US President Joe Biden will sign an executive order today that would allow Washington to impose sanctions on financial institutions that help Russia circumvent Western sanctions over its invasion of Ukraine, US Treasury Secretary Janet Yellen said.

This order, which is part of a broader US effort to address sanctions evasionalso gives Washington the ability to ban imports of products produced in third countries but made from Russian raw materials, such as diamonds, Yellen explained.

“Today we are taking steps to use new and powerful tools against Russia’s war machine”, commented the American finance minister. “And we will not hesitate to use these new tools to take decisive and surgical action against financial institutions that facilitate the financing of the Russian war machine,” he added.

The US and its allies, including the EU and Britainhave imposed sanctions on Russia since its invasion of Ukraine in February 2022 and have since ramped up pressure on Moscow, targeting President Vladimir Putin, the Russian financial sector and dozens of oligarchs.

Today’s order is issued in consultation with US partners.

Washington has repeatedly warned companies against circumventing US sanctions against Russia and has targeted companies in the United Arab Emirates, Turkey and elsewhere that it has accused of helping Moscow evade sanctions.

Sanctions and economy

The new order, which goes into effect immediately after being signed by Bidenwill allow the US Treasury Department to acquire the tools to target the networks Moscow is trying to build to circumvent sanctions.

“We estimate that (…) financial institutions will take steps to stop these behaviors before we are forced to use” this new mechanism, said a senior US official who spoke to reporters on Thursday on condition of anonymity.

“Ultimately, any bank in the world if it has a choice between continuing to sell a small amount of products to the Russian military-industrial complex or being connected to the American financial system, will choose to remain connected to the American financial system,” he said. .

At the same time he explained that most European and American banks have already stopped financing activities in Russiabut revealed that they have relationships with financial institutions in other countries, which may still have operations there.

Washington therefore expects Western banks to put pressure on their partners to third countries to sever their economic relations with Russia.

Other a senior US official indicated that the initial sanctions and export controls imposed by the US on Russia have paid off, with the Russian economy having shrunk by 5% from pre-war projections.

However, almost two years after the start of the war the Russian economy appears to be weathering the shock, despite an avalanche of sanctions.

Moscow is still selling hydrocarbonsmainly in China and India, and, according to experts, has created effective mechanisms to successfully circumvent the ceiling that the West has placed on its oil sales.

Besides, Washington estimates that Moscow has strengthened its military cooperation with Iran, which supplies it with drones, and also with North Korea.

Based on International Monetary Fund estimates, Russia is set to record growth of just over 2% this year and just over 1% in 2024.