The U.S. expands sanctions on Russia, targeting Chinese companies aiding in the Ukraine conflict, as G7 leaders meet in Italy to discuss support for Ukraine and further measures against Russia.
United States (Bollywood Fever): The United States expanded its sanctions against Russia on Wednesday, as G7 leaders gathered in Italy for a summit focused on bolstering support for Ukraine and undermining Russia’s war efforts.
U.S. Expands Sanctions Against Russia as G7 Leaders Convene in Italy
The latest sanctions package targets Chinese companies aiding Russia in its war against Ukraine and raises the stakes for foreign financial institutions that work with sanctioned Russian entities.
Since the conflict began, the U.S. has sanctioned over 4,000 Russian businesses and individuals to cut off funds and armaments to Moscow, which has leveraged its superior firepower on the battlefield. However, Russia continues to adapt by reworking its supply chains.
“We have to be very honest with ourselves that Putin is a very capable adversary who is willing to adapt and find those willing collaborators,” Aaron Forsberg, the State Department’s Director for Economic Sanctions Policy and Implementation, told The Associated Press. He noted that sanctions against Russia are a “dynamic affair.”
Create Difficulty for Russia
The sanctions aim to make it more difficult for Russia to source crucial technology and increase the cost of obtaining goods. Wednesday’s package targets over $100 million in trade between Russia and its suppliers.
More than 300 new sanctions are primarily focused on deterring individuals and companies in countries like China, the United Arab Emirates, and Turkey from helping Russia bypass Western restrictions. These sanctions also threaten foreign financial institutions with penalties if they conduct business with nearly any sanctioned Russian entity, highlighting the U.S. view that Russia has shifted its economy to a war footing.
Russia’s military is “desperate for access to the outside world,” said Treasury Secretary Janet Yellen.
Announcement
The announcement came as President Joe Biden arrived in Italy, where G7 leaders are considering ways to aid Ukraine, including converting frozen Russian assets into billions of dollars for Kyiv.
Seven Chinese and Hong Kong-based companies were sanctioned on Wednesday for shipping millions of dollars of materials to Russia, including items for Russian weapons systems. U.S. officials state that China is a leading supplier of critical components to Russia, providing both Chinese and Western technology.
A Chinese state-owned defense company was also sanctioned for shipping military equipment for use in the Russian defense sector. This move signals the U.S.’s willingness to “wade into more treacherous territory” by increasing pressure on China, according to Benjamin Hilgenstock, senior economist at the Kyiv School of Economics.
“We will address (China’s) support for the Russian defense industrial base. And we will confront China’s non-market policies that are leading to harmful global spillovers,” White House national security spokesman John Kirby said on Tuesday.
China has not sanctioned Russia
China has not sanctioned Russia following President Vladimir Putin’s invasion of Ukraine, and Putin’s recent visit to China underscored their growing strategic ties. Janis Kluge, a Russia sanctions specialist at the German Institute for International and Security Affairs in Berlin (SWP), noted, “The Chinese leadership is not interested in making these sanctions a success.” He added that Beijing is reluctant to halt lucrative trade with Russia and does not want to “add to the pressure on Putin in this war.”
Imports from China are crucial for Russia as China produces critical components, including for Western companies. Chinese firms also act as intermediaries for Western components shipped to Russia. Despite finding Chinese technology on Ukrainian battlefields, most components still come from Western nations, particularly in high-tech drones and ballistic missiles, according to Hilgenstock.
In addition to China, the U.S. sanctioned businesses in Turkey and the UAE for sending high-priority items to Russian companies, including those already sanctioned.
The White House had previously warned that foreign financial institutions could face sanctions for working with entities in Russia’s defense sector. Wednesday’s expanded sanctions now threaten those institutions if they engage with almost any sanctioned Russian entity.
The fear of secondary sanctions is a significant deterrent. “Chinese banks have always been very careful not to become a target of secondary sanctions because it would be very costly,” Kluge explained, noting instances where Chinese banks severed ties with Russian customers.
Target Russia’s financial infrastructure
Wednesday’s sanctions also targeted Russia’s financial infrastructure, including the Moscow Stock Exchange, to restrict the flow of money in and out of Russia. Additionally, the package aims to hinder the development of Russia’s energy sector and future cash sources, such as Arctic LNG projects supplied with critical technology by a Chinese company.
The sanctions also addressed the forced transfer and deportation of Ukrainian children to Russia. Five individuals in Russia and Russian-occupied Ukraine were sanctioned for their roles in the forced militarization, reeducation, and issuance of Russian passports to the children.
Article Source: APNews
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