By David Lawder

WASHINGTON, (Reuters) – The United States has increased sanctions against Russia in an effort to deprive Moscow of the money and other components it needs to support its invasion of Ukraine. However, curbing Russia’s main funding source, Russian energy exports will take some time.

Adeyemo said in an interview that the United States and its allies had “a lot more than we can” and would do so if Russia continues its invasion.

On Thursday, leaders from Ukraine demanded that the world stop purchasing Russian oil and gas and remove all Russian banks and financial institutions completely from the international financial systems.

Washington and its allies have announced steps in an incremental manner this week, following the initial effort to freeze Russian assets. They are now approaching the limit on sanctions that can be used to punish Russia but not cause economic hardship at home.

Adeyemo stated that President Joe Biden announced Wednesday a new ban on Americans investing in Russian companies’ debt, equity, and investment funds. This will prohibit them from investing in the country’s largest source of capital and cut off Russia’s defense sector.

Adeyemo stated that this would mean Russia losing the capital needed to rebuild its economy and invest in its war machines.

He said that Treasury was working with the private sector to determine whether Russia would not allow companies operating in Russia to continue funding these operations.

Officials from the Kremlin, who described their action in Ukraine as “special military operations”, insist that sanctions by Western countries will have no effect on their objectives and only strengthen Russian support

Adeyemo claimed that both the United States of America and its European allies would target Russian military supply chain to block access to critical components. These key components are “important to build their tanks, to provide missiles and make sure they have less resources.” This will allow them to not only fight the conflict in Ukraine but also project future power.

Adeyemo stated that he believes the economic impact would be the same as the previous sanctions’ impact on Russia. According to U.S. officials, Russia is likely to experience a recession of 10% this year while inflation approaches 20%.

He refused to confirm whether suppliers of parts to the defense sector would be included in a revised list of Russian state-owned companies that was expected to be published on Thursday.

Brian Deese, White House Economic Council Director, stated Wednesday that United Aircraft Corp (the maker of Sukhoi fighter jets and MiG-fighter jets) and United Shipbuilding Corp would be exempted from the latest sanctions by the Biden Administration.

Adeyemo stated that Russia’s defense industry has created front companies since 2014 to obtain critical supplies and material to support Moscow’s military. A number of these firms were targeted by sanctions https://home.treasury.gov/news/press-releases/jy0677 last month.

ROUBLE SUPPORT DRAIN WAR FUNDS

Adeyemo claimed that Russia’s financial sanctions forced it to pay more from its hard-currency energy revenues in order to preserve its rouble currency. It is also reducing funds for war planning.

Officials from the United States claim that the Russian ruble has lost 45% against the dollar during the Ukraine invasion. This is due to the capital control by Moscow and the distortion of the Russian central banking.

He stated that Russia now has less money, and that the president must choose between investing in Ukraine’s war effort and supporting the economy. Adeyemo claimed that the meetings he had last week in London with European allies from Paris, London, Brussels and Paris helped him focus on next steps. They also assisted in the acceleration of the sanctions, which were announced Wednesday.

Adeyemo claimed he was inspired by strong statements from European countries on reducing Russian dependence, however, Adeyemo noted that his continent was not in the same position as the United States.

He stated that “Because our ability to generate energy at home we were able quickly to ban Russian imports of oil to America.” They’ll take more time, but they are reducing their dependency over time.