The United States has widened its sanctions against Russia.
The measure, issued on Wednesday, June 12, 2024, targeted Chinese companies which help Russia pursue its war in Ukraine and raised the stakes for foreign financial institutions which work with sanctioned Russian entities.
It also targeted Russia’s financial infrastructure, in an attempt to limit the amount of money flowing in and out of Russia. Shortly after the sanctions were made public, the Moscow Exchange announced it would suspend transactions in dollars and euros.
The U.S. has sanctioned more than 4,000 Russian businesses and individuals since the war began, in an effort to hinder the flow of money and armaments to Moscow.
Imports from China are vital to Russia because Beijing is a major producer of critical components, including for Western companies. Chinese companies also act as intermediaries for the sale and shipment of Western components to Russia.
While sanctions have not stopped the flow of illicit goods, the aim is to make it harder for Russia to source crucial technology as well as drive up the markup on the goods.
Wednesday’s package targets more than $100 million in trade between Russia and suppliers for its war.
Seven Chinese and Hong-Kong-based companies were targeted for shipping millions of dollars of material to Russia, including items which could be used in Russian weapons systems.
As well as China, the U.S. targeted businesses in Turkey and the United Arab Emirates which officials said sent high-priority items to companies in Russia, including to businesses which were already sanctioned.
The package also aims to hobble the development of Russia’s energy sector and future sources of cash, including Arctic liquified natural gas projects which have been shipped critical LNG technology by a Chinese company.
In addition, the package targeted people involved in the forced transfer and deportation of Ukrainian children to Russia. Five people in Russia and Russian-occupied Ukraine were sanctioned after participating in the forced militarization and reeducation of the children and providing them with Russian passports.
U.S. President Joe Biden’s top foreign policy adviser, Jake Sullivan, told reporters that the message to China and other countries was that they are “at serious risk of running afoul of the Treasury Department and falling under a sanctions regime.”
Analysts claim that the fear of triggering secondary sanctions is an effective threat.
Russia’s military is “desperate for access to the outside world,” U.S Treasury Secretary, Janet Yellen, said.
U.S Increasing Pressure on Chinese Government
According to Senior Economist at the Kyiv School of Economics, Benjamin Hilgenstock opined that the move sends the message that the U.S. is “willing to wade into more treacherous territory” by increasing the pressure on the Chinese government.
Hilgenstock noted that while Chinese technology has been found on the battlefield in Ukraine, most of the components still come from Western nations including those which are “overwhelmingly” found in high-tech drones and ballistic missiles.
Meanwhile, Janis Kluge, a Russia sanctions specialist at the German Institute for International and Security Affairs in Berlin (SWP.), stated, “The Chinese leadership is not interested in making these sanctions a success.”
Beijing, Kluge said, is reluctant to stop a valuable trade that is worth large amounts of money and it does not want to “add to the pressure on Putin in this war.”
While President Xi Jinping may not want to facilitate Western sanctions on Russia, “Chinese banks have always been very careful not to become a target of secondary sanctions because it would be very costly,” Kluge said, pointing to cases where Chinese banks have ended relationships with Russian customers.
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