Russian To Actual Judgment, Con't

Biden drops the hammer this week on Putin and company as tensions mount along the Russia-Ukraine border.

 

The Biden administration imposed a series of new sanctions on Russia, including restrictions on buying new sovereign debt, in retaliation for alleged misconduct related to the SolarWinds hack and efforts to disrupt the U.S. election.

The new measures sanction 32 entities and individuals, including government and intelligence officials, and six Russian companies that provide support to the Russian government’s hacking operations. The U.S. is also expelling 10 Russian diplomats working in Washington, including some intelligence officers.

The Biden administration also is barring U.S. financial institutions from participating in the primary market for new debt issued by the Russian central bank, Finance Ministry and sovereign wealth fund. Those limits would take effect from June 14.

Russian bonds fell and the ruble dropped the most since December on the news.

“What President Biden is going to announce today, we believe, are proportionate measures to defend American interests in response to harmful Russian actions, including cyber intrusions and election interference,” National Security Advisor Jake Sullivan told CNN early Thursday. “His goal is to provide a significant and credible response but not to escalate the situation.”

The sanctions reflect an attempt by the U.S. to balance the desire to punish the Kremlin for past misdeeds but also to limit the further worsening of the relationship, especially as tensions grow over a Russian military buildup near Ukraine.

The latest moves come just two days after President Joe Biden warned Vladimir Putin the U.S. would defend its interests but also offered the possibility of a summit meeting in the coming months, drawing a cautiously positive response from Moscow.

Restrictions blocking U.S. investors from buying ruble-denominated Russian government debt have long been seen as the “nuclear option” in financial markets, where the bonds, known as OFZs, have been a popular investment. Foreigners now hold about a fifth of that debt, worth roughly $37 billion.

 

Hitting Putin right where it hurts, his country's version of Wall Street's Big Casino, is a real step towards real sanctions with real teeth. And they never would have happened under the Former Guy™. Meanwhile the US is backing off plans (for now) to send Naval warships into the Black Sea.

We'll see how this balances out, but I would expect we'll have Putin's response in the Crimea or Donbass regions of Ukraine rather than the halls of Washington.