The US has announced new sanctions on several companies and people in Europe and Asia for indirectly helping Russia in the war against Ukraine. This action has been taken against companies accused of providing products and services for Russian military activities. The US State Department has particularly expressed concern about items exported from China to Russia that may be used for military purposes. Under the recent ban, action has been taken against Chinese companies that exported shipping machine tools and microelectronics to Russia. In June this year, the US also took action against some Chinese companies that sold semiconductors to Russia.
Apart from taking action against these companies having ties with Russia, the US has also warned of action against those countries which will allow the opening of branches of Russian banks in their countries. The US believes that such branches can boost Russian President Vladimir Putin’s efforts to finance the war. The US says that countries which allow the opening of these branches may face sanctions.
Will the restrictions really cause problems?
China has criticised these sanctions and said it will take all possible measures to protect its businesses. Russia has so far been able to avoid the impact of US sanctions by working with its new friend China. When the US banned major Russian banks from using dollars after the attack on Ukraine, China and the US worked together to ensure that there were no problems in payments between the two countries.
Both countries are trying to develop a financial and trade system that is not affected by US sanctions. Under this, there is also talk of creating a non-dollar payment system to continue trade and financial transactions without any hindrance. Apart from this, India and Russia are also considering the proposal of ‘dynamic reference rate’ for their respective currencies, the Indian Rupee (INR) and the Russian Ruble (RUB). The proposed system aims to continue the financial transactions between the two countries and reduce the impact of US sanctions on Russia.
