Has surpassed Iran, Syria and Russia to become the world’s most severely sanctioned country
[The Epoch Times, March 11, 2022](The Epoch Times Special Department reporter Zhang Wan interviewed and reported) Since the outbreak of the Ukraine crisis, Russia has been collectively boycotted by Western countries and isolated unprecedentedly. Under such circumstances, whether Beijing, which has always claimed to be an ally of Moscow, will help Russia has attracted attention from the outside world. Some Chinese experts said that the sanctions imposed by the United States and Europe on Russia are so severe that it is difficult for Beijing to take action when it is alarmed.
On March 8, the United States announced that it would ban the purchase of Russian oil, natural gas, coal and other energy products, and prohibit Americans from investing in foreign companies involved in energy production in Russia. Britain also announced on the same day that it would cut off energy imports from Russia within a year. Biden also said that he would take actions that other countries cannot do to cut off Russia’s economic artery.
In response to the tense situation in Ukraine, on the same day (8th) French President Emmanuel Macron, German Chancellor Olaf Scholz and Chinese Communist Party General Secretary Xi Jinping held a video summit. At the meeting, Xi Jinping did not accuse the United States and NATO countries of squeezing Russia’s strategic space, but reiterated his opposition to Western sanctions against Russia. He said that sanctions have had an impact on global finance, energy, supply chains, etc., and are not good for all parties. Russia and Ukraine should be urged to continue negotiations.
Mike Sun, an investment consultant based in the United States and an expert on China, said that the CCP will definitely support Russia for its own interests. However, the unprecedented unanimous support of the West to Ukraine this time has comprehensively attacked Russia’s lifelines such as finance and energy.
Before the outbreak of the Ukraine war, the CCP expressed its support for Russia with a large trade order. Russian President Vladimir Putin and Chinese Communist Party General Secretary Xi Jinping held a high-profile meeting on February 4 and issued a statement saying there is “no upper limit” to the strategic cooperation between the two countries.
During the meeting, Russia and China reached a 10-year deal worth up to $117.5 billion in oil and gas, as well as a deal for Russia to export coal worth $20 billion to China. After Russia invaded Ukraine, on February 27, the General Administration of Customs of China lifted the time limit on Russian wheat import trade.
Subsequently, the unanimous attack by Western countries against Russia has softened the CCP’s attitude. On March 2, the CCP adopted an ambiguous attitude in the vote on the UN resolution condemning Russia’s invasion of Ukraine, abstaining from voting along with 35 countries including India.
On March 8, Xi Jinping told the leaders of Germany and France that the top priority now is to prevent the situation from escalating and getting out of control. Beijing is willing to act as a coordinator to push for a peaceful outcome in the negotiations between Russia and Ukraine. At the same time, Xi Jinping also took the opportunity to express that he hopes to carry out more space for economic cooperation with Europe.
Russia faces unprecedented sanctions
According to statistics from Castellum.ai, a sanctions watch list website cited by the BBC, Russia had been subject to 2,754 sanctions before February 22, and an additional 2,778 sanctions were imposed on Russia after the invasion of Ukraine on the 24th, bringing the total to 5,532, surpassing Iran’s 3,616 and Syria’s 2,608, making it the most severely sanctioned country in the world.
Of these sanctions, 21% came from the United States; 18% came from the United Kingdom and the European Union. The energy sector, the lifeblood of Russia’s economy, is one of the main sanctions targets.
According to a report released by the U.S. Energy Administration on March 2 this year, in January 2022, Russia’s oil and gas industry tax and export tariff revenue accounted for 45% of Russia’s budget, and the current daily production of crude oil and refined products is as high as about $700 million.
Following the latest Russian energy bans issued by the United States and the United Kingdom, BP and Shell also announced that they would halt new purchases of Russian oil and gas.
In fact, under the pressure of global boycott of Russia, several major international energy giants have begun to withdraw from their business in Russia.
At the end of February this year, BP announced that it would sell nearly 20% of its shares in the Russian state-owned oil company; Shell also announced that it would withdraw from its joint venture with Gazprom and withdraw from the North, which has now suspended gas transmission to Germany. Nord Stream 2 pipeline project. Exxon Mobil (XOM) said it would shut down a large oil and gas development project on the Russian Far East island of Sakhalin.
At present, Russia’s largest oil and gas market, Europe, has not indicated that it will follow up on the US and UK’s energy ban on Russia. However, after major Russian banks were kicked out of the SWIFT international settlement system, some international buyers began to shy away from doing business with Russia to avoid disputes.
China’s financial system fears secondary sanctions
According to the relevant secondary sanctions in US law, if the company’s business dealings involve countries, companies or individuals sanctioned by the United States, it may face the risk of being imposed secondary sanctions. As a result, Chinese companies and financial institutions could face serious consequences if they do business with Russia.
On March 4 this year, the Asian Infrastructure Investment Bank (AIIB), backed by China, announced that it would cease operations related to Russia and Belarus. China is AIIB’s largest shareholder with 27% of voting rights.
On the same day, the New Development Bank, jointly funded by China, Russia, India, Brazil and South Africa, also announced the suspension of new transactions in Russia.
In addition, Bloomberg reported on February 25 that two of China’s largest state-owned banks have begun restricting financing for purchases of Russian commodities.
Ben Kostrzewa, foreign legal counsel at Hogan Lovells in Hong Kong, said Chinese financial institutions must take sanctions compliance seriously if they don’t want to be sanctioned and lose opportunities to trade in U.S. dollars.
Chinese companies, banks violate sanctions precedents
In June 2019, a U.S. court ruling said three major Chinese banks allegedly violated North Korean sanctions had held a grand jury in contempt for refusing to comply with investigative subpoenas. The three banks were involved in laundering more than $100 million for North Korea’s Foreign Trade Bank, The Washington Post reported.
In August 2012, China’s Bank of Kunlun was placed on the US sanctions list for doing business with Iran.
Two Chinese technology companies, Huawei and ZTE, have also been involved in lawsuits for violating U.S. sanctions against Iran, and ZTE has also been fined heavily by the U.S. government.
In March 2017, a U.S. Department of Commerce circular said ZTE admitted to violating sanctions by selling electronics to Iran and North Korea. In the end, ZTE paid a fine of nearly $1.2 billion.
In December 2018, Meng Wanzhou, Huawei’s chief financial officer and daughter of company founder Ren Zhengfei, was arrested in Canada after Huawei was accused of circumventing U.S. sanctions on Iran from 2009 to 2014, using its illegal presence in Hong Kong. The official subsidiary, Skycom Tech, operates a computer equipment business in Iran and deceives multinational banks into providing settlement services for its transactions with Iran.
It was not until September 2021 that Meng Wanzhou reached a deferred prosecution agreement with the U.S. government before being released back to China.
Responsible editor: Lian Shuhua#