Lack of new US sanctions allows Russia to replenish its war chest

Business Standard

5 days ago

Since President Trump returned to office in January, the United States has issued no new sanctions against Russia related to the full-scale invasion of Ukraine. In some cases, the administration has eased restrictions. And without new ones, analysts say, existing measures lose their force.
The result has created an opening for new dummy companies to funnel funds and critical components to Russia, including computer chips and military equipment that would otherwise be cut off to the Kremlin, trade and corporate records show.
Sanctions became the center point of the Western-led effort to isolate the country after it invaded Ukraine in 2022. The effort evolved into an international game of cat-and-mouse, as evasion schemes regularly sprang up around the world.
During his presidency, Joseph R. Biden Jr. imposed thousands of so-called maintenance sanctions targeting new schemes. But this year, those actions have come to a standstill, according to a New York Times analysis of restrictions on trade, financial transactions and other activities connected to Russia and its president, Vladimir V. Putin.
'Trump's approach to economic statecraft is to impose pressure and get leverage and try to get the best deal possible,' said Edward Fishman, a senior research scholar at the Center on Global Energy Policy at Columbia University. 'For whatever reason, with Russia, he doesn't want to have any leverage over Putin.'
The Biden administration placed, on average, over 170 new sanctions a month on entities linked to Russia from 2022 to 2024. The targets included oil and weapons production, tech procurement and banking.
In total, the Biden administration imposed more than 6,200 blocks on individuals, companies, vessels and aircraft linked to Russia. In Biden's final weeks in office, the United States ramped up pressure even further, issuing nearly three times the monthly average, according to a Times analysis of data from the Treasury Department.
The effects of that pressure are already beginning to erode. A Times review of trade records, online listings and corporate filings identified more than 130 companies in mainland China and Hong Kong that are advertising immediate sales of restricted computer chips to Russia. None of the companies is under sanctions.
One of these firms, HK GST Limited, advertises chips essential to Russian cruise missiles, including the Kh-101, which was recently used in a strike on Kyiv that killed 10 civilians. The firm was incorporated in Hong Kong nine months ago, and its website was set up in February. An analysis of website hosting data, domain ownership, code patterns and contact details links the company to a network of four similar electronics distributors, including Singaporean-based ChipsX and Carbon Fiber Global, a high-performance drone part manufacturer based in China. All of these companies were set up within the last three years.
Several companies in the network have sent restricted components to Russia in violation of U.S. export controls, trade data, online listings and corporate registration records show.
A representative for Carbon Fiber Global denied that the company or ChipsX had sold restricted goods to Russia but declined to address questions about other companies in the network.
For sanctions to work, 'you need to keep running just to stay still,' said Elina Ribakova, an economist at the Peterson Institute for International Economics. She added that, without 'continuous maintenance' of restrictions, Russia's workarounds could take hold, including the establishment of shadowy companies like HK GST Limited and ChipsX.
The United States' abrupt shift on sanctions underscores Mr. Trump's hands-off approach toward Russia, even as fighting has escalated in the region.
Since the start of the year, Russia has intensified its campaign in Ukraine, launching waves of drone and missile attacks that have left scores dead and widespread damage to civilian infrastructure. Analysts say the Kremlin has been quick to seize on growing American disengagement to press its advantage on the battlefield.
Mr. Trump's relative inaction has drawn criticism from both Republican and Democratic lawmakers, who argue that the administration is undermining the Western effort to confront Russian aggression.
In a statement, a White House spokesperson said Mr. Trump was urging leaders from Russia and Ukraine 'to stop the killing while keeping all options on the table.'
The Treasury Department did not respond to a request for comment.
The president has used sanctions aggressively elsewhere, the data shows. Mr. Trump has imposed more than 280 new restrictions on Iran in the past six months, targeting people involved in terror financing. He has also penalized judges at the International Criminal Court for investigating potential Israeli war crimes. And he has used sanctions to crack down on narcotics trafficking and cyber-criminal groups.
By contrast, the Trump administration has eased some restrictions on Russia.
In April, the Treasury Department, which is responsible for administering and enforcing sanctions, quietly lifted limits that had been placed on Karina Rotenberg, the wife of a Russian oligarch. Ms. Rotenberg's husband, Boris, made a fortune in construction and energy, and as a childhood friend of Mr. Putin's he has been a central figure in the Russian president's inner circle for decades.
The announcement, buried at the bottom of a routine bulletin published in April, provided no explanation for Ms. Rotenberg's removal from the sanctions list. It was an unusual deletion. Ms. Rotenberg, an American citizen, was among the first Russian nationals to face sanctions after the Russian invasion.
The Rotenbergs did not respond to requests for comment. The Treasury Department declined to comment on the move, and instead referred questions to the State Department. A State Department spokesperson said in a statement that the delisting was 'independent from our ongoing efforts to advance a negotiated end to the war,' but that the department was 'unable to comment on the specifics of this delisting.'
In February, the Justice Department shuttered the KleptoCapture task force, a unit formed in 2022 to identify and seize assets belonging to Russian oligarchs around the world who were under sanctions. The task force had coordinated investigations across agencies, leading to high-profile seizures of luxury yachts, real estate and private jets. The Department of Justice recently established a task force with a similar structure to focus on Hamas, according to Andrew Adams, the former head of KleptoCapture.
The Department of Justice declined to comment on the closure of the task force.
Russia was also notably left off the White House's 'Liberation Day' tariffs, which took aim at trade with almost every other country. The United States imported more than $3 billion in Russian goods in 2024, more than it brought in from Greece or Egypt, according to data from the Census Bureau.
The tariff omission stood out to experts, especially as Mr. Trump has boasted about the ability of import taxes to bring countries to the bargaining table. He has used tariffs not just as a trade tool but as 'a form of sanction,' according to Mr. Fishman.
Together, these actions signal that the United States is now more willing to tolerate Russia's war and less interested in cracking down, said Maria Shagina, a senior researcher at the International Institute for Strategic Studies.
The American pullback has left the European Union to take the lead on imposing sanctions on Russia.
E.U. restrictions so far have been far less comprehensive overall, especially when it comes to companies and individuals outside Russia who help Moscow sidestep sanctions, according to a Times analysis. These so-called third-country networks are important back channels for the Kremlin to keep its wartime supply chains alive.
The number of sanctions issued by the United States to date outnumbers the European Union's more than two to one. But that's beginning to shift, experts say.
In the past, the United States led that effort for geopolitical reasons. 'But that has changed dramatically,' said Maximilian Hess, a fellow in the Eurasia Program at the Foreign Policy Research Institute. 'Europe has picked up the slack.'
Members of Congress, though, have begun to push for legislative efforts to target Russia.
A new bill, co-sponsored by Senators Lindsey Graham, Republican of South Carolina, and Richard Blumenthal, Democrat of Connecticut, would impose sweeping new restrictions. The legislation includes a 500 percent tariff on any country that continues buying Russian energy, including China and India.
The bill has broad bipartisan support, though its critics argue that it could upend global trade and ensnare allies in Europe.
Mr. Blumenthal, who recently returned from Kyiv, said Ukrainian officials were growing increasingly anxious for U.S. support. In an interview, he argued that the sanctions would give the United States a chance to level the playing field.
'The Ukrainians are outnumbered, they're outgunned,' he said. 'We have the opportunity to correct that imbalance.'