U.S., U.K. Weigh Russia Sanctions, Possibly Targeting Debt




  • In Business
  • 2021-03-05 09:45:27Z
  • By Bloomberg
 

(Bloomberg) -- The U.S. and U.K. are weighing additional penalties against Russia over the use of chemical weapons, with options ranging from sanctions against oligarchs to the extreme step of targeting the nation's sovereign debt, according to people familiar with the matter.

British officials plan to push for the Organisation for the Prohibition of Chemical Weapons to continue to pressure Russia to provide answers over its use of banned substances, and will raise potential measures with key European allies, including France and Germany, in the coming weeks, according to one of the people.

The Biden administration announced its first sanctions against Russia on Tuesday, punishing the Kremlin for the poisoning and jailing of opposition leader Alexey Navalny. The penalties mirrored those imposed by the European Union and the U.K., mainly targeting senior Russian law enforcement officials and others allied with President Vladimir Putin.

Russian bonds snapped a four-day rally, lifting the yield 11 basis points to 6.68% as of 12:21 p.m. in Moscow. Buoyed by climbing oil prices, the ruble was 0.3% stronger at 74.46 per dollar after slipping 1% on Thursday.

The U.S. is expected to closely adhere to a 1991 chemical weapons law and follow-up with a second, more extensive round of sanctions unless Russia meets certain conditions, according to people familiar with the matter. Those include assurances it will refrain from the use of such weapons and allow inspections of suspected chemical weapons sites.

The penalties were the latest sign of deepening tensions between Washington and Moscow, and the relationship could deteriorate further if Russia retaliates or the U.S. escalates its sanctions.

All of the people spoke on condition of anonymity owing to the sensitivity of the matter. Communications aides at the White House National Security Council and the U.K. Foreign Office had no immediate comment Thursday.

British officials are in discussions with U.S. counterparts about new measures. One trigger for additional steps would be if Russia continues to stonewall an investigation into Navalny's poisoning, one person said.

U.K. Foreign Secretary Dominic Raab on Thursday urged Russia to adhere to its obligations under international law.

"These attacks are unacceptable. We urge Russia to investigate, adhere to its obligations under the Chemical Weapons Convention," Raab tweeted.

U.S. Secretary of State Antony Blinken sent a similar message Thursday.

The U.S. could increase pressure on Russia with sanctions on oligarchs with powers under the Magnitsky Act, which authorizes the president to sanction individuals for human rights violations or corruption, the people said.

But if Russia is again found to commit a major transgression of the international ban on chemical weapons, President Joe Biden would consider imposing sanctions on the nation's sovereign debt if it could be done in cooperation with Europe, two of the people said.

The Treasury Department under former Secretary Steven Mnuchin in 2018 warned of global financial market turmoil if Russia's sovereign debt market were sanctioned, saying it could destabilize markets because of how deeply tied the Russian market is to global indexes.

But others say that Russia has moved away from buying U.S.-denominated debt toward the euro, meaning that negative spillovers could be smaller than previously anticipated. That view is shared by Daleep Singh, a former Obama-era Treasury official, who is now a deputy on Biden's National Security Council.

In 2019, as a witness during a congressional hearing on Russia, Singh supported restricting purchases of Russian sovereign debt to protect U.S. national security interests. At the time, he said that damage to global markets resulting from prohibiting purchases of Russian debt would not be as significant because global investors have reduced their overall exposure to the nation since the Obama administration started sanctioning Russia in 2014.

(Updates with bonds falling in fourth paragraph.)

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

COMMENTS

More Related News

Biden to push sweeping jobs plan in meeting with bipartisan group of lawmakers
Biden to push sweeping jobs plan in meeting with bipartisan group of lawmakers

The president faces stiff opposition from Republicans on Capitol Hill to enact the $2 trillion proposal.

Biden, auto executives and chip makers meet in bid to solve crippling shortages
Biden, auto executives and chip makers meet in bid to solve crippling shortages

"Trying to address supply chains on a crisis-by-crisis basis creates critical national security vulnerabilities," said White House National Security Adviser ...

Fact check: Fake quote calls Biden supporters a
Fact check: Fake quote calls Biden supporters a 'confederacy of fools'

The quote was in circulation before the Joe Biden presidency, and there is no evidence anyone said it.

White House to zero in on chip shortage in meeting with company officials
White House to zero in on chip shortage in meeting with company officials

U.S. President Joe Biden will urge Congress to invest $50 billion in semiconductor manufacturing and research when he meets with top executives from nearly...

Ukraine accuses Russia of blocking talks to defuse tense military stand-off
Ukraine accuses Russia of blocking talks to defuse tense military stand-off
  • World
  • 2021-04-12 16:51:13Z

The president of Ukraine accused Vladimir Putin of ignoring attempts to reach him by telephone to defuse the rapidly spiralling military stand off between...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business