U.S. Plans to Expand Sanctions, Export Controls on Russ

U.S. Plans to Expand Sanctions, Export Controls on Russ
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New effort targets military and energy industries, with Western allies planning to roll out similar measures.

HIROSHIMA, Japan—President Biden plans to unveil a new round of U.S. restrictions on trade with Russia on the first day of the Group of Seven summit here, a move designed to further squeeze the Kremlin and demonstrate allies’ continued resolve to support Ukraine.

The new U.S. sanctions and trade restrictions target goods and services vital to Russia’s military-industrial complex, said a senior Biden administration official who briefed reporters shortly after the president landed in Hiroshima. They are also aimed at Russia’s ability to extract the oil and natural gas critical to the country’s economy, the official said. Other Western allies will roll out similar new programs, officials said.

The fresh restrictions come at the start of a summit where Biden’s primary aim is expected to be maintaining unity among allies in support of Ukraine, along with strengthening economic cooperation to counter China

“The bottom line is we’re upping the economic pressure on Russia,” the senior U.S. official said, adding that the actions of the U.S. and allies will “make it even harder for Russia to sustain its war machine.”

HIROSHIMA, Japan—President Biden plans to unveil a new round of U.S. restrictions on trade with Russia on the first day of the Group of Seven summit here, a move designed to further squeeze the Kremlin and demonstrate allies’ continued resolve to support Ukraine.

The new U.S. sanctions and trade restrictions target goods and services vital to Russia’s military-industrial complex, said a senior Biden administration official who briefed reporters shortly after the president landed in Hiroshima. They are also aimed at Russia’s ability to extract the oil and natural gas critical to the country’s economy, the official said. Other Western allies will roll out similar new programs, officials said.

The fresh restrictions come at the start of a summit where Biden’s primary aim is expected to be maintaining unity among allies in support of Ukraine, along with strengthening economic cooperation to counter China

“The bottom line is we’re upping the economic pressure on Russia,” the senior U.S. official said, adding that the actions of the U.S. and allies will “make it even harder for Russia to sustain its war machine.”

The moves are part of a continuing effort to plug gaps in the West’s pressure campaign. Countries, banks and companies that are helping Russia sidestep the sanctions and trade restrictions undermine the political costs the economic pressure is intended to exact on the Kremlin, Western officials say. Additionally, they supply Russia’s military forces with the electronics and other imports needed to prosecute the war against Ukraine.

The new salvo in Washington’s financial war includes the addition of more than 300 companies, individuals, aircraft and vessels across Europe, the Middle East and Asia that officials say are helping Moscow sidestep the trade and finance bans, the U.S. official said. And the U.S. Commerce Department will add 70 new entities to its roster of companies and individuals targeted with export restrictions, they said.

One area of particular interest for the U.S. is targeting Russia’s diamond trade, administration officials said in the days leading up to the summit. Although the U.S. has sanctioned Russia’s diamond giant, Alrosa, analysts cite EU trade data showing imports of the precious stones were up nearly a third in the second quarter last year compared with the year before. Further restrictions on the trade could cut what U.S. officials say amounts to billions of dollars in revenue for Russia. 

Among the companies due to be sanctioned on Friday is an electronics wholesaler called Elmec Trade, registered in EU-member Estonia, people familiar with the matter said. The company has been involved in thousands of semiconductor trades with Russia valued at over $15 million since the invasion, according to those people and Russian customs data seen by The Wall Street Journal.

Despite its seemingly small size, the company has emerged as a significant player in channeling Western semiconductors to Russia. 

Some of the thousands of shipments sent by Elmec to Russia after the export bans were implemented included antenna and communications equipment, according to Russian customs records reviewed by the Journal and provided by trade database ImportGenius. The U.S. government has warned banks and other companies to watch out for transactions involving such goods because of their ability to be used by Russia in its war against Ukraine, according to administration officials.

Elmec’s owner, Aleksandr Fomenko, said the company had shipped semiconductors that its Russian clients ordered in the year before the war began in February 2022, and that it had since stopped dealing with Russia. “It’s a big misunderstanding,” he said late Thursday.

“Our company has always honestly worked within the framework of the law, complied with all the requirements of suppliers, dealers, and followed all the requirements of sanctions against the Russian Federation,” Fomenko added by email. He said he couldn’t comment on the sanctions because he had learned of them from The Journal. “In any case, Elmec Trade has already laid off employees, paid all taxes and is moving towards the liquidation of the company,” Fomenko added.

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