Biden Administration Increases Sanctions on Russia Amid Calls for Stronger US Measures

WASHINGTON — 

Facing criticism that its initial package of sanctions on Russia was not severe enough, the Biden administration on Wednesday both defended its actions and announced an expansion of the penalties, which are meant to deter what appears to be an imminent Russian invasion of Ukraine.

On Wednesday afternoon, in a statement released by the White House, President Joe Biden announced that he had included Nord Stream 2 AG, the company that built a controversial natural gas pipeline between Russia and Germany, as well as its senior executives, on the list of entities being sanctioned.

The move came a day after German Chancellor Olaf Scholz announced that his government would not certify the pipeline, a necessary step in making it operational. The U.S. sanctions effectively prevent a reversal of Scholz’s decision, because it would subject any company doing business with Nord Stream 2 to U.S. sanctions.

“These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine,” Biden said. “As I have made clear, we will not hesitate to take further steps if Russia continues to escalate.”

Also Wednesday, White House press secretary Jen Psaki said in a news conference that the measures the U.S. and its allies have taken will result in a “vicious feedback loop” that will damage Russia’s economy by raising interest rates, encouraging investors to flee Russian assets and weakening the Russian ruble against other currencies.

Initial response criticized

Biden and his administration faced sharp criticism Tuesday, after announcing sanctions on two Russian banks and a handful of wealthy Russian citizens, and imposing restrictions on the purchase of Russia’s sovereign debt.

The measures fell far short of the devastating response that the Biden administration had spent weeks warning Russia to expect and drew criticism from both Democrats and Republicans in Congress.

In an appearance on CNN, Senate Foreign Relations Committee Chairman Robert Menendez, a Democrat, said, “I think you should use the overwhelming amount of (sanctions) now. You may reserve something like what I call the ‘mother of all sanctions,’ unplugging Russia from the SWIFT financial system. But at the end of the day, when is it that we’re going to be clear to Putin that there are severe consequences for what he’s doing?”

Marsha Blackburn, a Republican senator from Tennessee, said in a statement, “Joe Biden has refused to take meaningful action, and his weakness has emboldened Moscow.”

Expert sees merit in both approaches

There are reasonable arguments for both the incremental approach to sanctions and a “shock and awe” approach that puts them all in place at the same time, said Daniel Ahn, a global fellow at the Wilson Center in Washington and a former chief economist for the U.S. Department of State.

On the incrementalist side, he said, the argument is that, “You may want to keep some ammunition in reserve in case of different contingencies, and also to achieve as much political consensus as possible, both domestically and internationally.”

On the side of full implementation, he said, the argument is that incrementalism weakens the signaling effect of sanctions and “gives time for adjustments to be made” by Russia.

However, Ahn said, the difference between the ultimate effects of each approach may not be as great as advocates think.

“As long as there is a sense of uncertainty, or market expectation that there could be future sanctions coming online, that already has a bit of a chilling effect on existing economic and financial activity,” he said. “The risk or uncertainty that sanctions could impose could deter a lot of private sector behavior, which is where the bite of sanctions come from. So, I think from an actual impact perspective, there’s less daylight between the two (approaches) than people think.”

More steps possible

After announcing what it described as the “first tranche” of sanctions Tuesday, the White House said that more would be coming.

In an appearance on CNN Wednesday morning, Daleep Singh, a deputy national security adviser, repeated that assurance.

“Yesterday was a demonstration effect,” he said. “And that demonstration effect will go higher and higher. Russia is already feeling the pain, and let’s remember the bigger purpose. Our purpose is not to max out on sanctions. That serves no purpose to itself. Our purpose is to prevent a large-scale invasion and … seizure of large cities in Ukraine. Our purpose is to prevent human suffering that could involve tens of thousands of casualties. And our purpose is to prevent a puppet regime from taking over in Kyiv that bends to the will of Moscow. That’s what this is all about.”

Incremental approach

The administration’s response may have been affected by the limited nature of the actions Putin took on Monday. U.S. officials have, for weeks, been warning that a massive invasion of Ukraine was imminent, pointing to the more than 150,000 Russian troops positioned on its borders.

Putin on Monday announced that Russia had recognized the independence of Donetsk and Luhansk, two Ukrainian provinces that are partially controlled by Russian-backed separatists. He also said that he would send troops, which he characterized as “peacekeepers,” into the two provinces, although on Wednesday it remained unclear whether Russian soldiers had crossed the border.

In a background briefing Tuesday, a senior administration official characterized Russia’s steps as “the beginning of an invasion” and said the first round of sanctions should be seen as “the beginning of our response.”

U.S. consulting with allies

The sanctions announced by the United States are in addition to similar sanctions being levied by the European Union, United Kingdom, and other U.S. allies. In the U.K., in particular, there have been calls to sanction wealthy Russian oligarchs, many of whom own property in London.

In a statement Wednesday, U.S. State Department spokesperson Ned Price said that Deputy Secretary of State Wendy Sherman spoke with representatives of France, Germany, Italy and the U.K.

“The deputy secretary and her counterparts underscored that Russia’s flagrant disregard for international law demands a severe response from the international community and agreed to coordinate closely on next steps, including massive additional economic sanctions, should Russia continue to escalate its aggression against Ukraine,” Price said. “They highlighted their continuing commitment to diplomacy, while reiterating that progress can only be made in an environment of de-escalation.”

Biden Administration Considers Technology Sanctions if Russia Invades Ukraine

WASHINGTON — 

In the months since Russia began massing troops on the border of Ukraine, the Biden administration has, on multiple occasions, warned that any further aggression by Moscow toward its neighbor would be met with unprecedented levels of sanctions. Now, the White House appears to be dropping some specific hints about what those sanctions might look like.

According to multiple confirmed media reports, the administration has begun laying the groundwork for a ban on the sale of high-technology products containing U.S.-made components or software to Russia.

The plan echoes steps the Trump administration took against the Chinese telecommunications giant Huawei in 2020, barring vendors from selling the company semiconductors it needed to produce mobile telephone handsets. The ban had devastating consequences for Huawei’s business. Once the world leader in smartphone sales, it has fallen to 10th overall since the ban was put in place.

FILE – A man uses his smartphone as he stands near a billboard for Chinese technology firm Huawei at the PT Expo in Beijing, Oct. 31, 2019.

The extent to which the administration intends to cut off Russian supplies of high-tech gear is unclear, and that’s probably intentional, experts said.

“As with any sort of major event, or crisis, or potential invasion, government leaders want options … from strongest to weakest and everything in the middle, in terms of actions that can be taken,” Kevin Wolf, a former assistant secretary of Commerce for export administration in the department’s Bureau of Industry and Security, told VOA.

Wolf, now a partner with the law firm Akin Gump in Washington, said that the administration is unlikely to signal exactly what action it will take unless Russia forces its hand by trying to take over more of Ukraine’s territory.

In 2014, in an earlier invasion, Russia took control of Crimea, a region of Ukraine, and continues to support local militias that control parts of the country’s Donbass region.

Extraterritorial reach

The U.S. appears to be considering the application of a new doctrine, the foreign direct product rule, to Russia. First put forward under the Trump administration, the rule would make it illegal under U.S. law for any entity in the world to sell high-technology equipment to Russia if that equipment was made or tested using U.S. technology.

Theoretically, that could apply to virtually any product in the world that contains semiconductors, given the prevalence of U.S. technology and software involved in the devices’ manufacturing process.

The rule relies on the implicit threat that companies that rely on U.S. technology or software to produce their products — even if the physical components of the products themselves originate outside the U.S. — could find themselves cut off from crucial licenses or equipment if they refuse to honor the U.S. export ban.

The extreme reach of the rule, into the business dealings of non-U.S. firms, makes it politically fraught, according to Jim Lewis, senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies.

However, speaking with VOA, Lewis said, “Using force against Ukraine really justifies it.”

‘No more iPhones for Russia’

The U.S. has a wide range of options when it comes to blocking the transfer of technology to Russia, both in terms of the entities within Russia that the sanctions affect and the companies outside Russia that would be subject to them. (The U.S. already has export controls in place that target Russia’s defense sector, so anything the Biden administration applies would be in addition to those existing sanctions.)

FILE – A customer waits to buy Apple’s new iPhone X before its launch outside Central Universal Department Store in Moscow, Russia, Nov. 3, 2017.

At the more targeted end of the spectrum, the administration could identify specific companies, making it illegal to sell U.S. technology to them. More broadly, the U.S. could impose sectorwide restrictions, barring the export of technology to, for example, the Russian civil aviation industry.

At the far end of the spectrum would be a flat-out ban on the sale of all U.S.-related technology to Russia.

“If they go for the maximum approach, that means no more iPhones for Russia,” said Lewis, of CSIS.

Pushing Moscow toward China?

If the U.S. does move forward with extensive technological sanctions against Russia, it will be difficult for Moscow to fill the gap with domestic production, said Jeffrey Edmonds, a senior analyst at the security think tank CNA.

“Russia has always been fairly weak when it comes to things like microchips, microelectronics and electronics in general,” Edmonds told VOA. “That’s coupled with the fact that Russia has a very weak entrepreneurial system, in that most of the technology companies in that whole sector are really run by government-sponsored organizations that are highly inefficient and subject to high levels of corruption.”

The result could be to push Moscow toward China, which has already been working to create a domestic manufacturing base that, in the future, might be able to provide Russia with homegrown equipment that would render U.S. sanctions ineffective.

In an email exchange with VOA, research analysts Megan Hogan and Abigail Dahlman, at the Peterson Institute for International Economics, pointed out that United Nations data indicate that Russia already imports some 68% of its consumer IT products from China.

“In the short term, the application of the (foreign direct product) rule will provide the Chinese government with further evidence of Western powers, particularly the U.S., meddling in Eastern affairs, validating the Chinese government’s … anti-foreign sanctions measures and further straining U.S.-China relations,” Hogan and Dahlman wrote. “Chinese tech companies will likely be forced to choose between access to the U.S. market and access to the Chinese market, with penalties associated with either decision.”

They continued, “In the long term, the U.S. risks expediting China’s development of its own domestic semiconductor industry. China’s largest chip manufacturer, SMIC (Semiconductor Manufacturing International Corporation), is currently years behind its competitors in terms of its manufacturing technology and capacity. While China is already making moves to improve its domestic semiconductor manufacturing (as is the U.S.), U.S. technology sanctions on Russia are likely to expedite the process at the cost of the American semiconductor industry.”