US sanctioning banks that facilitate Russia's war effort

RUSSIA / FSU POLITICS - In Brief 27 Dec 2023 by Alex Teddy

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On December 22 the US made the announcement. These are secondary sanctions on financial institutions that in any way expedite the Russian defense sector. Any institution that does this will be blocked from the US financial system. Some in the US are worried that this will hasten countries moving away from the USD. The US is worried because sanctions on Russia have proved fairly ineffectual.  On December 22 the US intensified sanctions on Russian diamonds and seafood. Russia has hidden its exports by having these items processed abroad and then sold in third countries. The EU has also banned Russian diamonds.  The United States accuses North Korea and Iran of selling military equipment to Russia. If Russia purchased these items this in breach of UN sanctions that Russia voted for. Since 2022 Russia has been reducing its reliance on USD, EUR and GBP. It has been trading more in RMB. Chinese banks have lent large quantities of RMB to Russia in that time. The volume is said to be at least several billion worth of USD. Large banks in the UAE, Turkey and China have striven to avert US secondary sanctions. They have mostly complied with US sanctions. But smaller banks have taken the risk. There are tempting profits to be made in the short by these banks. They consider it worth it and assume that the US does not have the capacity to monitor small banks who do little business with the US anyway. Russia has created companies to disguise the end user of military use items bought via third countries. This is to source semiconductors, microchips, machine tools and airplane parts. They seek to purchase these items from small firms which Russia thinks the US scrutinizes less.  The IM...