Ukraine: Amid Europe’s turmoil, G-7 Summit, the US widens Russia sanctions
Virendra Pandit
New Delhi: Amid the Right-wingers’ increasing influence in Europe, Chinese President Xi Jinping’s effort to poach Hungary and Serbia, and potential disarray in the North Atlantic Treaty Organization (NATO), the United States on Wednesday suddenly widened sanctions on Russia, which is repeatedly warning the West to keep away from Ukraine.
The fresh US sanctions include targeting China-based companies selling semiconductors to Moscow, as part of an effort to undercut the Russian military machine waging war on Ukraine, the media reported on Thursday.
The US Treasury said it was raising “the risk of secondary sanctions for foreign financial institutions that deal with Russia’s war economy,” effectively threatening them with losing access to the American dollar-led global financial system.
Washington also sought to restrict the Russian military-industrial base’s ability to exploit select software and information technology services and target over 300 individuals and entities in Russia and beyond, including in Asia, Europe, and Africa.
Additionally, the US Commerce Department said it was targeting shell companies in Hong Kong for diverting semiconductors to Russia, which would affect nearly USD 100 million of high-priority items for Moscow, including such chips.
The US will also expand its lists of items Russia cannot import from other nations to cover not just origin products but branded goods, meaning those made with the US intellectual property or technology, the reports said.
Ukraine has found several Russian equipment like drones, radios, missiles, and armored vehicles, recovered from the battlefield, using widely used US technology-made chips and other technology.
Russia has long been targeting Ukraine. After seizing Crimea from Ukraine in 2014, it launched a full-scale invasion of its neighbor in February 2022, sparking several new Western economic and other sanctions on Moscow.
The US Treasury also said it was imposing sanctions on key parts of Russia’s financial infrastructure, including the Moscow Exchange (MOEX), which operates Russia’s largest public markets for equity, fixed income, foreign exchange, and other products.
MOEX and its related subsidiaries have facilitated sanctions evasion by obscuring the identities of parties engaged in such transactions. By sanctioning them, the US aims to force greater transparency on cross-border transactions, making it harder to evade sanctions.
Soon after the US announced fresh sanctions, the MOEX said these have forced an immediate suspension of trading in US dollars and euros on its leading financial marketplace.
China said it firmly opposed the sanctions and would safeguard the rights and interests of its companies and citizens. Beijing called the US “extremely hypocritical and overbearing” for supplying Ukraine weapons while pushing for peace.
“We urge the US to immediately stop abusing illegal unilateral sanctions, and focus on ceasefires, stop wars, restore peace, and play a constructive role,” the Chinese foreign ministry said at a regular news briefing on Thursday.
The news about the US imposing fresh sanctions came as President Joe Biden departed for a G-7 Summit in southern Italy, from June 13 to 15. One of the G-7 leaders’ priorities is boosting support for Ukraine, now in the third year of resisting Russia’s invasion.
Peter Harrell, who served as White House senior director for international economics in 2021 and 2022, said the US move would expose foreign banks to the risk of being cut off from the financial system if they deal with key large Russian banks.
It’s a clear message to the banks in China, Turkey, the UAE, and elsewhere outside of the G-7 that they could also face sanctions for continuing to engage in transactions with the big Russian banks and other sanctioned Russian banks and could spark a “major retreat” by those banks from Russia. It would complicate the flow of goods from countries that are continuing to trade with Russia.
