The US is taking sanctions against Russia to a new level.
The US Department of the Treasury on Friday turned away from past efforts like curbs on visas to unleash measures that would sever access to global financial markets, buyers and suppliers for several of Russia’s Kremlin-connected billionaires.
Russian tycoon Oleg Deripaska is to bear the brunt and sanctions against him entangle some of the world’s biggest businesses and financial groups.
Photo: Reuters
Shares of his giant aluminum operation trade in London, Hong Kong and Moscow, and customers include Glencore PLC and Toyota Motor Corp.
Philip Lader, a former US ambassador to the UK, and Ivan Glasenberg, chief executive officer of Glencore, are among board members of Deripaska’s United Co Rusal, the biggest aluminum producer outside China. Its shareholders include Vanguard Group, JPMorgan Chase & Co and Invesco Ltd, regulatory filings show.
“You face a really simple question,” said Brian O’Toole, a former chief of staff at the US Treasury’s Office of Foreign Assets Control, which draws up sanctions. “Are you going to continue to do business with Deripaska, or with the US?”
Eight of the 12 companies listed for sanctions on Friday are owned by Deripaska, a frequent companion of Russian President Vladimir Putin on his trips abroad.
One of them, En+ Group, immediately lost a record one-fifth of its market value.
US operations of sanctioned companies are now frozen and Americans are mostly barred from dealing with them, while others outside the US would be punished for carrying out significant transactions with the businesses.
The measures directly target oligarchs with companies that have wide-ranging involvement in international capital markets.
US Secretary of the Treasury Steven Mnuchin on Friday said that the Russian government disproportionately benefits oligarchs and elites, as well as occupying Crimea, instigating violence in Ukraine and attempting to subvert Western democracies.
Previous rounds of sanctions have largely been aimed at political or military figures, or imposed specific restrictions on companies without entirely banning US entities from dealing with them.
“This is a blocking action,” O’Toole said. “They are telling Deripaska, ‘you’re finished when it comes to dollars.’”
While Deripaska made headlines in the US last year for links to US President Donald Trump’s former campaign manager Paul Manafort, he is known in Russia as one of a coterie of Kremlin-connected billionaires that dominates the nation’s vast natural resources.
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