As if we didn’t have enough proof that these sanctions against Russia were a complete disaster. But this takes the cake.

What if I told you the Biden Administration, such as it is, has loosened sanctions for some Russian banks because of the adverse effects on Americans’ energy costs?

Yes, folks, we have definitive proof that these misguided sanctions are directly impacting your daily lives and hurting Americans where it hurts the most: in their wallets.

You might be thinking, “Haven’t you been discussing the negative impact of these sanctions for years?” 

And my answer is, “Yes, indeed.”

I won’t repeat all my objections to sanctions. If you're curious, go to rudeawakening.info and search for “sanctions” in the search bar. There are over fifty articles about them there.

But quickly, there are two principal reasons I hate these sanctions:

1. They hurt Americans and Europeans (especially) more than they hurt Russians.
2. The weaponization of the USD - and merely the thought of confiscating Russian assets - destroys trust in Western financial institutions, especially the dollar system.

Of course, I firmly believe that hurting Russia is not the solution. When one country controls roughly twenty resources the rest of the world needs, the only document other governments should sign with it is a free trade agreement.

Admitting the Problem is the First Step

The good news is that Biden knows the American people can’t afford to spend any more of their wallets on energy. This move should help the average American. The bad news is that the entire structure of the sanctions is inflationary, which we’ve mentioned in the Rude countless times. The worst news is that he’s only doing this to get re-elected.

Am I being cynical? I don’t think so.

The easing only lasts until November 1, 2024, right around the election. Therefore, it’s a transparent ploy to bribe Americans to vote for him. But after November 1st, he’ll cease to care about the American people. Win or lose, he won’t need to think about winning your vote again.

Didn’t You Get the Memo?

Boy, they kept this one quiet. We wouldn't know about this without a few enterprising X handles. As the announcement is short, I’ve reprinted it in its entirety. You can read the original here. (Bolds are mine.)

DEPARTMENT OF THE TREASURY WASHINGTON, D.C.
OFFICE OF FOREIGN ASSETS CONTROL
Russian Harmful Foreign Activities Sanctions Regulations
31 CFR part 587
GENERAL LICENSE NO. 8I
Authorizing Transactions Related to Energy

(a) Except as provided in paragraph (c) of this general license, all transactions prohibited by Executive Order (E.O.) 14024 involving one or more of the following entities that are related to energy are authorized, through 12:01 a.m. eastern daylight time, November 1, 2024:

(1) State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
(2) Public Joint Stock Company Bank Financial Corporation Otkritie;
(3) Sovcombank Open Joint Stock Company;
(4) Public Joint Stock Company Sberbank of Russia;
(5) VTB Bank Public Joint Stock Company;
(6) Joint Stock Company Alfa-Bank;
(7) Public Joint Stock Company Rosbank;
(8) Bank Zenit Public Joint Stock Company;
(9) Bank Saint-Petersburg Public Joint Stock Company;
(10) Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest; or
(11) the Central Bank of the Russian Federation.

(b) For the purposes of this general license, the term “related to energy” means the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources.

(c) This general license does not authorize:

(1) Any transactions prohibited by Directive 1A under E.O. 14024, Prohibitions Related to Certain Sovereign Debt of the Russian Federation;
(2) The opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;
(3) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation; or
(4) Any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including transactions involving any person blocked pursuant to the RuHSR other than the blocked persons described in paragraph (a) of this general license, unless separately authorized.

(d) Effective April 29, 2024, General License No. 8H, dated October 25, 2023, is replaced and superseded in its entirety by this General License No. 8I. Note to General License No. 8I. This authorization is valid until November 1, 2024, unless renewed.

Bradley T. Smith
Director
Office of Foreign Assets Control

Dated: April 29, 2024 

First, as I’ve mentioned, this only lasts until November. It’s clearly a political move, to ease Potatohead Biden back into the Oval Office. Biden probably can’t get the Fed to cut before then, as inflation is out of control (his fault, partially because of these sanctions), so he needs to do something else to ease pricing pressure.

Second, as paragraph (b) mentions, it is related only to energy.

Last, the Biden administration signed this yesterday, giving the easing only five months to work. They must be getting desperate, as Biden’s polling numbers are in the toilet.

Wrap Up

There are a few things we can gather from this overtly political move.

First, as we've mentioned many times, sanctions are hurting the targeters, not the targeted ones. You can’t take out an enormous seller of goods like Russia and expect the market not to be affected. Thanks to this misguided sanctions plan, the market is wrestling with high costs.

Second, Biden now knows his strategy is counterproductive but can’t change it because he’ll lose face on the global stage.

Third, Biden made this move quietly to bring down energy prices without admitting his error in an election year.

To paraphrase Ronald Reagan, “Mr. Biden, tear down these sanctions!”