Treasury Wants Russia’s Economic Crisis, but Opponents Ask for Success

WASHINGTON – When Russia imposed sanctions on US officials last month, its government targeted President Biden and his top security advisers, along with Wally Adeyemo, deputy secretary general of the Treasury, whose organization has been imposing sanctions on the economy. Russia.

Russia’s move, while completely symbolic, underscores the major role that the Treasury department has played in creating and implementing the financial sanctions imposed on the United States on the major financial powers.

These restrictions are similar to the economic war against Russia, which is entering a critical juncture as the war in Ukraine continues to escalate and as the Russian government tries to find ways to prevent or reduce the collapse of Western sanctions.

In an attempt to prevent Russia from escalating sanctions, Mr. Adeyemo, 40, a former Obama prime minister, spent the last week traveling to Europe to support a plan to counter Russia’s evasive tactics and plan a future plot. In a meeting with his colleagues, Mr Adeyemo discussed European government’s plans to partner with Russian security companies, some of which were banned by the US last week, and talked about ways in which the United States could help give more European power to Europe. . “Countries could reduce Russia’s oil and gas purchases,” Treasury chief said.

On Wednesday, five days after Mr. Adeyemo’s return, Biden’s administration announced further sanctions against Russian banks, state-owned enterprises, and the daughters of President Vladimir V. Putin.

However, even though the US and its allies have imposed greater sanctions for disrupting Russia’s economic power, it remains to be seen if the sanctions will work.

Over the past six weeks, the US and its allies in Europe and Asia have imposed sanctions on Russia’s major financial institutions, its central bank, its military companies and Putin’s allies, confiscating their yachts and aircraft. Russian oil exports to the United States have been banned, and Europe is making plans to extract Russian gas and coal, albeit slowly. This week, the Treasury department banned Russia from repaying its private loans with US dollars, which could force Russia to repay its first foreign debt in a century.

But so far Russia has continued to pay its debts. The monetary reform of Putin’s central bank, which barred Russians from using the ruble to buy dollars or other currencies, as well as remittances to Europe and elsewhere has allowed the ruble to stabilize and to increase Russian stockpiles and dollars. euro. This has raised questions as to whether the methods have been effective.

“I think we are dealing with the earthquake that has followed the shock and fear of the sanctions that have been established and the realization that sanctions take time to support the economy,” said Juan C. Zarate, former Treasury Assistant Secretary. on terrorist finances and financial crimes. “It calls for more sanctions to be reinstated in the tanks, especially once sanctions are imposed after the attack.”

Speaking in London last week, Mr Adeyemo described the potential for sanctions to change behavior, citing measures as part of an equation that enemies like Russia should consider when violating international law.

“The idea that you can violate the authority of another country and enjoy the opportunity to integrate with the global economy is one of our allies and our friends will not tolerate,” Mr. Adeyemo told Chatham House, a tanker.

Yet even the United States, which does not rely on Russia’s power, has struggled to cope with its sanctions.

Within the Treasury Department, officials have been constantly arguing over how to push sanctions without bringing about unexpected consequences that could disrupt the financial system and inflation, which is growing worldwide.

The impact of the US economy has been significant, with Janet L. Yellen, secretary general of the Treasury, expressing concern over possible inflation. Russian sanctions have pushed up oil prices, with officials warning that they could bring in food and truck prices because Russian grain and foreign salt are in short supply.

“Our goal from the start was to bring great pain to Russia, as best we can to protect the United States and our allies from economic devastation,” Ms. Yellen told counsel Wednesday.

While officials thought about how to use the ruble, Ms. Yellen, a former chair of the Federal Reserve, objected to the ban on foreign exchange trading, which could prevent Russia from buying dollars. Instead, he said, suspending Russia’s foreign exchange reserves – the currency of US dollars, euros and other liquid assets – and making Russia accept payment for certain electronic goods could be a very effective way to hurt Russia’s economy and reduce its effects on US and allies. ake.

At a press conference this week, Republicans denounced the athletes for being super giants that allow Russia to earn millions of dollars a day through oil and gas sales.

Officials in the Ministry of Finance have been following Russia’s policy-based approach to investing in its assets, such as buying stocks and bonds, and monitoring the growth of the black ruby ​​market, which shows a real decline in investment. The Biden government has seen with concern that the value of the ruble has skyrocketed in recent weeks.ruins. ”

“The fact is that, once he said that, when the ruble came back for reasons that did not show the weakness of the sanctions, people would say, ‘you see, they have failed,'” said Daniel Fried, a former US ambassador to Poland. assistant Secretary of State for Europe.

The Treasury chief said the US is also keeping a secret list of oligarchs whose financial activities were being monitored in preparation for future sanctions in order to better understand the social networks that help people hide their money. The United States has not imposed sanctions on Roman Abramovich, a Russian billionaire who already has European Union sanctions.

Economists at the Institute of International Finance wrote in a survey this week that Russian markets appear to be stabilizing due to strong financial tensions, sharp economic downturns and the volume of its accounts.

“Punishment has become a moving target and will need to change over time in order to be effective,” he said.

Improving sanctions in Russia and ensuring that anti-immigration activities in line with Europe have fallen sharply to Mr Adeyemo.

Mr. Adeyemo worked for the Treasury Department during the Obama administration and was second only to the international economic security adviser when the United States imposed sanctions on Russia after the Crimea in 2014. Ms. Yellen, an inexperienced economist national security, wrote Mr. Adeyemo last year to be the deputy secretary general and to preside over the department’s disciplinary proceedings.

The debate emphasized the need for sanctions, often sent unilaterally during the Trump administration, to forge strong alliances with American allies in order to “disrupt, prevent, and prevent” actions that undermine US national security.

Mr. Adeyemo has been closely associated with State Department officials and Daleep Singh, who was the Deputy Assistant Secretary of State for Treasury during the Obama administration and is now the Assistant Secretary of State for International Security.

Julia Friedlander, a former senior European policy adviser to Treasury’s Office of Terrorism and Financial Intelligence, said Biden’s government had done more violence in Russia than it had in 2014, when there were concerns about doing what was not “right” and this. The gradual influx of Russian troops into Ukraine before the war, he said, also gave Biden officials time to contact and cooperate and prepare to send sanctions as soon as the uprising began.

“It’s a smart change between responding according to the people involved that they want to destroy as a way,” Friedlander said.

But some sanctions experts argue that Biden’s rulers did not go too far and have been very careful. Many of the strong measures the United States used against Iran to prevent it from benefiting from exports have not yet been used against Russia. Several major banks have not been approved or cut off from SWIFT, a global financial services service. And the United States has stepped up its pressure to force Europe to stop buying Russian power.

“Time is not on the side of Ukraine,” said Marshall S. Billingslea, a former Treasury Secretary for Terrorism in the Trump administration. “If the authorities run this long and do nothing to disrupt Russia’s economy, then the Russian invasion will continue for a long time and the killings and vandalism and war crimes will continue.”

Ms Yellen said this week that any sanctions against Russia’s power sector should be closely linked to Europe, which relies heavily on Russian oil and gas. Doing so, he added, could have unintended consequences.

“We could see prices go up if we stopped oil,” said Ms Yellen.

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