U.S. to target banks that help Russia war in Ukraine

The United States, the world's largest economy, was sending a message to financial institutions that they have "a very stark choice."

Updated - December 22, 2023 09:42 pm IST

Published - December 22, 2023 09:41 pm IST - Washington

A Ukrainian military Mi-24 helicopter is seen in action near the front line town of Bakhmut, amid Russia’s attack on Ukraine, in Donetsk region, Ukraine December 21, 2023.

A Ukrainian military Mi-24 helicopter is seen in action near the front line town of Bakhmut, amid Russia’s attack on Ukraine, in Donetsk region, Ukraine December 21, 2023. | Photo Credit: REUTERS

The United States said Friday it will sanction foreign banks that support Russia's war in Ukraine, in a new bid to exert economic pressure on Moscow as it diversifies from the West to China.

Under an executive order to be signed Friday by President Joe Biden, the United States would be authorized to issue so-called secondary sanctions against financial institutions that support Russia's defense industry, officials said.

The United States, the world's largest economy, was sending a message to financial institutions that they have "a very stark choice," a senior official said on customary condition of anonymity.

"Ultimately, for almost any bank in the world, you give them the choice between continuing to sell a modest amount of goods to Russia's military-industrial complex or being connected to the U.S. financial system -- they're going to choose being connected to the U.S. financial system, given that our economy is far bigger, and our currency is the one used around the world," he said.

But Russia has been seeking to reduce reliance on dollars, euros and yen since its February 2022 invasion of Ukraine triggered a wave of Western sanctions.

China's largest banks have extended billions of dollars worth of credit in renminbi to Russia since the war as Western institutions exit.

The U.S. official voiced hope that European and U.S. banks, while not directly invested in Russia, would pressure partners operating in the country.

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