Treasury Deputy Secretary Wally Adeyemo is in Kyiv this morning to meet with Ukrainian officials, part of a wider effort underway to strengthen the Western alliance’s sanctions against Russia.
Adeyemo, the second-most senior official at the Treasury Department behind Secretary Janet Yellen, will meet with Ukrainian Minister of Finance Serhiy Marchenko. Top of mind for the officials will be efforts to “tighten” sanctions against Russia amid the ongoing war in Ukraine.
Improving the efficacy of Russian sanctions has been a major priority for Yellen and the broader Biden administration for months. Just last week, Yellen met with German bank officials and urged them to “remain vigilant and be more ambitious” when it comes to cutting off Russia’s military-industrial capacity.
That diplomatic offensive will continue this week and culminate with a speech in Berlin from Adeyemo on Friday previewing how the Biden administration plans to bolster sanctions compliance — which banks should probably pay attention to.
Looming over banks in Europe in particular is a December executive order signed by President Joe Biden that authorized Treasury to hit financial institutions with secondary sanctions for facilitating business with the Russian defense sector. Don’t let the name fool you. Secondary sanctions can be a financial death sentence for banks caught in the blast zone.
Adeyemo will argue that Russia’s economic resiliency has partly been “enabled by significant imports of dual-use goods from Chinese firms,” according to a Treasury advisory published on Tuesday.
Adeyemo and Marachenko will discuss Ukraine’s efforts to combat corruption as well, according to a Treasury official. That, of course, will be of interest to the mostly Republican lawmakers who’ve expressed concerns about corruption in Ukraine as Congress sends billions in aid.
And in another meeting with the Office of the President of Ukraine, Adeyemo will discuss efforts to tap into Russian sovereign assets as a way to support the embattled country.
At last week’s G7 Finance meeting, Yellen pushed hard for world leaders to embrace a plan that would use the projected forward earnings on Russian sovereign assets to backstop a larger loan to Ukraine as the invasion grinds into its third year.
— Brendan Pedersen
