March 17, 2022
New Financial and Trade Sanctions Against Russia
On February 24, the Russian Federation (Russia) launched
send payment instructions to other banks in order to process
a full-scale invasion of Ukraine. The United States and
payments; more than 11,000 financial institutions from
allies have responded with sanctions and other actions,
more than 200 jurisdictions use its services. Removing key
affecting economic engagement, access to financial
Russian financial institutions from SWIFT makes it
instruments and resources, and trade, against Russia that are
difficult for them to process cross-border payments. The
unprecedented in terms of their comprehensiveness,
purpose of excluding some but not all Russian banks from
coordination, and swiftness. Within the United States, the
SWIFT is in part to allow for continued payments for
new measures were primarily imposed by the executive
European imports of Russian natural gas.
branch. Congress has sought to widen the range of
Sovereign Debt and Banking Sector Sanctions. The
economic targets and to curtail further the Russian
United States and allies expanded sanctions on Russian
government’s access to financial and other resources.
sovereign debt and several Russian financial institutions. In
the United States, the sanctions tighten restrictions on U.S.
Financial Sanctions
purchases of Russian government bonds, limit the ability of
Given the primacy of the U.S. dollar and U.S. financial
Russia’s largest bank (Sberbank) to transact in U.S. dollars,
markets in the global economy, financial sanctions are a
and impose full blocking sanctions (freezing assets and
particular source of U.S. economic leverage with respect to
banning transactions) on Russia’s second largest bank
Russia.
(VTB) and two Russian state investment funds (VEB and
Central Bank Sanctions. The United States, European
the Russian Direct Investment Fund, a Russian sovereign
Union (EU), United Kingdom, Canada, and Japan
wealth fund), among other measures. These sanctions have
suspended transactions with Russia’s central bank. These
exemptions, including for energy transactions, but,
sanctions block Russia’s access to its holdings of foreign
combined with other international sanctions on Russia,
exchange reserves in these jurisdictions. Russia’s reserves
generally restrict Russia’s ability to borrow from Western
totaled $630 billion at end-January 2022. Based on the most
capital markets and process transactions in U.S. dollars.
recent data available (from June 2021), about half of
Russia’s
General Investment Prohibition. The Biden
central bank reserves may be frozen. These
Administration prohibited new investment in the Russian
sanctions significantly limit the resources available to
energy sector. Additionally, President Biden has also
Russia to fund its war effort and support its economy. The
main funds still accessible to Russia’s c
prohibited investment in any additional sector of the
entral bank are
Russian economy, as determined by the Secretary of the
reserves held in China and gold stored in central bank
Treasury.
vaults (approximately $220 billion).
Figure 1. Bank of Russia Reserves: Estimating the
Trade Sanctions and Actions
Portion Frozen
The Biden Administration has taken several actions that
limit trade with Russia. U.S.-Russia trade flows were
relatively low before Russia’s war on Ukraine: Russia
accounts for less than 1% of U.S. exports and about 1% of
U.S. imports. The United States, however, is an important
source of technology used in a variety of goods imported by
Russia, and coordination on trade restrictions with allies
amplifies their significance.
Export Controls. The U.S. Department of Commerce’s
Bureau of Industry and Security announced new rules
restricting the transfer of certain U.S.-origin technologies to
Russia and Belarus. All exports of controlled electronics,
Source: CRS using Bank of Russia data for June 2021 (latest
computers, telecommunications, sensors, lasers, and
available).
navigation, avionics, marine, aerospace, and propulsion
Notes: Russia’s central bank may have real ocated its reserve
technologies now require a license (with a few exceptions).
holdings between June 2021 and February 2022. These figures should
Applications will be reviewed under a presumption of
be viewed as estimates.
denial. The new rules also restrict the export of such goods
produced in foreign countries using controlled U.S.
SWIFT Sanctions. At the direction of the EU and with
technology. Stricter rules are also in place for restricting
support from the other G-7 countries, the Society for
exports to specified military end users. More than 30
Worldwide Interbank Financial Telecommunications
countries have announced or are already implementing,
(SWIFT) removed seven Russian financial institutions from
similar controls.
its system. Globally, financial institutions use SWIFT to
https://crsreports.congress.gov
New Financial and Trade Sanctions Against Russia
Export and Import Restrictions. President Biden
to use reserve resources from the International Monetary
prohibited the export to Russia of U.S. dollar denominated
Fund (H.R. 6899), prohibit transactions in any security or
bank notes and luxury goods, and has prohibited the import
related derivatives of entities incorporated in Russia (H.R.
from Russia of various products, including crude oil and
6995), and seek to exclude Russian officials from
petroleum products, coal, non-industrial diamonds, seafood,
international economic meetings (H.R. 6891).
and alcoholic beverages. In 2021, approximately 8% of
U.S. imports of fossil fuels came from Russia. The
Mitigating the Impact on the U.S. Economy. Several bills
President also provided broad discretion to executive
attempt to mitigate the sanctions’ impact on the U.S.
branch agencies to prohibit additional U.S. exports to and
economy. One bill, for example, would suspend portions of
imports from Russia.
the Jones Act for the duration of any ban on the
transportation of crude oil or petroleum products from the
Revoke PNTR. The Biden Administration has announced
that it will work closely with Congress to revoke Russia’s
Russian Federation (H.R. 6974). The Jones Act requires
goods shipped between U.S. ports to be transported on
permanent normal trade relations (PNTR or most-favored-
ships that are built, owned, and operated by United States
nation [MFN]) treatment. Revoking PNTR for Russia
citizens or permanent residents. Other bills seek to expand
would increase the average unweighted ad valorem tariff on
U.S. fossil fuel production (H.R. 6916, S. 3752) and
Russian imports from approximately 4% to approximately
mitigate the effects of the oil embargo (S. 3815).
30%. Revoking PNTR requires congressional legislation,
and several bills have been introduced to revoke PNTR for
Russia’s Economic Retaliatory Responses
Russia (e.g., H.R. 6835, H.R. 7014, S. 3717, S. 3722). The
Russia has responded to international sanctions, driven by
other G-7 countries have pledged to revoke normal trade
both a desire to retaliate and salvage their economy. For
relations with Russia as well. (For more, see CRS Insight
example, the Russian government is restricting the export
IN11881, Invasion of Ukraine: Russia’s Trade Status,
of certain goods and agricultural commodities; allowing
Tariffs, and WTO Issues, by Cathleen D. Cimino-Isaacs and
Russian businesses to use intellectual property held by
Liana Wong.)
companies from “unfriendly countries” without their
consent and compensation; directing Russian borrowers to
Private Companies Withdrawing from
repay debts to “unfriendly” countries in rubles; banned
Russia
brokers from selling securities held by foreigners; and
Many U.S. and international companies have suspended
sanctioned several U.S. officials.
operations in Russia, left Russia altogether, or terminated
Other measures reportedly under consideration include
transactions with Russia, due to concerns about violating new
restricting foreign ships from entering Russian ports,
or potential sanctions, economic instability in Russia, threat of
allowing Russian airlines to register jets leased from non-
nationalization or expropriation, and corporate reputations.
Russian firms as their own property, and nationalizing
According to data compiled by researchers at the Yale School
assets of foreign-based firms that suspend or stop work and
of Management, more than 350 companies, across a range of
leave assets behind. Russian officials have also threatened
sectors, have suspended or limited transactions with Russia.
to cut off gas supplies to Europe if their governments curtail
Examples include Apple, EY, FedEx, Formula One, Harley-
energy imports.
Davidson, H&M, John Deere, Lego, Mastercard, Mattel,
McDonald’s, McKinsey, Netflix, Nike, PayPal, PwC, Rol s
Policy Issues for Congress
Royce, Rolex, Starbucks, TikTok, UPS, Vanguard, and Visa.
As Congress considers U.S. sanctions against Russia, it
Some U.S. and other international companies continue
may want to consider:
operations in Russia.
the economic impact of sanctions and retaliatory
measures on Russia, the United States, and the global
Additional Measures under Consideration
economy;
the effectiveness of sanctions in changing the actions of
Members of Congress have introduced a number of
foreign governments;
sanctions bills, as well as bills to mitigate the impact of
sanctions on the U.S. economy.
the interaction of sanctions and other foreign policy
tools; and
Restricting Trade. Several bills call for import restrictions
the conditions under which the United States and allies
on a variety of products. Some seek to legislatively restrict
would lift sanctions and other measures on Russia.
imports of Russian fossil fuels (e.g., S. 3754, S. 3718). One
Also see CRS Insight IN11869, Russia’s Invasion of
targets minerals like nickel and copper (H.R. 7044). At least
Ukraine: Overview of U.S. and International Sanctions and
one bill that calls for a full embargo on all trade with Russia
Other Responses, by Cory Welt.
(H.R. 6995). Some legislation would advocate for Russia’s
suspension from the World Trade Organization (S. 3717, S.
3722).
Rebecca M. Nelson, Coordinator, Specialist in
International Trade and Finance
Tightening Financial Sanctions. Several bills would
Christopher A. Casey, Analyst in International Trade and
further restrict Russia’s ability to access financial resources
Finance
or participate in financial markets more generally.
Andres B. Schwarzenberg, Analyst in International Trade
Examples include measures to limit Russia’s ability to gold
and Finance
reserves (S. 3771; H.R. 7068), prohibit all transactions in
Russian sovereign debt (H.R. 6900), limit Russia’s ability
IF12062
https://crsreports.congress.gov
New Financial and Trade Sanctions Against Russia
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https://crsreports.congress.gov | IF12062 · VERSION 1 · NEW