The Biden administration announced a series of new financial sanctions on Wednesday aimed at disrupting the rapidly growing technological ties between China and Russia, in what American officials say is a sweeping effort to rebuild and modernize Russia’s military during of the war with Ukraine.
The measures were announced just as President Biden left the country for a meeting of the Group of 7 industrialized countries in Italy, where a renewed push to deteriorate Russia’s economy will be high on his agenda.
The measures were coordinated by the finance, foreign and trade ministries and were aimed at further isolating Russia from the global financial system and denying it access to the technology that powers its military arsenal.
The effort has become far more complicated in the last six or eight months after China, previously largely on the sidelines, increased its shipments of microchips, machine tools, optical systems for drones and components for advanced weapons, U.S. officials said. So far, however, Beijing appears to have heeded Biden’s warning against arms sales to Russia, even as the US and NATO continue to arm Ukraine.
Although the measures expand the reach of the U.S. sanctions program, the Biden administration has so far held off on imposing sanctions on Chinese or European banks that it believes are helping Russia. The new measures do not prevent banks from facilitating transactions related to Russia’s energy exports, which the Biden administration allowed out of concern that their restriction could fuel inflation.
Announcing the sanctions, Treasury Secretary Janet L. Yellen said in a statement: “Russia’s wartime economy is severely isolated from the international financial system, leaving the Kremlin’s military desperate for access to the outside world.”
At the heart of the measures is an expansion of “secondary” sanctions that give the United States the power to blacklist any bank around the world that does business with Russian financial institutions already facing sanctions. This is intended to discourage smaller banks, particularly in countries like China, from helping Russia finance its war effort.
The Finance Ministry also imposed restrictions on the Moscow stock exchange, hoping to prevent foreign investors from supporting Russian defense companies. The sanctions hit several Chinese companies accused of helping Russia gain access to critical military equipment such as electronics, lasers and drone components.
In addition to the Treasury Department’s actions, the State Department imposed sanctions on about 100 companies, including companies “engaged in the development of Russia’s future energy, metals and mining production and export capabilities.” And the Commerce Department announced a series of restrictions of its own, banning American exports to certain Hong Kong addresses that the U.S. says are used to set up shell companies to funnel banned goods into Russia.
Mr. Biden has previously tried to choke off Russia’s supplies and funding and has overestimated the impact of that move. In March 2022, shortly after the start of the war, he announced a first round of financial measures, stating: “As a result of these unprecedented sanctions, the ruble will be reduced to rubble almost immediately.” It was not. After a brief slump, it recovered, and although it is not as strong today as it was a year ago, the Russian economy has grown due to strong war-related growth.
Much of this is thanks to China’s efforts. It has bought Russian oil, often at a discount to world prices. And it has expanded sales of dual-use goods, particularly microelectronics and software needed to make weapons systems, drones and air defense systems.
The result was the rise of a somewhat parallel war economy between Russia, China, Iran and North Korea. Many of the companies affected by sanctions are in Hong Kong or just across the border in Shenzhen, China’s technology manufacturing hub. But government officials insist they can stifle the deepening business relationship this time.
By announcing new restrictions on Chinese companies, the Biden administration also hopes to persuade European governments and possibly Asian allies to take similar measures.
Secretary of State Antony J. Blinken discussed the issue with European counterparts at a meeting of the North Atlantic Treaty Organization in Prague last month, and U.S. officials plan to put it on the agenda of a leaders’ summit in Washington in July.
Mr. Blinken has also warned the Chinese government that it cannot hope for a friendly relationship with European powers if it props up Russia’s defense industry.
At a news conference in Prague on May 31, Mr. Blinken said that 70 percent of the machine tools Russia imports come from China, as do 90 percent of the microelectronics.
“China cannot expect, on the one hand, to improve relations with the countries of Europe and, on the other hand, to fuel the greatest threat to European security since the end of the Cold War,” he said.
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2024-06-13 03:10:56
www.nytimes.com
