President Joe Biden will issue an executive order on Thursday authorizing the US government to sanction any sector of the Russian economy and use it to restrict Russia’s ability to issue sovereign debt in order to punish Moscow for its interference in the US elections from 2020, senior officials in the Biden administration have said. .
Officials, who requested anonymity, said Biden would ban U.S. financial institutions from participating in the primary market for Russian ruble-denominated sovereign bonds from June 14. Sovereign bonds in ruble since 2019.
The latest step is part of a wider range of sanctions that the White House plans to announce on Thursday to make Russia pay the price for “malicious” actions such as election interference, cyber-hacking, use of chemical weapons and the reports it offered to the Taliban. militant bonuses to kill American soldiers in Afghanistan.
Among the sanctions that will be unveiled are the blacklist of around thirty entities as well as orders expelling a dozen Russian officials from the United States, a person familiar with the matter said.
Russia denies interfering in US election, orchestrating cyber hack that used US tech company SolarWinds Corp (SWI.N) to penetrate US government networks and using a nerve agent to poison Kremlin critic Alexei Navalny. He also brushed aside allegations of granting bonuses to US soldiers in Afghanistan.
Biden spoke to Russian President Vladimir Putin on Tuesday to express his concerns over these issues and the build-up of Russian forces in Crimea and along the border with Ukraine, even as he proposed a summit between the two men.
Biden appears to be trying to strike a balance between defending US national interests against Russia while making it clear that he would prefer to have a less volatile relationship and cooperate on issues such as limiting Iran’s nuclear program.
“The American people should not be complicit in the malicious activities of the Russian government by directly funding the Russian state at a time when the Russian government is trying to undermine our sovereignty and threaten our allies and partners,” an official said, echoing the administration’s desire for a “stable and predictable relationship” with Russia.
“We don’t think we need to continue on a negative trajectory in the relationship,” he said. “However… we will defend our national interests and impose costs for actions by the Russian government that appear to undermine our sovereignty.”
“Our goal here is to show determination in taking hard-hitting action,” he added. “The second goal is to… be very clear in our signaling that we have the opportunity to step up in a much more aggressive way if we choose to, and that will really be determined by Russia’s actions.”
The official said the executive order allows the US government “to target any sector of the Russian economy,” adding that “we will not hesitate to extend the sanction on Russian sovereign debt if Russia escalates further. “.
The executive decree on “Blocking property with respect to specified and harmful foreign activities of the government of the Russian Federation,” was signed by Biden on Wednesday and will be made public Thursday morning, US officials said.
The action on sovereign debt, which will specifically cite Russia’s central bank, the National Wealth Fund and the Ministry of Finance, extends a measure taken by the United States in 2019, when it banned American financial institutions from ‘buy non-ruble-denominated debt directly from Russia in the primary market.
However, none of these measures affect Russian sovereign debt traded on the secondary market, which means that US citizens can continue to buy and sell such bonds there.
The chief US official said the Russian ruble-denominated sovereign debt market is valued at around $ 185 billion, of which about a quarter is held by foreign investors. American investors make up about half of foreign holdings, he said.
“Judging from the history, removing US investors as buyers in this market is likely to cause a deterrent effect that will increase Russia’s cost of borrowing, as well as a fight against capital and a weaker currency. – which will lead to slower growth and higher inflation, “the official said.
Dan Fried, a retired US diplomat currently at the Atlantic Council think tank, described the step described by US officials as “important” and significantly stronger than the actions of former US President Donald Trump.
“We signal that we are ready to do even more and there are steps which would be a little stronger,” he said, citing the possibility of “restrictions on trade in the secondary market, which would be a huge deal “.
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