U.S. Deputy Secretary of the Treasury Wally Adeyemo, left, and European Commissionner for Financial services Mairead McGuinness address a media conference at EU headquarters in Brussels, on March 29.JOHANNA GERON/The Associated Press
Senior U.S. officials fanned out around the world this week to press other leaders to join or continue to pressure on Moscow as the war in Ukraine enters its fifth week, and the initial economic shock to Russia seems to be ebbing.
Deputy Treasury Secretary Wally Adeyemo met with senior officials in London, Brussels and Paris, and will finish the week in Berlin; the deputy national security adviser for international economics, Daleep Singh, pressed Indian officials in New Delhi, and Secretary of State Antony Blinken discussed the Ukraine war with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan in Morocco.
The effort comes as the initial impact of unexpectedly tough sanctions on Russian banks, oligarchs and companies begins to wear off somewhat, and the United States considers its next economic steps to isolate Russian President Vladimir Putin.
Within days of cutting off key Russian banks from the international SWIFT financial transactions network and immobilizing the bulk of the Russian central bank’s $630 billion foreign exchange war chest, the ruble lost half its value, prompting U.S. officials to declare that Moscow was battling a financial crisis.
But a month later, the ruble has largely recovered to its level just before the invasion, propped up partly by Russian capital controls, government orders for export firms to sell foreign currency and companies gathering funds to make quarter-end tax payments. Shares on Russia’s stock market are trading again, although they have dropped in value.
Russian bank VTB, a principal sanctions target, remains open for business in Europe, where it has gathered billions of euros in deposits, mainly from German savers. Other Russian banks are considering China’s UnionPay credit card system after Visa and Mastercard suspended Russian operations.
And the sanctions thus far have left Russia’s biggest economic lifeline untouched – energy sales to Europe, which could be up to 500 million euros ($555 million) a day at current prices. Russia is demanding payments in rubles for gas starting on Friday, which could boost the currency further.
The Biden administration is making sure European allies are firmly aligned on punishing Putin, and hoping to sway leaders who have sat on the sidelines as the war stretches on, officials say.
“We’ve got to continue to raise pressure on Russia and increase our support for Ukraine,” one senior U.S. official said, speaking on condition of anonymity. “This is a challenge that is facing the free world and all democratic nations. And we need to be prepared for it to last a long time.”
COUNTERING CHINA, WARNING INDIA
The visits follow closely on the heels of Biden’s visit to Europe last week and come as Russia and China – the world’s second largest economy – draw ever closer together, with Chinese Foreign Minister Wang Yi meeting his Russian counterpart Sergei Lavrov on Wednesday and reaffirming Beijing’s plans to continue bilateral ties and boost cooperation.
Deputy Treasury Secretary Adeyemo’s discussions with his European counterparts centred on sanctions, the impact of India and China on Russia’s potential sanctions evasion efforts, and how to help countries like Germany cover their energy needs in the event of a Russian embargo, said one European official.
Russia’s demand that foreign buyers pay for their Russian gas imports in rubles starting Friday or face cutoffs in supply was a key topic, the official said. European capitals have rejected the demand, and the German government said it amounted to “blackmail.”
It is imperative the United States keep tending its relationships with allies, said Catherine Novelli, a former senior U.S. trade official and diplomat. It is “very hard” to maintain the momentum of sanctions and other punitive measures after the initial outrage wanes, she said.
In India, Deputy National Security Adviser Singh told officials that the U.S. would not set any red lines about purchasing oil, but warned against rapid acceleration of purchases.
India has a military dependent on Russian technology and hardware and has tried to balance its long-standing ties with Russia and the West. Unlike other members of the Quad group of countries – the United States, Japan, Australia – it has not imposed sanctions on Russia.
Singh spoke ahead of Russian Foreign Minister Lavrov’s arrival in the Indian capital for a two-day trip.
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