Russian state-owned shipping company Sovcomflot (SCF Group) has been hit with the newest sanctions imposed by the United States in response to Putin’s “war of choice” against Ukraine.
On Thursday, the US took action to respond to Russia’s further invasion of Ukraine by imposing economic costs that are expected to have both immediate and long-term effects on the Russian economy, financial system and access to new technology.
The US Department of Treasury’s Office of Foreign Assets Control (OFAC), in partnership with allies and partners, imposed expansive economic measures that target the core infrastructure of the Russian financial system — including all of the country’s largest financial institutions and the ability of state-owned and private entities to raise capital.
In a move to limit Russia’s ability to finance its invasion against Ukraine, OFAC expanded Russia-related debt and equity restrictions on thirteen of the most critical major Russian enterprises and entities.
This includes restrictions on all transactions in, provision of financing for, and other dealings in new debt of greater than 14 days maturity and new equity issued by thirteen Russian state-owned enterprises and entities including Sovcomflot, oil producer and refiner Gazprom Neft, natural gas company Gazprom and others.
These entities, including companies critical to the Russian economy with estimated assets of nearly $1.4 trillion, will not be able to raise money through the U.S. market — a key source of capital and revenue generation.
It remains to be seen to what extent will the new sanctions affect Sovcomflot, which is Russia’s largest maritime and freight shipping company and one of the world’s biggest energy shipping companies.
With a fleet of 133 vessels and a combined deadweight of 11,619,330 tonnes with an average age of 12.4 years, Sovcomflot focuses on the transportation of crude oil, petroleum products, and liquefied gas, as well as the servicing of offshore oil and gas production.
The Biden administration had earlier on Thursday announced sweeping export restrictions against Russia.
The sanction hammers Russia’s access to global exports of everything from commercial electronics and computers to semiconductors and aircraft parts.
The controls, announced by the Commerce Department rely on a dramatic expansion of the so-called foreign direct product rule.
Under the rules, companies making high and low tech items overseas with U.S. tools must seek a licence from the United States before shipping to Russia.
The rules also instruct the Commerce Department to deny almost all of those licence requests.
Biden remained steadfast on Thursday that sanctions will have an effect on Russian aggression after the country attacked Ukraine.
“It will weaken his country. He’ll have to make a very, very difficult choice of whether to continue to move toward being a second-rate power or, in fact, respond,” Biden said.
“If we don’t move against him now with these significant sanctions, he will be emboldened,” Biden later said.
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