The United States has imposed sanctions on Gazprombank, one of Russia’s largest financial institutions, escalating its economic measures against President Vladimir Putin’s war efforts in Ukraine. This move comes as President Joe Biden approaches the end of his term, with President-elect Donald Trump poised to take office.
Gazprombank is a private-owned Russian bank, the third largest bank in the country by assets. Gazprombank is one of the main channels for payments for Russian oil and gas.
Shift in US Policy
Initially, the Biden administration refrained from sanctioning Gazprombank to avoid disrupting global energy markets. However, the US now aims to weaken Russia’s economy and bolster Ukraine’s position ahead of Trump’s anticipated efforts to negotiate a cease-fire.
“Today’s sanctions targeting Russia’s largest remaining non-designated bank, along with dozens of other financial institutions and officials, will further weaken Russia’s war machine,” said Treasury Secretary Janet Yellen. She added that these measures will make it more difficult for the Kremlin to evade sanctions and finance its military.
Expanding Sanctions
The US Treasury Department’s Office of Foreign Assets Control announced sanctions on approximately 50 Russian banks with global connections and about 15 Russian officials. This marks a broad effort to isolate Russia’s financial system.
Growing Western Pressure
The urgency to fortify Ukraine’s position stems from Trump’s pledge to end the war swiftly upon taking office. The Kremlin has signaled a willingness to discuss a cease-fire with Trump, though Western officials remain skeptical of its intentions. Meanwhile, Russia has intensified its attacks on Ukraine, with previous sanctions failing to prevent significant military losses over the past two and a half years.
Allegations Against Gazprombank
Gazprombank has been accused of facilitating payments for military equipment, soldier salaries, combat bonuses, and compensation to families of Russian soldiers killed in Ukraine. Countries such as Australia, Canada, New Zealand, and the United Kingdom had already sanctioned the bank.
Energy Market Implications
The US had previously exempted Gazprombank from sanctions to allow European countries to pay for Russian gas. However, this exception became less critical as European nations reduced their reliance on Russian energy supplies. Since 2022, Gazprombank has managed gas payments for European customers of Gazprom PJSC, after Putin required buyers to pay in rubles via special accounts at the bank.
Uncertain Impact on Gas Payments
It remains unclear whether the new sanctions will disrupt gas payments for customers still purchasing fuel from Russia. Some European buyers had complied with Moscow’s payment demands, while others were cut off from supplies.
The sanctions highlight the US’s determination to exert economic pressure on Russia, even as the conflict continues to escalate and diplomatic solutions remain uncertain.