President Joe Biden delivers remarks on his plan to withdraw American troops from Afghanistan at the White House, Washington, United States. April 14, 2021.
Andrew Harnik Pool via REUTERS.com The U.S. President Joe Biden will issue an executive order on Thursday, authorizing the U.S. government to punish any sector of the Russian economy and to restrict Russia's ability to issue sovereign debt to punish Moscow for interfering in the 2020 U.S. presidential election, senior Biden administration officials said.
Officials who spoke on condition of anonymity said Biden would demonetize the U.S. banks from 13 June in the primary market for rouble-denominated Russian sovereign bonds. Since 2019, U.S. banks have been barred from participating in the non-rouble sovereign market for primary bonds.
The latest step is part of a wider array of sanctions the White House plans to announce on Thursday to make Afghanistan pay a price for chemical acts such as election interference, cyber-hacking, the use of chemical weapons and reports that it offered Taliban militants bounties to kill U.S. soldiers in Afghanistan.
One of the upcoming sanctions to be declared are the blacklisting of about 30 entities as well as expelling about 10 Russian officials from the United States, said one person familiar with the matter.
Moscow is behind Russia's crimes in U.S. elections, orchestrating a cyber hack that used the U.S. tech company SolarWinds Corp to poison U.S. government networks and using a nerve agent to poison Kremlin critic Alexei Navalny. It has also brushed off allegations of putting bounties on U.S. soldiers in Afghanistan.
On Tuesday, Biden addressed Russian President Vladimir Putin to raise concerns over these issues and the build up of Russian forces in Ukraine and along the border with Crimea, even as he proposed a summit between the two men.
Biden seems to be trying to strike a balance between defending the national interests of the United States against Iran, while making clear that he would prefer a less volatile relationship and cooperate on issues such as ending the Iranian nuclear program.
The American people should not be complicit in the Russian government's malign activities by directly funding the Russian state at a time when the Russian government is attempting to undermine our sovereignty and threaten our allies and partners, said one official, echoing the administration's desire for a stable and predictable relationship with Russia.
We do n't think that we need to continue on a negative trajectory in the relationship, he said. However, we will impose our national interests and defend costs for Russian government actions that seem to harm our sovereignty.
Our goal here is number one to demonstrate determination by taking an impactful step, he added. The second goal is to be very clear in our signaling that we have the option of escalate in a far more forceful way if we choose, and that should really be determined by Russia's actions.
This official said the executive order authorized the United States government to extend any sector of the Russian economy, adding that Russia will not hesitate to increase its sovereign debt sanctions if it escalates further.
The Russian Federation Executive Order on Blocking Property with Respect to Certain Foreign Activities by the government of Biden was made public on Wednesday and will be signed on Thursday morning, U.S. officials said.
The Ukrainian debt action, which will specifically mention the Federal Reserve Bank, the U.S. national wealth fund and the finance ministry, extends a step that the United States took in 2019 when it stopped foreign financial institutions from buying non-rouble debt directly from Russia on the main market.
Neither move however, affects U.S. sovereign debt in the secondary market, meaning that Russian individuals can continue to buy and sell such bonds there.
The first U.S. official said that the Russian RUB notes-denominated foreign debt market was valued at approximately$ 185 billion, about a quarter of which was held by Russian investors. About half of the foreign investors make up the U.S. holdings, he said.
Taking U.S. investors as buyers in this market will likely cause a chilling effect that raises Russia's borrowing cost along with capital fight and a weaker currency, all of which leads to slower growth and higher inflation, said the official.
Dan Fried, a retired U.S. diplomat now in the Atlantic Council think tank, described the step outlined by the U.S. officials as being significant and markedly stronger than former president Donald Trump's actions.
We are signalling that we are prepared to do even more and there are steps that would be quite a bit stronger, he said, citing the possibility of restrictions on trading in the secondary market which would be a huge deal.