US expands sanctions on Russia, targeting firms aiding Putin’s war effort

By:
on Jun 12, 2024
Listen
  • US sanctions over 300 entities aiding Russia’s war effort, including Chinese and UAE companies.
  • Sanctions aim to disrupt more than $100 million in trade supporting Russian military operations.
  • G7 leaders gather in Italy to discuss increased support for Ukraine and economic measures against Russia.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

The United States expanded its sanctions against Russia on Wednesday as G7 leaders prepared to gather in Italy for a summit.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

The primary focus of the summit is to boost support for Ukraine and further debilitate Russia’s military capabilities.

New sanctions target foreign entities

Copy link to section

The latest sanctions package targets Chinese companies that aid Russia’s war effort in Ukraine and raises the stakes for foreign financial institutions doing business with sanctioned Russian entities.

This move underscores the dynamic nature of sanctions, as noted by Aaron Forsberg, the State Department’s Director for Economic Sanctions Policy and Implementation. He emphasized that sanctions are a “dynamic affair,” aiming to complicate Russia’s ability to source critical technology and drive up the cost of goods.

Impact on trade and technology

Copy link to section

The new sanctions target over $100 million in trade between Russia and its suppliers. More than 300 individuals and entities, including those in China, the United Arab Emirates, and Turkey, are affected.

These sanctions aim to deter companies from helping Russia circumvent Western trade blocks.

The US Treasury and the State Department’s measures focus on preventing Russia from obtaining technology crucial to its military efforts.

Chinese companies under scrutiny

Copy link to section

Among the newly sanctioned entities are seven Chinese and Hong Kong-based companies accused of shipping millions of dollars worth of materials to Russia, including items potentially used in Russian weapons systems.

A Chinese state-owned defense company was also sanctioned for allegedly supplying military equipment to Russia’s defense sector.

US officials pointed out that China is a leading supplier of critical components to Russia, including both Chinese and Western technology.

G7 summit priorities

Copy link to section

The announcement of these sanctions came shortly before President Joe Biden arrived in Italy for the G7 summit. The leaders are expected to focus on aiding Ukraine, including the potential conversion of frozen Russian assets into financial support for Kyiv.

Treasury Secretary Janet Yellen highlighted that Russia’s military is “desperate for access to the outside world,” emphasizing the need for continued pressure.

China’s stance and global implications

Copy link to section

Despite the sanctions, China has not sanctioned Russia following President Vladimir Putin’s invasion of Ukraine. Instead, China has emphasized its strategic ties with Russia, as seen during Putin’s visit to China in May.

Analysts like Janis Kluge from the German Institute for International and Security Affairs (SWP) suggest that China is reluctant to halt valuable trade with Russia and does not wish to increase pressure on Putin.

US officials, however, continue to address China’s support for the Russian defense industrial base. White House national security spokesman John Kirby stated,

“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.”

Secondary sanctions and financial institutions

Copy link to section

The expanded sanctions also target businesses in Turkey and the UAE for sending high-priority items to Russia. In December, the White House warned that foreign financial institutions could face sanctions for working with entities in Russia’s defense sector.

The new measures now extend this threat to almost any sanctioned Russian entity, increasing the risk for global financial institutions.

Analysts believe the threat of secondary sanctions is a significant deterrent. While Chinese President Xi Jinping may not support Western sanctions on Russia, Chinese banks have shown caution to avoid becoming targets of secondary sanctions, as this would be costly.

As the G7 summit proceeds, the international community will be closely watching how these new sanctions impact Russia’s economy and its war efforts in Ukraine.

The evolving geopolitical landscape continues to pose significant challenges for global trade and diplomatic relations.

Russia USA USD Vladimir Putin Economic