While China and Russia have strengthened ties since the Kremlin’s brutal invasion of Ukraine, the US has not seen evidence that China has provided systemic material support to the Kremlin as Russian President Vladimir Putin and his government look for avenues to evade Western sanctions and backfill its military, according to senior US Treasury officials.
One senior Treasury official said that China is, as of now, unwilling to provide material support to Russia at scale and in a significant way, pointing instead to Russian efforts to source material from North Korea and Iran. The comments come almost one month after revelations of US intelligence that China has been open to providing Russian with requested military and financial assistance, and US national security adviser Jake Sullivan warned top Chinese diplomat Yang Jiechi about American concerns over such a move.
With relations between Washington and Beijing at historic lows, the senior officials attributed the decision by China to hold off so far on more systemic help to efforts across the sanctions coalition – from public US comments to active and direct messages that the Europeans have given to China.
With Russia’s brutal invasion of Ukraine into its second year, the Biden administration has continued to take steps to plug the gaps of the Western allies’ sanctions regime as they broaden intelligence sharing with US allies and jurisdictions where Russia has looked to sidestep sanctions and export controls.
The US and its allies have also taken more direct action, sanctioning a Chinese satellite company providing intelligence to Russian forces in January and putting some Chinese companies on the US export control list.
As part of that effort and as leaders of the global financial system descend on Washington D.C. next week for the Spring Meetings of the International Monetary Fund and World Bank, top US Treasury and intelligence officials will share information with relevant partners to help countries and businesses understand how the Kremlin continues to use its intelligence services to try and evade the unprecedented sanctions regime instituted by the US and its allies, these senior officials also said.
The meetings next week with countries the US is concerned about are part of a broader push by the Treasury over the next month as senior officials continue to fan out across the world to strategize with US allies and partners to deepen cooperation and ramp up the pressure on countries key to Russia’s sanctions evasion and backfilling efforts.
Two of Treasury’s top sanctions officials – Brian Nelson and Liz Rosenberg – will continue the US government’s ramped up efforts internationally to speak to specific countries and their businesses about the risks of providing support to Russia and share detailed information on sanctions evasion. Nelson will travel to Switzerland, Italy, Austria and Germany to compare notes with their counterparts and continue to share intelligence on the ways in which Russia is attempting to evade sanctions; and, Rosenberg will travel to Kazakhstan in Central Asia, a region with a long history of ties to Russia, and through which officials have raised concerns that Russia is sourcing materials.
Despite the impact sanctions have had on the Russian economy, some observers have pointed to concerns over Moscow’s ability to evade sanctions and re-orient trade routes to continue to acquire some of the technologies and financing needed to fund its war machine through countries it borders and more permissive jurisdictions, such as the United Arab Emirates and Turkey.
But in recent months officials have also begun to see some results from their public and private efforts. Turkish officials told the US last month that their government has been taking further action to block the transit of sanctioned goods directly to Russia, according to a source familiar with the discussion.
Since Russia launched its bloody war against Ukraine, the US has imposed thousands of sanctions against Russian politicians, oligarchs and companies, cut off the Russian central bank from its dollar-denominated reserves as well as the global financial messaging system, undermined Russia’s defense-industrial base and imposed a price cap on Russian oil and petroleum products.
One of the most successful efforts, the price cap, has already been having a demonstrable effect with the Russian Finance Ministry announcing Friday a $29 billion dollar deficit in the budget for the first quarter of 2023, according to Reuters.
In a speech earlier this year on the anniversary of Russia’s invasion, US Deputy Treasury Secretary Wally Adeyemo publicly warned Russian intelligence services that the US is monitoring their efforts and is cracking down.
“We know Russia is actively seeking ways to circumvent these sanctions… In fact, one of the ways we know our sanctions are working is that Russia has tasked its intelligence services – the FSB and GRU – to find ways to get around them,” Adeyemo said in his February speech.
