Key Takeaways

• Latest US sanctions targeting Gazprombank have triggered a rout in the Russian rouble.
  
• The Ukraine war is resonating at the grassroots level of the Russian economy.

US President Joe Biden fired off a final salvo of Russia sanctions last week, ramping up pressure on an already beleaguered Russian economy ahead of an expected dovish turn from the incoming Trump administration. The sanctions targeted Gazprombank, the largest Russian bank that has yet to be sanctioned following the outbreak of the Ukraine war. Gazprombank had been spared until now due to its central role in facilitating European purchases of Russian natural gas. But with Europe’s Russian gas purchases dropping from 40% in 2021 to just 8% in 2023, and the clock running out on the Biden administration, Gazprombank finally ran afoul of the US Treasury.

The move comes as Moscow accelerates its military advance in eastern Ukraine while the Russian economy shows increasing signs of strain, thus setting up a race against time to capture as much territory and strengthen Moscow’s negotiating position as much as possible ahead of expected peace talks under the Trump administration.