In a move aimed at escalating pressure on Russia, President Joe Biden signed an executive order on Friday, granting the U.S. Treasury Department the authority to target financial institutions facilitating Russia’s efforts to bolster its defense industry. The sanctions seek to impede the Kremlin’s efforts to replenish the Russian military’s arsenal, which has been depleted over 22 months of conflict in Ukraine. According to a U.S. assessment, Russia has already lost over 13,000 pieces of military equipment, including tanks, drones, and missile systems.
The executive order also aims to enhance existing restrictions on diamonds and seafood imported from Russia following a thorough review by U.S. agencies.
Treasury Secretary Janet Yellen emphasized the expectation for financial institutions to exert every effort to avoid facilitating Russia’s circumvention and evasion. Yellen stated in a release, “We will not hesitate to use the new tools provided by this authority to take decisive, and surgical, action against financial institutions that facilitate the supply of Russia’s war machine.”
The move follows recent virtual discussions between Biden and G-7 leaders regarding support for Ukraine. As debates intensify in Washington over the financial backing of Kyiv, the White House is engaging in talks with key lawmakers to secure additional funds for Ukraine. Biden has proposed a $110 billion wartime aid package for Ukraine, Israel, and other national security priorities. However, approval from GOP lawmakers hinges on the White House agreeing to significant immigration and U.S.-Mexico border policy changes. The Defense Department warns that available funds for supporting Ukraine’s defense are nearly depleted.
In a joint statement after their December 6 meeting, G-7 leaders pledged to curtail Russia’s use of the international financial system to advance its war in Ukraine. The focus includes targeting “Russian military procurement networks and those who help Russia acquire machine tools, equipment, and key inputs.”
Russian defense spending surged by almost 75% in the first half of 2023, with the country on track for record military spending next year. Deputy Treasury Secretary Wally Adeyemo emphasized the critical nature of the executive order, stating in a Financial Times op-ed, “By raising the stakes for banks supporting sensitive trade with Russia and continuing to sanction new front companies and procurement networks, our coalition is pouring sand into the gears of Russia’s military logistics.”