US sanctions on Russia’s OFZ local debt come into force
15 Jun 2021

The US sanctions imposed on April 15 that bar US investors from buying Russian Ministry of Finance ruble-denominated OFZ treasury bills in primary auctions come into force on June 14.

The sanctions are the first to target Russian domestic debt, but are seen as largely symbolic, as the ban does not include the “nuclear option” of banning US investors from buying the Ministry of Finance’s workhorse bonds on the secondary market or owning the popular bonds.

Observers point out that by nevertheless targeting the OFZs the White House has taken the sanctions regime up to a new level and has created a legal mechanism whereby extending the sanctions to include an outright ban is easy, so the sanctions are indeed significant.

The Kremlin condemned the sanctions when they appeared, but appears to have accepted them. Russian Foreign Minister Sergei Lavrov took a new hard line on new sanctions in his new rules of the game speech in February where he said that Russia would not tolerate any new sanctions, but left himself some wiggle room by saying Russia would react harshly to any “economically damaging” sanctions.

At the time it was not clear if the Kremlin would accept US President Joe Biden’s offer of a one-on-one summit with Russian President Vladimir Putin and the fear was the April 15 sanctions would derail the chances of the talks that both sides seem to want. However, that meeting is due to happen this week on June 16 in Geneva, although both sides have been playing down expectations.

Biden has just left the UK, which hosted a G7 summit where he tried to forge a common position of the world’s rich nations on Russia so he could present a united front to Putin.

The G7 referred to Russia specifically in its joint statement following the summit and laid out its wish list of demands:

“We reiterate our interest in stable and predictable relations with Russia, and will continue to engage where there are areas of mutual interest. We reaffirm our call on Russia to stop its destabilising behaviour and malign activities, including its interference in other countries’ democratic systems, and to fulfil its international human rights obligations and commitments. In particular, we call on Russia to urgently investigate and credibly explain the use of a chemical weapon on its soil, to end its systematic crackdown on independent civil society and media, and to identify, disrupt and hold to account those within its borders who conduct ransomware attacks, abuse virtual currency to launder ransoms, and other cybercrimes.”

Read more at bne IntelliNews

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