The United States imposed tough new sanctions on Gazprombank, one of Russia’s biggest state-owned banks. This move is designed to tighten the grip on the Kremlin’s finances and make it harder for Russia to fund its war in Ukraine. The new sanctions hit Gazprombank and six of its international branches, effectively cutting it off from the global financial system dominated by the United States.
Gazprombank has been crucial in helping Russia pay for its military activities. The bank has acted as the main channel for payments, including buying military equipment for Russian forces and compensating the families of soldiers killed in the war. By cutting off the bank’s access to global financial systems, the U.S. intends to restrict Russia’s ability to fund its war efforts.
Janet Yellen, the U.S. Treasury Secretary, explained the reason behind these sanctions. She said, “This sweeping action will make it harder for the Kremlin to evade U.S. sanctions and fund and equip its military.” The United States wants to put more pressure on Russia, hoping this will slow down its war efforts.
How Gazprombank Played a Key Role
Gazprombank is not just any Russian bank. It has been central to the country’s energy payments, especially when it comes to natural gas sales. For many years, Gazprombank helped Russia get paid for its gas exports, including deals with European countries. In fact, it has been one of the few large Russian banks not already on the U.S. sanctions list.
This bank’s role was especially important because, despite ongoing sanctions, many countries, including those in Europe, were still buying Russian gas. Although the European Union has reduced its reliance on Russian gas sharply, Gazprombank remained important for energy payments, keeping Russia connected to global markets. However, with the U.S. imposing sanctions, Gazprombank can no longer use dollars or other international payment systems for transactions.
U.S. Slams Hamas Leaders in Turkey and Gaza with Sanctions Over Terrorist Activities
The U.S. decision to sanction Gazprombank comes after Russia’s invasion of Ukraine in 2022. Since the war began, several Western countries, including the U.S., have been using economic sanctions to hurt Russia’s economy and military efforts. While other major Russian banks were already cut off from global financial systems, Gazprombank had been able to keep operating relatively freely—until now.
The Impact of These Sanctions on Russia
The new sanctions against Gazprombank are a significant blow to Russia’s ability to finance its war in Ukraine. Since Gazprombank was one of the few Russian financial institutions not yet sanctioned by the U.S., it was still able to process payments for energy deals. Now, with Gazprombank banned from the global financial system, it will be much harder for Russia to continue making these payments, especially when it comes to buying the military equipment it needs for the war.
Further Economic Pressure
This new sanction also sends a warning to other banks around the world. The U.S. Treasury has made it clear that any foreign bank that continues to do business with Russia, especially if they use the Russian System for Transfer of Financial Messages (a Russian alternative to the Swift system), could face secondary sanctions. This means that any foreign bank that helps Russia could also be punished by the U.S.
The sanctions are not just limited to Gazprombank. In addition to the bank, the U.S. also imposed penalties on over 50 small Russian banks, 40 securities registrars, and 15 people they say are helping Russia abuse the international financial system. The U.S. believes these individuals and companies are involved in helping Russia buy the equipment it needs to sustain its war efforts.
Challenges for Russian Imports
The sanctions are also starting to hurt Russia’s economy in other ways. The Russian government has said that the new sanctions have made it much harder to import goods. They say the cost of doing business has gone up because it is more difficult for Russian companies to settle payments. As a result, Russia has lowered its forecast for imports in 2024 by nearly 10 percent, showing just how much the financial pressure is impacting the country’s economy.
In response, Russia’s central bank has also reported that the sanctions are making it difficult for businesses to trade in global markets. This has led to higher costs for Russian companies, especially those that rely on importing raw materials for their industries. These challenges are hurting the Russian economy in a number of ways, and the new sanctions on Gazprombank will only add to these struggles.
