Russia remains at the heart of the world’s trade sanctions news, with reports on a host of sanctions-busting firms helping to move everything from parts for Russian president Vladimir Putin’s limousines to road-building equipment into the country.
There is also renewed tension between the US and China, however, as China slaps new restrictions on US firms it says have been exporting weaponry to Taiwan while the US considers imposing harsher restrictions on advanced technology exports.
Sanction turbulence
The aerospace industry has been at the centre of a novel Russian sanctions development.
Following the implementation of EU and US sanctions that have prohibited Russian airlines from using their airspace, Russia refused to return 400 mostly Irish aircraft leased by airlines.
Sanctions also prohibit EU and US firms from exporting spare aircraft parts to Russia, leading Moscow to pass legislation that has legalised the dismantling of other planes to sustain those in need of repair.
However, this hasn’t stalled an ever-decreasing supply of parts, and Russia has now permitted the manufacture of its own spare parts based on the design of well-known manufacturers like Boeing or Airbus – to the concern of some aviation authorities.
Politico spoke with the managing director of the Aviation Advocacy consultancy, Andrew Charlton, who said that, “with or without the sanctions, a Russian aircraft with domestically-produced, but non-approved or supervised by Boeing or Airbus parts, would not be allowed to operate in Europe”.
“Given that Boeing and Airbus aircraft are certified by the [U.S.] Federal Aviation Administration and EU Aviation Safety Agency, respectively, those regulators need to also certify the spares, or be confident that the authority that does so is at a satisfactory standard.”
Logistics breach
Reuters has reported that employees from a German logistics firm that helped move goods to Russia before the invasion of Ukraine have since helped establish a new firm assisting with circumventing sanctions.
The new, Russian-registered firm, Heinrich Tap Rus (HT Rus), offers a “parallel imports” service to clients – meaning the rerouting of goods via third countries into Russia. Clients include the manufacturer of Russian president Vladimir Putin’s limousines, Aurus, and battery suppliers for arms companies.
HT Rus is owned by a company registered in Germany, with a German shareholder and, until recently, a German director. Hellman Worldwide Logistics, the original firm whose employees established HT Rus, has denied any connection to it.
China/US trade tensions
China has imposed sanctions on six US defence firms over their export of arms to Taiwan, Bloomberg reports, stating that the sales “seriously violate the one-China principle”.
The assets of the companies concerned will be frozen, China has said, while their CEOs will also have their assets in China frozen and will be refused access to the country. Taiwanese president, Lai Ching-te, is reportedly mulling a visit to the US as part of a tour of countries with ties to Taiwan.
Washington is said to have told its allies that it is considering a using the “most severe trade restrictions” available if companies continue to ship advanced semiconductor technology to China.
The foreign direct product rule (FDPR) would allow the US to impose restrictions on any product that is made using American technology, even if that good is not made in the US and does not pass through its territory.
The developments come after a threat from G7 leaders last month to impose more sanctions on China itself over its sale of weapons to Russia.
The G7 statement following a meeting of the group in Italy argued that China was “enabling” Russia’s assault on Ukraine. It called for an end to “the transfer of dual-use materials, including weapons components and equipment”.
Sanctions warning
LetterOne, an investment group backed by Russian oligarchs, has called on Western governments “to be open to reviewing their sanctions policies” to reduce negative economic effects.
During its annual review earlier this month (8 July), the company said that sanctions imposed on Russian billionaires Mikhail Fridman and Petr Aven had limited its ability to “invest in businesses and support jobs”.
Fridman and Aven are two owners of LetterOne, although the report stresses that they own “less than 50%” of the group and that it has “recorded 100% compliance” in 2023.
“Very few businesses have had to manage the scope and complexity of challenges that [LetterOne] has been faced with since Putin’s abhorrent war in Ukraine,” said Mervyn Davies, chair of LetterOne, in the report.
Recently, LetterOne launched the first challenge to national security restrictions, after it was forced to sell broadband provider Upp in 2022 over fears of “leverage” by the Russian state.