WASHINGTON — President Joe Biden said Tuesday that Russia has begun “an invasion” of Ukraine, and he announced sweeping sanctions on the major Russian bank VEB and its military bank, as well as on the country’s sovereign debt and on three individuals.
The bank sanctions will prohibit American financial institutions from processing transactions for VEB and for Russia’s military bank, PSB. This would effectively cut the banks out of transactions involving U.S. dollars, the global reserve currency.
Biden’s announcement came after Russia’s parliament approved President Vladimir Putin’s request on Tuesday to use military force outside the country’s borders, a development that appears designed to authorize a broader attack on Ukraine.
Biden also announced that the United States would implement comprehensive sanctions on Russia’s sovereign debt.
“That means we’ve cut off Russia’s government from Western financing,” Biden said in remarks at the White House. “It can no longer raise money from the West and cannot trade its new debt on our markets, or European markets either.”
In addition to the sanctions on VEB and Russian debt, the Biden administration sanctioned three individuals, two of whom are the sons of high-ranking Russian government officials.
In announcing the individual sanctions, Biden said the adult children of members of Putin’s inner circle “share the corrupt gains of the Kremlin’s policies, and so they ought to share in the pain as well.”
The sanctions on Russia’s sovereign debt build upon existing restrictions that Biden signed in 2021, and prohibit American banks from trading shares in or lending to several major Russian sovereign debt funds.
The Treasury Department unveiled a complete list of the entities and individuals sanctioned Tuesday, as well as their subsidiaries and their precise designations.
As Biden announced the tranche of sanctions, he took a major rhetorical step.
Until Tuesday, the U.S. president had not used the word “invasion” himself to describe the Russian military deployment in the two breakaway regions of eastern Ukraine. But he said Putin’s actions in recent days had made his intentions clear.
“This is the beginning of a Russian invasion of Ukraine, as [Putin] indicated and asked permission to be able to do from his Duma,” said Biden. “So I’m going to begin to impose sanctions in response.”
Biden said NATO reinforcements would continue to operate only in a defensive capacity, but that this should not be taken to mean that the alliance would not respond in kind to Putin’s military maneuvers.
“Today, in response to Russia’s admission that it will not withdraw its forces from Belarus, I have authorized additional movements of U.S. forces and equipment already stationed in Europe to strengthen our Baltic Allies, Estonia, Latvia, and Lithuania,” said Biden.
“As Russia contemplates its next move, we have our next move prepared as well,” he said.
Biden said there was little reason to believe that Russia still had any interest in diplomacy. He pointed to Moscow’s recent movements of troops and supplies into place along Ukraine’s border.
“Russia has moved supplies of blood and medical equipment into position on their border,” said Biden. “You don’t need blood unless you plan on starting a war.”
The prospect of a war involving Russia, the largest supplier of gas and oil to Europe, has rattled markets and fueled fears of higher oil prices.
The S&P 500 closed in correction territory on Tuesday, and the Dow Jones Industrial Average dropped 482.57 points, or nearly 1.5%.
Biden said he would do everything in his power to insulate American consumers from the cost of Russia’s actions, but he acknowledged that gas prices would likely rise.
“Defending freedom will have costs for us as well, here at home. We need to be honest about that,” he said. But he said the United States was working with other major oil-producing countries on a plan to stabilize prices.
“I want to limit the pain the American people are feeling at the gas pump. This is critical to me,” he said.
The possible increase in gas prices comes as Americans endure the highest inflation in decades.
But Biden emphasized that that United States would stand with Ukraine no matter what, and that he was prepared to impose more sanctions if Russia moved forward.
“if Russia goes further with this invasion, we stand prepared to go further as with sanctions,’ he said.