Putin and Biden are circling each other warily
Just two days after President Joe Biden invited Russian President Vladimir Putin to meet in person, the Biden administration is rolling out a series of tough sanctions designed not just to signal unhappiness with the actions of the Russian regime, but to have a significant diplomatic and economic impact. Tensions between the United States and Russia, already about as high as they've been at any time since the Cold War, are about to get hotter.
As Russia masses tens of thousands of troops along its border with Ukraine, raising fears that it may be planning an invasion, Biden is sending an unequivocal message that the acquiescent days of the Trump administration are over.
U.S. imposes wide array of sanctions on Russia for ‘malign’ actions
The United States on Thursday imposed a broad array of sanctions on Russia, including curbs to its sovereign debt market, to punish it for interfering in last year’s U.S. election, cyber hacking, bullying Ukraine and other alleged malign actions.
The U.S. government blacklisted Russian companies, expelled Russian diplomats and barred U.S. banks from buying sovereign bonds from Russia's central bank, national wealth fund and Finance Ministry. The United States warned Russia that more penalties were possible but said it did not want to escalate.
The Russian Foreign Ministry reacted angrily, summoning the U.S. ambassador for a diplomatic dressing-down to tell him "a series of retaliatory measures will follow soon." A ministry spokeswoman also said a possible summit could be imperiled.
U.S. sanctions announced on Thursday on newly-issued Russian government debt could see the bonds excluded from JPMorgan's influential indexes, including the emerging market local-currency GBI-EM investment index, the bank said.
"Economic sanctions which impact the replicability of the JPMorgan fixed income indices will result in an Index Watch (observation period) followed by potential rebalance actions such as exclusion of the sanctioned bonds/issuers from the benchmark," JPMorgan said.
Russia's share in JPMorgan's GBI-EM index, the main global benchmark for emerging market local currency bonds, now sits at 7.1% compared with 8.9% a year ago and the maximum possible 10% in 2014 before Russia was hit with Western sanctions for annexing part of Ukraine.
The U.S. bank said 11 Russian bonds with a combined market value of over $40 billion are part of the EMBI index series, tracked globally by about $412 billion in assets. Some 22 Russian bonds worth just over $99 billion are included in the GBI-EM index series, tracked by some $241 billion globally.
Reference: Reuters, CNN
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