President Biden on Friday called on Congress to revoke Russia’s “most favored nation status,” which would downgrade the country as a U.S. trading partner and potentially result in devastating tariffs against Moscow.
In addition to revoking normal trade relations, Biden announced a new tranche of economic sanctions that include cutting Russia off from international borrowing privileges and imposing more export and import restrictions as well as additional penalties on Russian elites and their families. Oligarchs that will be targeted include Yuri Kovalchuk, a Russian billionaire businessman and financier who is associated with Vladimir Putin’s personal banking, executives of Russian banks already sanctioned by the U.S., and Duma members who sponsored legislation to recognize the two Ukrainian separatist regions of the Donbas as independent republics.
As part of the pressure campaign, the U.S. and its partners will take action that undermines the profits these individuals have made off the war and that cuts them off “from the U.S. financial system, freezes any assets they hold in the United States and blocks their travel to the United States.”
Biden announced the sanctions during a press conference Friday. As punishment for its continued attacks on Ukraine, Russia will be denied the opportunity to borrow from the World Trade Organization and International Monetary Fund.
In order to revoke Russia’s “most favored nation” status, Congress must vote to remove the country from the World Trade Organization — an effort that is expected to receive bipartisan support.
“Together with similar actions by the G7, following our respective national processes, this collective action by more than half of the global economy will deliver another serious economic blow to Russia,” the White House wrote in a statement.
“I think we should use Article 21 ability under the WTO to revoke that,” Senator Rob Portman (R., Ohio) said Thursday during a Foreign Relations Committee hearing.
G7 countries and the European Union are expected to take the same step in the coming days and Canada has already revoked Russia’s status.
The export of luxury goods to Russia as well as the U.S. import of commodities from several Russian sectors including seafood, spirits/vodka, and non-industrial diamonds will also be prohibited. The U.S. Treasury will also release guidance on preventing sanctions evasion through cryptocurrency and the blockchain, which could be a loophole for financial transactions.
While the western world has inflicted severe damage on Russia’s ability to participate in the international economy, it has not yet fully cut off Russia from SWIFT, a system that facilitates payments in international finance and banking, due to European resistance, although there has been a selective ban of certain Russian banks. Given that the West, including the United States, is dependent on Russia for energy, there is fear among many nations that removing all Russian banks from SWIFT could cause major disruption to global energy markets with terrible economic fallout.