Biden’s team now hopes for a reduction in tensions and believes that it will benefit the financial markets and the Russian economy, said one of the interlocutors of Bloomberg.
However, the US authorities may apply new sanctions if the situation escalates, including a ban on the secondary trading of any ruble-denominated debt for the first 90 days or more after the issue, the source said.