President Obama ordered a sanction against Russia that is going unsung because most of us are completely lost. We go blank when it comes to the complexities of big banking, Russia’s powerful oligarchs and Vladimir Putin’s tightening inner circle of advisers. According to a March 21 Yahoo News article, Obama instructed the Treasury Department to add Bank Rossiya and twenty members of Putin’s inner circle to the Office of Foreign Asset Control’s list of “specially designated nationals.”
This means financial devastation for Bank Rossiya, where the Russian Federation’s senior officials keep their money. Even worse, Russia’s oil and gas industry works through that bank. After the order, U.S. banks and financial institutions must stop all business with the banker to the real powers in Russia.
This sanction involves giants like Wells Fargo, Western Union, Visa and Mastercard. No other U.S. business can work with the bank. Canada has ordered the same sanction and other nations may follow.
The top people and some of Russia’s major income producing business sectors must find another bank or be frozen out of doing any transactions in U.S. dollars. Russia likes a lot of U.S. dollars.
What about other banks in the world? Can’t they take over business with Bank Rossiya? Probably not. It will be easier for other, non U.S. banks to just stop dealing with Bank Rossiya than to try to route transactions through another route.
Most interesting is how Bank Rossiya is not the largest bank in Russia. It only deals in about $10 billion and is 17th on the list of Russia’s biggest lenders, according to a March 22 Bloomberg article. The sanction is more about who uses that bank. The sanction hurts Putin’s inner circle the most. These are the senior officials in the Russian Federation.
Rossiya Bank also controls one of Russia’s biggest insurance firms and a big part of National Media Group, which owns the Izvestia newspaper and several broadcast companies. Gazprom is the pension fund for the state gas company. Billionaires have money tied up in the bank. They own major interests in giant businesses.
So, while this sanction is against a relatively small and obscure Russian bank, the impact on Russia’s most powerful people is vastly large. Perhaps World War III, triggered by European Union ambitions in the Balkan nations, will be prosecuted as a series of economic battles. That would force the one percent to do the fighting and it would keep humans out of harm’s way for once.