U.S. Imposes More Sanctions on Russia for Chemical Agent Use

(Bloomberg) -- The U.S. imposed a second round of sanctions on Russia for using a banned nerve agent in an attempt to kill a former Russian spy in the U.K. in 2018.

The measures will prohibit U.S. banks from participating in the issuance of Russian sovereign debt, the State Department and Treasury Department said in separate statements. The sanctions will take effect following publication of a Federal Register notice on or about Aug. 19, and will remain in place for at least 12 months.

“The United States is announcing a second round of sanctions on Russia for its use of a ‘Novichok' nerve agent in an attempt to assassinate Sergei Skripal and his daughter Yulia,” the State Department said.

On Saturday, Treasury released a directive that prohibits U.S. banks from participating in the primary market for non-ruble denominated bonds issued by the Russian sovereign, or from lending it non-ruble denominated funds. That directive takes effect Aug. 26.

The statements were the first official confirmation that sanctions for the Skripal poisoning was the purpose of an executive order signed by President Donald Trump on chemical and biological weapons violations that the White House issued without comment late Thursday night.

The move was a long time coming: the State Department had said in September that sanctions could be implemented in November but delays continued, worrying the Democratic chairman and top Republican on the House Foreign Affairs Committee.

Representatives Eliot Engel of New York and Michael McCaul of Texas wrote to Trump on July 25 that they were “deeply concerned sanctions have not been imposed on Russia as required by U.S. law.”

The sanctions package also includes U.S. opposition to the extension of loans, or financial or technical assistance to Russia by international financial institutions such as the World Bank or International Monetary Fund, as well as the addition of export licensing restrictions on Department of Commerce-controlled goods and technology.

“There is nothing good” about the U.S. decision to impose new sanctions, Russia's Finance ministry said in a statement, citing Minister Anton Siluanov. “We are sure that the financial system we have created will allow us to meet the borrowing needs of the budget and companies,” Siluanov said as cited in the statement.

Russia's economy has demonstrated its resilience to external pressures, according to the statement.

The Kremlin was found to be responsible for the assassination attempt using the toxin on Skripal, a former Russian military intelligence officer who simultaneously worked for U.K. intelligence services, and his daughter in the English city of Salisbury, southwest of London. Both survived, but a U.K. woman died after handling an item that had been exposed to the nerve agent.

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The Russian government has denied involvement in the incident.

“Until Russia takes responsibility and provides assurances that it will not use chemical weapons again sanctions will not be lifted,” U.S. Ambassador to the U.K. Woody Johnson tweeted Saturday morning.

Andrew Weiss, who oversees research on Russia and Eurasia for the Carnegie Endowment for International Peace, said after Trump's executive order was issued that the move would have a limited effect because Russia has $500 billion in cash reserves and is “reluctant to tap Western capital markets.” Weiss was a national security official in the administrations of former Presidents Bill Clinton and George H.W. Bush.

--With assistance from Anna Edney, Saleha Mohsin, Olga Voitova and Josh Wingrove.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Steve Geimann

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