THE United States has upped the ante in its sanctions war against Russia, announcing punitive measures against China for buying Russian-made fighter jets and missiles.
Stepping up pressure on Moscow over its “malign activities,” the US State Department said it was placing financial sanctions on the Equipment Development Department (EDD) of the Chinese Ministry of Defence, and its top administrator, for its recent purchase of Russian Sukhoi Su-35 fighter jets and S-400 surface-to-air missiles.
Officials said it was the first time a third country has been punished under sanctions legislation for dealing with Russia, and signalled the Trump administration’s willingness to risk relations with other countries in its campaign against Moscow.
But the move is only likely to strengthen ties between Moscow and Beijing, with their presidents undertaking their third face-to-face meeting in just four months.
Talks between President Xi Jinping and President Vladimir Putin coincided with Russia’s Vostok — meaning “East” — military exercises, billed as the largest war games since the Reagan era. Thousands of troops from China are taking part.
And the two world leaders are already talking about reshaping the world in their own image.
EASTERN POWER BLOC?
“Putin and Xi are on the same page when it comes to the fundamental concept of a desirable world order,” Dmitri Trenin, the director of the Carnegie Moscow Center think tank, wrote in an opinion piece in the state-run China Daily.
Their shared vision includes “several independent power centres instead of a single-nation hegemony; protection of state sovereignty from foreign political and ideological influence; and full equality among peers, including the United States,” he wrote.
“The president and I agree that since the beginning of this year, Russian-Chinese relations have been showing dynamic growth,” Xi told media during a round of ‘pancake’ diplomacy where he and Putin cooked a traditional Russian dish. Xi said ties with his “close friend” Putin had “entered a new era of rapid development and are reaching a higher level.”
Both criticised the concept trade protectionism, a clear — if oblique — reference to Trump’s policies.
On Monday, President Trump announced a 10 per cent tax on $200 billion of Chinese imports in a fresh escalation in the balance of trade dispute between Washington and Beijing. Earlier this year, Trump imposed a 25 per cent tariff on Chinese steel and aluminium goods.
Russia is continuing to suffer under sanctions imposed after it invaded Ukraine in 2014. These were reinforced last year after allegations of meddling in the 2016 US presidential elections.
In the meantime, trade between China and Russia has grown to $US87 billion last year. President Putin said it was expected to top $US100 billion this year.
ESCALATING TRADE WAR
US State Department officials say they could consider similar punitive action against other countries taking delivery of Russian fighter jets and missiles — such as India and Turkey.
NATO ally Turkey is currently talking with Moscow about an S400 advanced long-range air-to-air missile system deal. The US has already suspended delivery of Turkey’s first F-35 stealth fighters in retaliation.
“The ultimate target of these sanctions is Russia,” a senior administration official told journalists, insisting on anonymity.
“CAATSA sanctions in this context are not intended to undermine the defence capabilities of any particular country. They are aimed at imposing costs on Russia in response to its malign activities.” CAATSA, or the Countering America’s Adversaries Through Sanctions Act, was passed in 2017 as a tool that gives the Trump administration more ways to target Russia, Iran and North Korea with economic and political sanctions.
With regard to Russia, CAATSA arises from the country’s “aggression in Ukraine, annexation of Crimea, cyber intrusions and attacks, interference in the 2016 elections, and other malign activities,” the State Department said.
The legislation allows the government to take action against those companies and individuals who have been placed on the CAATSA blacklist.
EDD and its director Li Shangfu became targets after taking delivery over the past year of the jets and missiles from Rosoboronexport, Russia’s main arms export entity already on the CAATSA blacklist for its support of the Assad regime in Syria.
TARGETING ‘BIG TICKET’ ARMS DEALS
At the same time, the State Department also announced it was placing 33 Russian intelligence and military-linked actors on its sanctions blacklist under the CAATSA rules.
All of them — defence related firms, officers of the GRU military intelligence agency, and people associated with the St. Petersburg-based Internet Research Agency disinformation group — have been on previous US sanctions lists and 28 of them have already been indicted by Russia election meddling investigator Robert Mueller.
“We will continue to vigorously implement CAATSA and urge all countries to curtail relationships with Russia’s defence and intelligence sectors, both of which are linked to malign activities worldwide,” the State Department said.
The sanctions freeze any of EDD’s and Li’s assets in US jurisdictions. They also restrict EDD’s access to global financial markets by blocking foreign exchange transactions under US jurisdiction or any transactions in the US financial system.
The senior official stressed that CAATSA is not going to be implemented across the board, but that the US was choosing Russia’s sale of “bigger ticket items” of “new, fancy, qualitatively significant stuff” that could have a “security impact” on the United States.
“The CAATSA was not intended to take down the economy of third party countries. It’s intended to impose appropriate pressures on Russia in response to Russian malign acts,” the official said.
The official declined to answer if the US would take similar action if Russia delivers S400 missiles to other countries such as Turkey, which is in talks to buy them.
However, he said, “You can be confident that we have spent an enormous amount of time talking about prospective purchases of things such as S-400s and Sukhois with people all around the world who may have been interested in such things and some who may still be.” “We have made it very clear to them that these — that systems like the S-400 are a system of key concern with potential CAATSA implications.”