US Considering Expanding Treasury’s Sanctions Powers to Counter Russia, Official Says

The U.S. plans to continue fine-tuning its export controls and sanctions against Russia in response to Moscow's attempts to get around them, a Biden administration official said this week.

“Russia’s adapted,” said Daleep Singh, deputy national security adviser for international economics. “Circumvention networks are alive and well, and we’ve got to match every circumvention with a countermeasure.”

Options the administration is considering include further expanding the Treasury Department’s ability to target financial institutions that facilitate Russia’s war, and broadening the scope of export controls on U.S.-origin or U.S.-branded products, Singh said at a May 28 Brookings Institution event. The administration is also looking to develop a “doctrine of economic statecraft” to guide and explain its efforts.

Since Russia invaded Ukraine in February 2022, the U.S. has imposed sanctions and export controls on more than 4,500 people and entities. Many of those entities “are front and shell companies, intermediaries and service providers in Russia or third countries that didn’t exist prior to the invasion but were emerging as nodes in Russia’s shadow production network,” Singh said.

While the restrictions haven't caused Russia to end its invasion, they have hurt its economy, which will eventually impede its ability to wage war, he said. As examples of Russia’s economic problems, Singh pointed to the country’s high inflation and interest rates and to a large loss last year at Russian state-controlled gas giant Gazprom.

“Russia’s near-constant need to adapt and reorient its supply chains creates inefficiency, uncertainty and complexity,” Singh said. “By dumping pounds of sand into the gears of Russia’s war machine, we’re forcing the Kremlin to rely on ever more elaborate and expensive procurement networks.”

Other speakers at the event said Russian President Vladimir Putin hopes that Western support for sanctions will wane following elections this year in Europe and the U.S. Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations, said that political parties that favor ending Russian sanctions are poised to do well in several countries in European Parliament elections in June. “I think that this is very worrying,” she said.

Fiona Hill, a Brookings senior fellow in foreign policy, noted that Singh and his administration colleagues will not be able to continue their export control and sanctions work if President Joe Biden loses his re-election bid in November. “Putin is hoping very much that Daleep [and the rest of the administration] will not be here” after the election, Hill said.

Some lawmakers, however, have questioned the effectiveness of U.S. export controls and sanctions, citing the continued flow of American high-tech equipment to Russia’s war machine. Sen. Richard Blumenthal, D-Conn., said in February that U.S. export controls are “lethally ineffective” and that the U.S. sanctions system is a “sieve” (see 2402270065).