Embargoes and Sanctions

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    Biden Team to Counter Tech Espionage Unveils Cases Involving China and Russia

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    A new division set up by the government to pursue sanctions evasion and technology espionage announced arrests of individuals with ties to foreign governments.The Biden administration announced arrests and criminal charges on Tuesday in five cases involving sanctions evasion and technology espionage efforts linked to Russia, China and Iran.Two Russian nationals were taken into custody last week under accusations of sending aircraft parts to Russia in violation of sanctions imposed after the invasion of Ukraine. In another case, a former Apple engineer is accused of stealing the company’s autonomous vehicle technology to provide it to a Chinese competitor.The announcements were the work of a recently established “technology strike force,” which aims to protect critical American technology or data from theft by hostile nations. The strike force was set up in February and brings together agents with the Commerce and Justice Departments, as well as the F.B.I. and local attorneys offices.Federal agents are working to trace the global movement of U.S. goods and data, as well as the funds used to pay for them. The effort seeks to crack down on the global networks that are channeling goods and technology through opaque jurisdictions and middlemen to try to circumvent sanctions and technology restrictions imposed by the United States.In another case unveiled Tuesday, a California-based engineer is accused of trying to steal source code for advanced machinery that can be used to make parts for military submarines and aircraft to sell it to several Chinese companies.Two other cases were announced, including charges against China-based agents who were accused of attempting to send materials used in weapons of mass destruction to Iran, according to U.S. officials, and charges involving the alleged provision of advanced technology to Russia that could be repurposed by the Russian military.Matthew G. Olsen, the assistant attorney general of the Justice Department’s national security division, told reporters that the cases showed the U.S. government’s ability “to accelerate investigations and surge our collective resources to defend against these threats.”“Foreign nation states are working hard to acquire our most sensitive technologies,” said Matthew Axelrod, the assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security. “We’re working even harder to stop them.”Oleg Patsulya and Vasilii Besedin, the two Russian nationals who were arrested last week under suspicion of trying to procure millions of dollars of prohibited parts for Russian airlines, were charged with conspiracy to violate the Export Control Reform Act and conspiracy to commit international money laundering. If convicted, they would face up to 20 years in prison for each charge.The Commerce Department issued a temporary denial order Tuesday against the men, which prohibits them from transactions involving any U.S. products for 180 days.The order also applies to a freight forwarder in the Maldives that the men had utilized to route shipments of prohibited products into Russia, as well as a Russian airline, Smartavia, that sought to purchase these products.On Thursday, federal officials seized luxury goods purchased with proceeds of their scheme, a U.S. official said. More

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    U.S.-Made Technology Is Flowing to Sanctioned Russian Airlines

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    Russian customs data shows that millions of dollars of aircraft parts made by Boeing, Airbus and others were sent to Russia last year despite sanctions.Last August, Oleg Patsulya, a Russian citizen living near Miami, emailed a Russian airline that had been cut off from Western technology and materials with a tempting offer.He could help circumvent the global sanctions imposed on Rossiya Airlines after Russia’s invasion of Ukraine by shuffling the aircraft parts and electronics that it so desperately needed through a network of companies based in Florida, Turkey and Russia.“In light of the sanctions imposed against the Russian Federation, we have been successfully solving challenges at hand,” Mr. Patsulya wrote, according to a criminal complaint filed Friday with the U.S. District Court in Arizona.Mr. Patsulya and his business partner were arrested Thursday on charges of violating U.S. export controls and international money laundering in a case that illustrates the global networks that are trying to help Russia bypass the most expansive technological controls in history.Since the Russian invasion of Ukraine, the United States has acted in partnership with nearly 40 other governments to impose sanctions on Russia, including limits on Moscow’s access to weapons, computer chips, aircraft parts and other products needed to fuel its economy and its war. The sanctions also applied to Russian airlines including Aeroflot, its subsidiary Rossiya and others.But despite these far-reaching sanctions, thousands of shipments of aircraft parts were successfully sent into Russia last year, according to a trove of Russian customs data obtained by The New York Times.The data, which was compiled and analyzed by Import Genius, a U.S.-based trade data aggregator, shows that tens of millions of dollars of aircraft parts were sent to Russian airlines explicitly sanctioned by the Biden administration, including to Rossiya Airlines, Aeroflot, Ural Airlines, S7 Airlines, Utair Aviation and Pobeda Airlines.Those shipments were made possible by illicit networks like Mr. Patsulya’s, which have sprung up to try to bypass the restrictions by shuffling goods through a series of straw buyers, often in the Middle East and Asia.For instance, dozens of shipments of copper wires, bolts, graphite and other parts marked as made in the United States by Boeing slipped into the warehouses of Aeroflot last year. They traversed obscure trading companies, free-trade zones and industrial parks in the United Arab Emirates and China, and then traveled into Russia, to help patch up Aeroflot’s dilapidated fleet.The data captures more than 5,000 individual shipments of aircraft parts into Russia over a period of eight months in 2022, from simple screws to a Honeywell-branded aircraft engine starter valued at $290,000.In all, it shows that $14.4 million of U.S.-made aircraft parts were sent into Russia during the eight months, including $8.9 million of parts that are described as being manufactured or trademarked by the U.S. plane maker Boeing and sold into Russia via third parties.Boeing said it had fully complied with U.S. sanctions and had suspended providing parts, maintenance and technical support for customers in Russia in early 2022. Experts in the aviation supply chain said the parts probably came from a variety of sources, such as existing overseas stocks from airlines and repair facilities or resellers who trade in scrapped parts.A Boeing plant in Renton, Wash. Millions of dollars of parts described as being manufactured or trademarked by the U.S. plane maker were sold into Russia via third parties.Grant Hindsley for The New York TimesMost of the products were routed through countries like the United Arab Emirates, Turkey, China and the Maldives, according to the data. But a handful of shipments — including to Rossiya — were sent directly from the United States or Europe.The shipments also increased over the course of last year as Russia recruited global businesses to help it bypass the sanctions. The trend suggests that “networks for evading sanctions took time to establish during the immediate post-export-control scramble but are now in a position to help Russian airlines source some key parts,” said William George, the director of research at Import Genius.The Russian nationals taken into custody on Thursday began setting up their scheme last May to send aircraft parts from the United States to Russia in violation of export regulations, according to the criminal complaint.The men are accused of fielding requests for parts, including expensive brake systems for a Boeing 737, from at least three Russian airlines, including two that had been strictly barred from purchasing U.S.-made products through a so-called temporary denial order issued by the Commerce Department. F.B.I. agents raided a condo owned by the men’s company in the Trump Towers in Sunny Isles Beach, Fla., on Thursday, The Miami Herald reported.Lawyers for the men did not immediately respond to a request for comment.Despite the level of sanctions evasion, airplane shipments into Russia remain significantly lower than before the war. U.S. officials say Russian airlines have been forced to cannibalize planes, breaking them down for spare parts to keep others in operation, as well as turning to Iran for maintenance and parts.Russia’s imports of aircraft and aircraft parts fell from $3.45 billion annually before the invasion to only about $286 million afterward, according to The Observatory of Economic Complexity, a data visualization platform that explores global trade dynamics.According to Silverado Policy Accelerator, a Washington nonprofit, China has been the leading overall exporter of parts for aircraft, spacecraft and drones to Russia since the invasion, accounting for about half of all shipments, followed by India. The number of single-aisle planes in use in Russia fell about 16 percent from the summer of 2021 to the summer of 2022, after the invasion, according to Cirium, an aviation data provider. The number of larger twin-aisle planes, often used on international routes, was down about 40 percent.Aviation experts say it will become more challenging for Russian airlines to continue flying planes without access to Western suppliers and help from Boeing and Airbus. The manufacturers regularly consult with airlines to assess any damage and strictly control access to technical documentation used by mechanics.But for now, Russian airlines have been kept alive with the help of international shipments and the use of hundreds of foreign jets that were stranded there after the war began.Tens of thousands of flights are expected to crisscross Russia this month, according to schedules published by Cirium. More than 21,000 flights — over half of them operated by Russian airlines — are expected to carry passengers to and from countries in Central Asia, as well as Turkey, the United Arab Emirates, Egypt, China and Thailand.Half a dozen export control lawyers and former government officials consulted by The New York Times said that many of the shipments in the Import Genius data likely violated sanctions, but that plane makers like Boeing or Airbus were not necessarily at fault. The aviation supply chain is complex and global, and the parts could have come from a variety of sources.“There is pretty clearly a violation,” said William Reinsch, a trade expert at the Center for Strategic and International Studies who oversaw export controls during the Clinton administration. “Less clear is the guilty party.”Aircraft parts originating in the European Union, including those marked as being manufactured or trademarked by Airbus, were also shipped into Russia last year, according to the data.Working on an Airbus A320 plane at a hangar in Haikou, China, in May. Airbus parts were also shipped into Russia last year.Zhang Liyun/Xinhua, via Getty ImagesJustin Dubon, a spokesman for Airbus, said that the company keeps track of genuine parts and documentation provided to its customers and conducts due diligence on all parties requesting spare parts. Restrictions in the United States and Europe mean that “there is no legal way that genuine aircraft parts, documentation and services can get to Russian carriers,” he said.U.S. restrictions technically allow companies to apply for a special license to continue sending products to Russian carriers for “safety of flight” reasons, but both Boeing and Airbus said that they had neither sought nor received such a license. In addition, Airbus said that E.U. laws prevent it from shipping such goods to Russia, regardless of U.S. licensing.Current and former U.S. officials say that some shipments into Russia are to be expected. Kevin Wolf, a partner at the law firm Akin Gump who oversaw export controls during the Obama administration, said the restrictions “can never block everything,” but that the rules were still significantly degrading Russia’s capabilities.He added that the scope of the new rules still exceed current methods of tracking and enforcement in other allied countries. Until the invasion of Ukraine, trade in aircraft parts was mostly unrestricted by the United States and other countries, except to Iran, Cuba, North Korea and Syria.“It’s improving,” Mr. Wolf said, “but it’s still way, way behind.”Compared with other countries that mostly limit their scrutiny to goods crossing their own borders, the United States is unparalleled in its attempt to police commerce around the world.In the past three years, the United States has imposed new technology restrictions for Russia, China and Iran that apply extraterritorially: Products made in the United States, or in foreign countries with the help of American components or technology, are subject to U.S. rules even when changing hands on the other side of the world.Both the United States and the European Union have been ramping up penalties for companies that violate sanctions, and dispatching officials to countries like Kazakhstan to try to persuade them to clamp down on shipments to Russia through their territory. The U.S. government has nine export control officers stationed in Istanbul, Beijing and other locations to trace shipments of sensitive products, and it is setting up three more offices.But providing parts can be a lucrative business. James Disalvatore, an associate director at Kharon, a data and analytics firm that has been monitoring Russia’s efforts to bypass sanctions, said the value of some aircraft parts imported by Russian airlines since the invasion had risen fourfold or more.“I don’t think there’s any secret what’s going on,” said Gary Stanley, a trade compliance expert who advises businesses in aerospace and other industries. “How long have we had Cuban sanctions? How long have we had North Korean sanctions? How long have we had Iranian sanctions? It never seems to put these folks out of business.” More

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    Russia Is Importing Western Weapons Technology, Bypassing Sanctions

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    Western technology goods are winding up in Russian missiles, raising questions about the efficacy of sanctions.Late last month, American and European Union officials traded information on millions of dollars’ worth of banned technology that was slipping through the cracks of their defenses and into Russian territory.Senior tax and trade officials noted a surge in chips and other electronic components being sold to Russia through Armenia, Kazakhstan and other countries, according to slides from the March 24 meeting obtained by The New York Times. And they shared information on the flow of eight particularly sensitive categories of chips and other electronic devices that they have deemed as critical to the development of weapons, including Russian cruise missiles that have struck Ukraine.As Ukraine tries to repel Russia from its territory, the United States and its allies have been fighting a parallel battle to keep the chips needed for weapons systems, drones and tanks out of Russian hands.But denying Russia access to chips has been a challenge, and the United States and Europe have not made a clear victory. While Russia’s ability to manufacture weaponry has been diminished because of Western sanctions adopted more than a year ago, the country is still gaining circuitous access to many electronic components.The result is devastating: As the United States and the European Union rally to furnish Ukrainians with weapons to keep fighting against Russia, their own technology is being used by Russia to fight back.American officials argue that the sweeping sanctions they have imposed in partnership with 38 other governments have severely damaged Russia’s military capacity, and raised the cost to Russia to procure the parts it needs.“My view is that we’ve been very effective in impeding Russia’s ability to sustain and reconstitute a military force,” said Alan Estevez, who oversees U.S. export controls at the Bureau of Industry and Security at the Commerce Department, in an interview in March.“We recognize that this is hard, hard work,” Mr. Estevez added. “They’re adapting. We’re adapting to their adaptations.”There is no doubt that the trade restrictions are making it significantly harder for Russia to obtain technology that can be used on the battlefield, much of which is designed by firms in the United States and allied countries.Direct sales of chips to Russia from the United States and its allies have plummeted to zero. U.S. officials say Russia has already blown through much of its supply of its most accurate weapons and has been forced to substitute lower-quality or counterfeit parts that make its weaponry less accurate.But trade data shows that other countries have stepped in to provide Russia with some of what it needs. After dropping off sharply immediately after the Ukrainian invasion, Russia’s chip imports crept back up, particularly from China. Imports between October and January were 50 percent or more of median prewar levels each month, according to tracking by Silverado Policy Accelerator, a think tank.Sarah V. Stewart, Silverado’s chief executive, said the export controls imposed on Russia had disrupted pre-existing supply chains, calling that “a really positive thing.” But she said Russia was “still continuing to get quite a substantial amount” of chips.“It’s really a supply chain network that is very, very large and very complex and not necessarily transparent,” Ms. Stewart said. “Chips are truly ubiquitous.”A Ukrainian serviceman holding an electronic unit of an unmanned aerial vehicle used by Russia against Ukraine, during a media briefing of the Security and Defense Forces of Ukraine in Kyiv last week.STR/NurPhoto, via Getty ImagesAs Russia has tried to get around restrictions, U.S. officials have steadily ratcheted up their rules, including adding sanctions on dozens of companies and organizations in Russia, Iran, China, Canada and elsewhere. The United States has also expanded its trade restrictions to include toasters, hair dryers and microwaves, all of which contain chips, and set up a “disruptive technology strike force” to investigate and prosecute illicit actors trying to acquire sensitive technology.But the illicit trade in chips is proving hard to police given the ubiquity of semiconductors. Companies shipped 1.15 trillion chips to customers globally in 2021, adding to a huge worldwide stockpile. China, which is not part of the sanctions regime, is pumping out increasingly sophisticated chips.The Semiconductor Industry Association, which represents major chip companies, said that it was engaging with the U.S. government and other parties to combat the illicit trade in semiconductors, but that controlling their flow was extremely difficult.“We have rigorous protocols to remove bad actors from our supply chains, but with about one trillion chips sold globally each year, it’s not as simple as flipping a switch,” the association said in a statement.So far, the Russian military appears to have been relying on a large stockpile of electronics and weaponry it accumulated before the invasion. But that supply may be drying up, making it more urgent for Russia to obtain new shipments.A report issued Tuesday by Conflict Armament Research, an independent group that examines Russian weaponry recovered from the battlefield, revealed the first known example of Russia’s making weapons with chips manufactured after the invasion began.Three identical chips, made by a U.S. company in an offshore factory, were found in Lancet drones recovered from several sites in Ukraine this past February and March, according to Damien Spleeters, who led the investigation for C.A.R.Mr. Spleeters said his group was not revealing the chip’s manufacturer while it worked with the company to trace how the product ended up in Russia.These chips were not necessarily an example of an export control violation, Mr. Spleeters said, since the United States did not issue restrictions on this specific type of chip until September. The chips were manufactured in August and may have been shipped out soon thereafter, he said.But he saw their presence as evidence that Russia’s big prewar stockpile of electronics was finally running out. “Now we are going to start seeing whether controls and sanctions will be effective,” Mr. Spleeters said.The parent company of the firm that designed the drone, the Kalashnikov Group, a major Russian weapons manufacturer, has publicly challenged the West’s technology restrictions.“It is impossible to isolate Russia from the entire global electronic component base,” Alan Lushnikov, the group’s president, said in a Russian-language interview last year, according to a translation in a report from the Center for Strategic and International Studies, a think tank. “It’s a fantasy to think otherwise.”That quote included “some bluster,” Gregory Allen, one of the report’s authors, said at an event in December. But he added: “Russia is going to try and do whatever it takes to get around these export controls. Because for them, the stakes are incredibly, incredibly high.”As the documents from the March meeting show, U.S. and European officials have become increasingly concerned that Russia is obtaining American and European goods by rerouting them through Armenia, Kazakhstan and other Central Asian countries.One document marked with the seal of the U.S. Bureau of Industry and Security said that in 2022, Armenia imported 515 percent more chips and processors from the United States and 212 percent more from the European Union than in 2021. Armenia then exported 97 percent of those same products to Russia, the document said.In another document, the Bureau of Industry and Security identified eight categories of chips and components deemed critical to Russian weapons development, including one called a field programmable gate array, which had been found in one model of Russian cruise missile, the KH-101.The intelligence sharing between the United States and Europe is part of a nascent but intensifying effort to minimize the leakage of such items to Russia. While the United States has deeper experience with enforcing sanctions, the European Union lacks centralized intelligence, customs and law enforcement abilities.The United States and the European Union have both recently dispatched officials to countries that were shipping more to Russia, to try to cut down that trade. Mr. Estevez said a recent visit to Turkey had persuaded that government to halt transshipments to Russia through their free trade zone, as well the servicing of Russian and Belarusian airplanes in Turkish airports.Biden administration officials say shipments to Russia and Belarus of the electronic equipment they have targeted fell 41 percent between 2021 and 2022, as the United States and its allies expanded their restrictions globally.Matthew S. Axelrod, the assistant secretary for export enforcement at the Bureau of Industry and Security, said the picture was one of a “broad decrease.”“But still there are certain areas of the world that are being used to get these items to Russia,” he said. “That’s a problem that we are laser-focused on.”John Ismay More

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    China’s Economic Support for Russia Could Elicit More Sanctions

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    U.S. officials pledged to crack down on shipments to Russia that can be used for both civilian and military purposes, but that has proved hard to police.WASHINGTON — President Biden and his top officials vowed this week to introduce additional sanctions aimed at impeding Russia’s war efforts against Ukraine. But the administration’s focus is increasingly shifting to the role that China has played in supplying Russia with goods that have both civilian and military uses.As one of the world’s biggest manufacturers of products like electronics, drones and vehicle parts, China has proved to be a particularly crucial economic partner for Russia.Beijing has remained officially unaligned in the war. Yet China, along with countries like Turkey and some former Soviet republics, has stepped in to supply Russia with large volumes of products that either civilians or armed forces could use, including raw materials, smartphones, vehicles and computer chips, trade data shows.Administration officials are now expressing concern that China could further aid Russia’s incursion by providing Moscow with lethal weapons. While there is no clear evidence that China has given weapons and ammunition to Russia, Secretary of State Antony J. Blinken warned in recent days that China may be preparing to do so.President Biden, speaking in Kyiv on Monday, said the United States and its partners would announce new measures targeting sanctions evasion this week. He did not specify whether those actions would be directed at Moscow or its trading partners.“Together we have made sure that Russia is paying the price for its abuses,” he said the next day in Warsaw.And in a speech on Tuesday at the Council on Foreign Relations, Wally Adeyemo, the deputy Treasury secretary, said the United States would be working “to identify and shut down the specific channels through which Russia attempts to equip and fund its military.”“Our counterevasion efforts will deny Russia access to the dual-use goods being used for the war and cut off these repurposed manufacturing facilities from the inputs needed to fill Russia’s production gaps,” he said.The comments came on the same day that Wang Yi, China’s top diplomat, visited Moscow.The actions that the United States has taken against Russia in partnership with more than 30 countries constitute the broadest set of sanctions and export controls ever imposed against a major economy. But this regime still has its limits.One year into the war, the Russian economy is stagnant, but not crippled. The country has lost direct access to coveted Western consumer brands and imports of the most advanced technology, like semiconductors. But individuals and companies around the world have stepped in to provide Russia with black market versions of these same products, or cheaper alternatives made in China or other countries.Russia is unable to produce precision missiles today because the country no longer has access to leading-edge semiconductors, a U.S. official said.Maxim Shipenkov/EPA, via ShutterstockIn particular, the United States and its allies appear to have had limited success in stopping the trade of so-called dual-use technologies that can be used in both military equipment and consumer goods.The United States included many types of dual-use goods in the export controls it issued against Russia last February, because the goods can be repurposed for military uses. Aircraft parts that civilian airlines can use, for example, may be repurposed by the Russian Air Force, while semiconductors in washing machines and electronics might be used for tanks or other weaponry.The Chinese Spy Balloon ShowdownThe discovery of a Chinese surveillance balloon floating over the United States has added to the rising tensions between the two superpowers.Tensions Rise: In the aftermath of the U.S. downing of a Chinese spy balloon on Feb. 4 and three unidentified flying objects a week later, the nations have traded accusations over their spying programs.U.S.-China Meeting: Secretary of State Antony Blinken held a confrontational meeting with his Chinese counterpart on Feb. 18 in Munich, resuming diplomatic contact between Washington and Beijing.A ‘Military-Civil Fusion’: The international fracas over China’s spy balloon program has thrown a light on Beijing’s efforts to recruit commercial businesses to help strengthen the Chinese military.Unidentified Objects: As more objects were shot down after the balloon incident, experts warned that there was an “endless” array of potential targets crowding America’s skies. Here’s a look at some of them.Top U.S. officials warned their Chinese counterparts against supporting Russia’s war effort after the invasion of Ukraine last year, saying there would be firm consequences. While China has been careful not to cross that line, it has provided support for Russia in other ways, including through active trade in certain goods..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The United States has cracked down on some of the companies and organizations providing goods and services to Russia. In January, it imposed sanctions on a Chinese company that had provided satellite imagery to the Wagner mercenary group, which has played a large role in the battle for eastern Ukraine. In December, it added two Chinese research institutes to a list of entities that supply the Russian military, which will restrict their access to U.S. technology.But tracking by research firms shows that trade in goods that the Russian military effort can use has flourished. According to the Observatory of Economic Complexity, an online data platform, shipments from China to Russia of aluminum oxide, a metal that can be used in armored vehicles, personal protective equipment and ballistic shields, soared by more than 25 times from 2021 to 2022.Shipments of minerals and chemicals used in the production of missile casings, bullets, explosives and propellants have also increased, according to the Observatory of Economic Complexity. And China shipped $23 million worth of drones and $33 million worth of certain aircraft and spacecraft parts to Russia last year, up from zero the prior year, according to the group’s data.Data from Silverado Policy Accelerator, a Washington nonprofit, shows that Russian imports of integrated circuits, or chips, which are crucial in rebuilding tanks, aircraft, communications devices and weaponry, plummeted immediately after the invasion but crept up over the past year.In December, Russia’s imports of chips had recovered to more than two-thirds of their value last February, just before the war began, according to Silverado. China and Hong Kong, in particular, together accounted for nearly 90 percent of global chip exports to Russia by value from March to December.Shipments from China to Russia of smart cards, light-emitting diodes, polysilicon, semiconductor manufacturing equipment and other goods have also risen, the firm said.Secretary of State Antony J. Blinken said he had shared concerns with Wang Yi, China’s top diplomat, that Beijing was considering providing weapons and ammunition to aid Russia’s campaign in Ukraine.Pool photo by Stefani ReynoldsRelations between the United States and China have soured in recent weeks after the flight of a Chinese surveillance balloon across the United States early this month. But divisions over Russia are further straining geopolitical ties. A meeting between Mr. Blinken and Mr. Wang, his Chinese counterpart, on the sidelines of the Munich Security Conference on Saturday night was particularly tense.U.S. officials have been sharing information on China’s activities with allies and partners in their meetings in Munich, a person familiar with the matter said.On “Face the Nation” on Sunday, Mr. Blinken said he had shared concerns with Mr. Wang that China was considering providing weapons and ammunition to aid Russia’s campaign in Ukraine, and that such an action would have “serious consequences” for the U.S.-Chinese relationship.“To date, we have seen Chinese companies — and, of course, in China, there’s really no distinction between private companies and the state — we have seen them provide nonlethal support to Russia for use in Ukraine,” Mr. Blinken said.“The concern that we have now is, based on information we have, that they’re considering providing lethal support,” he added. “And we’ve made very clear to them that that would cause a serious problem for us and in our relationship.”U.S. officials have emphasized that China by itself is limited in its ability to supply Russia with all the goods it needs. China does not produce the most advanced types of semiconductors, for example, and restrictions imposed by the United States in October will prevent Beijing from buying some of the most advanced types of chips, and the equipment used to make them, from other parts of the world.Russia is unable to produce precision missiles today because the country no longer has access to leading-edge semiconductors made by the United States, Taiwan, South Korea and other allied sources, a senior administration official said on Monday.“While we are concerned about Russia’s deepening ties with them, Beijing cannot give the Kremlin what it does not have, because China does not produce the advanced semiconductors Russia needs,” Mr. Adeyemo said during his remarks. “And nearly 40 percent of the less advanced microchips Russia is receiving from China are defective.”But Ivan Kanapathy, a former China director for the National Security Council, said that most of what Russia needed for its weapons were less advanced chips, which are manufactured in plenty in China.“The U.S. government is very well aware that our export control system is designed in a way that really relies on a cooperative host government, which we don’t have in this case,” Mr. Kanapathy said.He added that it was “quite easy” for parties to circumvent export control through the use of front companies, or by altering the names and addresses of entities. “China is quite adept at that.” More

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    Russia Sidesteps Western Punishments, With Help From Friends

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    A surge in trade by Russia’s neighbors and allies hints at one reason its economy remains so resilient after sweeping sanctions.WASHINGTON — A strange thing happened with smartphones in Armenia last summer.Shipments from other parts of the world into the tiny former Soviet republic began to balloon to more than 10 times the value of phone imports in previous months. At the same time, Armenia recorded an explosion in its exports of smartphones to a beleaguered ally: Russia.The trend, which was repeated for washing machines, computer chips and other products in a handful of other Asian countries last year, provides evidence of some of the new lifelines that are keeping the Russian economy afloat. Recent data show surges in trade for some of Russia’s neighbors and allies, suggesting that countries like Turkey, China, Belarus, Kazakhstan and Kyrgyzstan are stepping in to provide Russia with many of the products that Western countries have tried to cut off as punishment for Moscow’s invasion of Ukraine.Those sanctions — which include restrictions on Russia’s largest banks along with limits on the sale of technology that its military could use — are blocking access to a variety of products. Reports regularly filter out of Russia about consumers frustrated by high-priced or shoddy goods, ranging from milk and household appliances to computer software and medication, said Maria Snegovaya, a senior fellow for Russia and Eurasia at the Center for Strategic and International Studies, in an event at the think tank this month.Even so, Russian trade appears to have largely bounced back to where it was before the invasion of Ukraine last February. Analysts estimate that Russia’s imports may have already recovered to prewar levels, or will soon do so, depending on their models.In part, that could be because many nations have found Russia hard to quit. Recent research showed that fewer than 9 percent of companies based in the European Union and Group of 7 nations had divested one of their Russian subsidiaries. And maritime tracking firms have seen a surge in activity by shipping fleets that may be helping Russia to export its energy, apparently bypassing Western restrictions on those sales.While Western countries have not banned the shipment of consumer products like cellphones and washing machines to Russia, other sweeping penalties were expected to clamp down on its economy. They include a cap on the price that Russia can charge for its oil as well as restricted access to semiconductors and other critical technology.Companies like H&M halted operations in Russia after the invasion of Ukraine, but the economy has proved resilient.Maxim Shipenkov/EPA, via ShutterstockSome companies, including H&M, IBM, Volkswagen and Maersk, halted operations in Russia after the invasion, citing moral and logistical reasons. But the Russian economy has proved surprisingly resilient, raising questions about the efficacy of the West’s sanctions. Countries have had difficulty reducing their reliance on Russia for energy and other basic commodities, and the Russian central bank has managed to prop up the value of the ruble and keep financial markets stable.On Monday, the International Monetary Fund said it now expected the Russian economy to grow 0.3 percent this year, a sharp improvement from its previous estimate of a 2.3 percent contraction.The I.M.F. also said it expected Russian crude oil export volume to stay relatively strong under the current price cap, and Russian trade to continue being redirected to countries that had not imposed sanctions.Most container ships have stopped ferrying goods like phones, washing machines and car parts into the port of St. Petersburg. Instead, such products are being carried on trucks or trains from Belarus, China and Kazakhstan. Fesco, the Russian transport operator, has added new ships and new ports of call to a route with Turkey that transports Russian industrial goods and foreign appliances and electronics between Novorossiysk and Istanbul.Sergey Aleksashenko, former deputy minister of finance of the Russian Federation, said at an event this month that 2023 would be “a difficult year” for the Russian economy, but that there would be “no catastrophe, no collapse.”Some parts of the Russian economy are struggling, he said, pointing to car factories that shut down after being unable to secure parts from Germany, France, Japan and South Korea. But military expenditures and higher energy prices helped prop it up last year.“We may not say that Russian economy is in tatters, that it is destroyed, that Putin lacks funds to continue his war,” Mr. Aleksashenko said, referring to President Vladimir V. Putin. “No, it’s not true.”Russia stopped publishing trade data after its invasion of Ukraine. But analysts and economists can still draw conclusions about its trade patterns by adding up the commerce that other countries report with Russia.The International Monetary Fund said it expected Russian crude oil exports to stay relatively strong despite a Western price cap. Andrey Rudakov/BloombergMatthew Klein, an economics writer and a co-author of “Trade Wars Are Class Wars,” is one of the people drawing conclusions about this Russia-size hole in the global economy. According to his calculations, the value of global exports to Russia in November was just 15 percent below a monthly preinvasion average.Global exports to Russia most likely fully recovered in December, though many countries have not yet issued their trade data for the month, he said.“Most of that recovery has been driven overall by China and Turkey particularly,” Mr. Klein said.It’s unclear how much of this trade violates sanctions imposed by the United States and Europe, but the patterns are “suspicious,” he said. “It would be consistent with the idea that there are ways of trying to get around some of the sanctions.”Silverado Policy Accelerator, a Washington nonprofit, recently issued a similar analysis, estimating that the value of Russian imports from the rest of the world had exceeded prewar levels by September.One of the case studies in that report was the jump in Armenian smartphone sales. Andrew S. David, the senior director of research and analysis at Silverado, said the trends reflected how supply chains had shifted to continue providing Russia with goods.Samsung and Apple, previously major suppliers of Russian cellphones, pulled out of the Russian market after the invasion. Exports of popular Chinese phone brands, like Xiaomi, Realme and Honor, also initially dipped as companies struggled to understand and cope with new restrictions on sending technology or making international payments to Russia.But after an “adjustment period,” Chinese brands started to take off in Russia, Mr. David said. Overall Chinese exports to Russia reached a record high in December, helping to offset a steep drop in trade with Europe. Apple and Samsung phones also appeared to begin to find their way back to Russia, rerouted through friendly neighboring countries.“Armenia is certainly not the only one,” Mr. David said. “There’s a lot coming through central western Asia, Turkey and the former Soviet republics.”Shipments to Russia of other products, like passenger vehicles, have also rebounded. And China has increased exports of semiconductors to Russia, though Russia’s total chip imports remain below prewar levels.President Vladimir V. Putin at a military training facility in Russia. Military expenditures and higher energy prices helped prop up the Russian economy last year.Pool photo by Mikhail KlimentyevOne major open question is how effectively the Western price cap will hold down Russia’s oil revenue this year.The cap allows Russia to sell its oil globally using Western maritime insurance and financing as long as the price does not exceed $60 per barrel. That limit, which is essentially an exception to Group of 7 sanctions, is designed to keep oil flowing on global markets while limiting the Russian government’s revenue from it.Some analysts have suggested that Russia is finding ways around the effort by using ships that do not rely on Western insurance or financing.Ami Daniel, the chief executive of Windward, a maritime data company, said he had seen hundreds of instances in which people from countries like the United Arab Emirates, India, China, Pakistan, Indonesia and Malaysia bought vessels to try to set up what appeared to be a non-Western trading framework for Russia.“Basically, Russia has been gearing up toward being able to trade outside of the rule of law,” he said.Mr. Daniel said his firm had also seen a sharp uptick in shipping practices that appeared to be Russian efforts to contravene Western sanctions. They include transfers of Russian oil between ships far out at sea, in international waters that are not under the jurisdiction of any country’s navy, and attempts by ships to mask their activities by turning off satellite trackers that log their location or transmitting fake coordinates.Much of this activity had been taking place in the mid-Atlantic Ocean. But after media coverage of suspicious practices in this region, the hub moved south, off the coast of West Africa, Mr. Daniel said.“They’re exploding,” he said of deceptive shipping practices. “It’s happening at an industrial scale.”So far, the oil price cap appears to be accomplishing its goal of reducing the price that Russia can charge while keeping global supplies flowing. But it remains to be seen whether this shadow fleet of ships is big enough to allow Russia to buy and sell oil outside the cap, said Ben Cahill, a senior fellow at the Center for Strategic and International Studies, during a January panel discussion.“If that fleet is big enough for Russia to really operate outside the reach” of the Group of 7 countries, the cap probably “won’t have the kind of leverage that policymakers wanted,” Mr. Cahill said. “I think we should know within a couple of months.”Alan Rappeport More

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    U.S. Blocks Dominican Republic Sugar Imports, Citing Forced Labor

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    An import ban targets sugar from Central Romana Corporation, a behemoth whose sugar is sold under the Domino brand.WASHINGTON — The Biden administration announced Wednesday that it would block shipments of sugar from Central Romana Corporation, a Dominican Republic company that produces sugar sold in the United States under the Domino brand and that has long faced allegations of subjecting its workers to poor labor conditions.U.S. Customs and Border Protection issued what is known as a withhold release order against the company “based on information that reasonably indicates the use of forced labor in its operations,” including abusive working and living conditions, excessive overtime, withheld wages and other violations.“Manufacturers like Central Romana, who fail to abide by our laws, will face consequences as we root out these inhumane practices from U.S. supply chains,” AnnMarie R. Highsmith, the executive assistant commissioner of the agency’s Office of Trade, said in a statement.Central Romana responded that it was “very disappointed” by the decision and that it had been investing significantly for years to improve the living conditions of its employees.“We disagree vehemently with the decision as we do not believe it reflects the facts about our company and the treatment of our employees,” it said in a statement on Wednesday.Central Romana, which is the largest landholder and employer in the Dominican Republic, exports more than 200 million pounds of sugar to the United States each year. It is owned partly by the Fanjul family, an influential force in U.S. politics for decades as key donors to both Republicans and Democrats.The measures have been the subject of an intense debate on Capitol Hill, where profits from the sugar industry are funneled into generous campaign contributions and lobbying expenditures, according to people familiar with the discussions who spoke on the condition of anonymity.The United States is the most important market for Dominican sugar, and the move could have a crippling effect on Central Romana, which alone produces roughly 59 percent of the Dominican Republic’s sugar, according to the U.S. Department of Agriculture.It could also cause significant disruptions to U.S. sugar imports in the near term, though economists said the impact on sugar prices, which are heavily influenced by regulation, remained to be seen. Those regulations include price supports that keep U.S. sugar prices far above those on world markets, as well as preferential tariff rates for sugar imported from the Dominican Republic.Charity Ryerson, the executive director at Corporate Accountability Lab, a Chicago-based human rights organization, said the restrictions would be a powerful impetus for Central Romana to improve conditions for its workers.“Central Romana has been on notice for years but has failed to comply with even the most basic of labor and human rights standards in their operation,” she said. “From this moment forward, we have a really significant opportunity for C.B.P., for Central Romana and civil society to work together to ensure that workers are free, they’re treated fairly and that forced labor never happens on these farms again.”The Dominican sugar industry has been the subject of scrutiny for decades for its poor labor practices. Media reports and human rights groups have said Central Romana exerts tremendous power over its workers, many of whom are Haitian migrants and some of whom lack citizenship.Many workers live in dilapidated housing without running water and electricity, according to civil society groups. The company has also been accused of forcibly evicting families from their homes in the Dominican Republic, and employing a force of masked and armed guards that intimidate workers.Central Romana has publicly defended its practices and has said it offers among the best working conditions in the industry. A congressional delegation that visited the Dominican Republic and met with workers this summer said the country had made progress toward addressing some of the worst abuses, including child labor and human trafficking.But the delegation still found evidence that forced labor was persisting on the sugar cane farms. Sugar cane cutters faced “arduous working and living conditions” and “a culture of fear appears to permeate the industry,” Representatives Earl Blumenauer of Oregon and Dan Kildee of Michigan, both Democrats, said in a statement.Members of the Fanjul family, Cuban exiles who started sugar cane farms in Florida and acquired the Dominican Republic company in the 1980s, have been a powerful force in American politics for decades, known for relationships with the Bush family, the Clintons and Senator Marco Rubio, Republican of Florida, among others.They are part owners of American Sugar Refining, the world’s largest sugar refinery, which processes sugar from the Dominican Republic at its U.S. facilities and sells to companies including Hershey. More