Russia sees China as a lifeline for sanctions; The United States threatens the “consequences”

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Russia sees China as a lifeline for sanctions; The United States threatens the “consequences”


WASHINGTON – Two days after National Security Advisor Jake Sullivan warned his Chinese counterpart of dire consequences if Beijing helps Russia wage its war against Ukraine, what exactly could be remains shrouded in secrecy.

“We will have this conversation directly with China and the Chinese leadership, not through the media,” White House press secretary Jen Psaki told reporters Tuesday.

PSAKI said Sullivan was “very direct about the consequences” during his Monday meeting in Rome with China’s top foreign policy official, Yang Jiechi.

“But in terms of potential impacts or consequences, at this point we will guide them through private diplomatic channels,” PSAKI said.

As the Russian invasion of Ukraine approaches its fourth week, concerns about how Western allies will react if China or Chinese companies try to help Moscow evade sanctions imposed by the US, UK and Europe have added a new level of uncertainty to already faltering global markets. the collapse of the Russian economy.

That uncertainty is compounded by fresh recollection of what happened the last time the White House issued vague warnings about the consequences, during the run-up to the invasion of Russia.

In February 20, four days before Russian troops marched into Ukraine, Psaki released a statement stating that the United States was “ready to impose swift and grave consequences” if Russia carried out its apparent plans.

At the time, few analysts believed that the US and Europe could actually reach a consensus on the tougher sanctions under consideration, such as the freezing of Russian central bank reserves. But they did, catching Moscow and Wall Street off guard.

When it comes to China, no one wants to make the same mistake again.

Moscow has reportedly asked Beijing for military and economic assistance to wage its war against Ukraine, although both governments publicly deny it.

But China has little interest in getting involved in the economic battle between Moscow and the rest of the developed world.

“China is not part of the crisis, nor does it want sanctions to hit China,” Foreign Minister Wang Yi said Monday during a phone call with Spanish Foreign Minister Jose Manuel Albares.

However, Wang insisted that “China has the right to safeguard its legitimate rights and interests,” according to an official notice from the Beijing appeal.

Over the past week, it has become increasingly clear that the Kremlin views Beijing as an economic lifeline.

Russian Finance Minister Anton Siluanov said on Sunday that his country’s “economic partnership with China will still allow us to maintain the cooperation we have achieved … but also to increase it in an environment where Western markets are closing.” to Russian exports.

This “enhanced” cooperation from China could take several forms. Some of them would openly violate sanctions against Russia, triggering an automatic response from the United States, but experts say other actions Beijing could take would be technically legal, forcing the United States to rely more on soft power tactics to counter them.

The blatant violations could include helping Russia bypass US export controls on high-tech equipment by buying American products and then selling them to Moscow.

However, this move would be very risky for companies. The sanctions are written specifically to apply not only to American companies, but to any company in the world that uses US software or components, many of them in China.

Commerce Secretary Gina Raimondo recently explained what the consequences would be for a large Chinese semiconductor company if the United States learned it was selling chips to Russia in violation of US export controls.

“We could essentially close [the company] down, because we prevent them from using our equipment and softwareRaimondo said in an interview with the New York Times on March 8.

Raimondo’s example highlights how the United States can use its economic power to make any firm’s decision to help Russia evade the essentially fatal sanctions.

“Most large institutions in China are unwilling to take the risk of conflict with US sanctions, so any lifting of sanctions is likely to be carried out by smaller institutions with less to lose,” said Martin Chorzempa. , researcher at the Peterson Institute of International Economics.

“Overall, China looks like it will complain but comply,” he told the Washington Post.

Another possible avenue for cooperation between Russia and China would be for Beijing to buy Russian oil and gas cheaply, Alexander Gabuev, senior fellow and president of Russia at the Carnegie Moscow Center think tank, told CNBC’s “Capital Connection” on Monday. .

“There will be no formal violation of US and EU sanctions, but this will be an important material lifeline for the regime” in Russia, Gabuev said.

This type of Sino-Russian cooperation requires a different response from the United States, which works with European allies to highlight the long-term risk to China’s reputation on the world stage.

“[Russian President] Vladimir Putin is … the villain in the eyes of the world “and Moscow is fast becoming a” pariah state, “said Robert Daly, director of the Kissinger Institute on China and the United States.

“Russia, Cuba, North Korea, Venezuela, Iran – this is not really the international club that most Chinese aspire to be a part of,” Daly told CNBC’s “Squawk Box Asia” on Tuesday.

As civilian casualties in Ukraine rise and TVs around the world broadcast images of bombed-out residential areas and brave Ukrainian resistance fighters, “circumstances are pushing China further in that direction,” Daly said.

But that doesn’t mean the country will break up with its longtime ally. Instead, Beijing can be expected to be “religious in observing” US and EU sanctions, but do “everything possible” to help Moscow, Gabuev said.

— CNBC’s Eustance Huang and Weizhen Tan contributed to the reporting.


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