A senior official at the US Treasury Department said on Wednesday 30 March that forthcoming international sanctions against Russia could impact the military-industrial sector and its supply chains.
“We need to look at certain sectors of the economy, the things that are related to the defence industrialised complex, going after companies, but additionally, going after their key suppliers. So looking at their supply chains”, this official told a number of journalists, including EUROPE, on the occasion of a visit to Brussels by US Deputy Treasury Secretary Wally Adeyemo (see EUROPE 12921/7).
According to this official, the aim is to frustrate the Russians and prevent them from not only being able to wage war in Ukraine, but also being able to project power going forward.
According to the Wall Street Journal, the EU is also considering taking action against the four unsanctioned banks that have been removed from Swift.
The US Treasury official explained that the sanctions have “forced the Kremlin to make a choice between propping up their domestic economy and financing the war effort”. “And what we want to do is make that choice harder for them every day”, he warned, adding that the goal is to get the Russians to spend their resources and dwindle down their resources in order to have less to spend on the war.
When asked about the lifting of sanctions, the source said that any decision on this – once the Russian attack had ended and Russian troops had verifiably withdrawn – would be taken in the same way as it had been put in place, i.e. in consultation with various partners and the Ukrainians.
Beyond adopting new measures, the G7 members want to work to avoid any circumvention of the measures that have already been adopted. “We are doing joint work to look at ways in which the Russian state will be attempting to evade our sanctions using traditional means, like financial institutions and middlemen, but also non-traditional means such as cryptocurrency, etc.”, the US source announced, warning that if any individual, company or financial institution sought to assist Russia or a sanctioned oligarch, then action would be taken against them to hold them accountable for it.
When asked about China’s behaviour, the US official explained that although it could supply some products to Russia, the idea that it could fully compensate for those items that partners and allies no longer supplied to Moscow, was not a realistic one. “The Russians know it and the Chinese know it”, he said. He noted, for example, that China had failed to build more sophisticated semiconductors, despite spending billions of dollars on this.
Moreover, according to this US source, Chinese companies, whether public or not, are not interested in violating sanctions since “they are doing business in the global arena and they want to make sure that they are able to continue to do that without violating rules”.
The official also referred to Adeyemo’s meeting with Commissioner Mairead McGuinness the day before, explaining that even prior to the Russian invasion, the EU and the US were willing to talk about sanctions. “Acting multilaterally makes our sanctions much more effective, both economically and politically ”, he explained. “It was important to have a dialogue where we talk through how we can better harmonise our existing regulations for conducting sanctions and talk about how we can work forward”, he added. (Original version in French by Camille-Cerise Gessant)