A White House official said on Tuesday (May 28) that the United States and its partners are preparing to use sanctions and export controls to prevent the threat of trade between China and Russia from jeopardizing their security amid the ongoing Ukraine war.
The Russia-Ukraine conflict has been ongoing for over two years, with the United States issuing multiple warnings to China for providing support to the Russian military through trade exports. Secretary of State Blinken directly pointed out during a meeting with Chinese officials in Beijing on April 26 that without China’s support, Russia’s attacks on Ukraine would be difficult to sustain.
In response to Russia’s evasion of Western sanctions, including behavior through Chinese entities to evade sanctions, the U.S. government imposed sanctions on nearly 300 companies and individuals on May 1, including over twenty companies based in China and Hong Kong.
Daleep Singh, the White House Deputy National Security Advisor responsible for international economic affairs, said on Tuesday that countries may take further action to increase the costs for Russia to use shadow fleets to evade the Group of Seven (G7) oil price cap.
He stated that given Moscow’s shift of its economy into a war footing, countries may also expand current financial facilitation sanctions.
Singh noted that the upcoming G7 summit next month is the best opportunity to address Ukraine’s funding gap. The summit will formulate a plan to monetize approximately $300 billion of Russia’s frozen assets. He believes that while there are risks involved, it is necessary.
Speaking at an event hosted by the Brookings Institution, Singh said, “Of course, mobilizing these assets carries risks, policies are about weighing risks and benefits. I believe sanctions are working relative to the goals we’ve set.”
According to a draft statement seen by Reuters, G7 finance ministers on May 25 stated that the G7 will explore how to use the future income from frozen Russian assets to assist Ukraine and focus on China’s overcapacity issue.
Singh indicated that if the G7 reaches a consensus, monetizing the frozen Russian assets could provide $500 billion for Kyiv. Given the severity of the situation, Washington is urging the G7 to take action.
The leaders of the G7 major democracies are scheduled to gather in Italy from June 13 to 15.