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US targets ‘disposable’ firms in new Russian sanctions blast

26th February 2024

By: Bloomberg

  

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The latest round of Russia sanctions unveiled Friday targeted hundreds of people and entities from around the globe, including a Liechtenstein company that traded precious metals, a semiconductor reseller based in Ireland and a Finnish supplier of truck parts.

Most of the targets of the latest US sanctions salvo against the Kremlin are based in Russia, largely out of Washington’s reach. But a few of the more than 500 are outside the country, part of the shadowy web of suppliers that the US alleges have helped Russia keep lucrative exports flowing out and vital western technologies and equipment coming in.

President Joe Biden framed the latest sanctions announcement as a major blow to President Vladimir Putin, punishment for his invasion of Ukraine two years ago and the death of dissident Alexey Navalny. “We can’t walk away now,” Biden said. “That’s what Putin is betting on.”

Among the most prominent targets was the state-owned operator of Russia’s Mir national payments system, which facilitates payments abroad and was set up after a previous round of sanctions about a decade ago. Also on the list was the state-owned exporter of rough and polished diamonds and precious metals and a transportation services company, SUEK, whose main client is Russia’s defense ministry.

“This feels like quantity over quality,” said Daniel Tannebaum, a former Treasury Department official now with Oliver Wyman, a management consulting firm. “I fear this won’t move the needle with Russia.”

Numerous Russia-based 3D printer makers were targeted, as were makers of plastic sheeting and “metal structures and parts.” For some, that anonymity is deliberate — they’re tiny operations meant to have short lifetimes.

“Sanctions on individual companies that facilitate Russia’s foreign trade tend to deliver limited effect as these are essentially disposable entities,” said Alexander Isakov, Russia economist at Bloomberg Economics.

Among the rest was the warden of the prison where Navalny died earlier this month. The deputy director of the Federal Penitentiary Service was also included. A Russian shipbuilder that helped produce 15 liquefied natural gas tankers was sanctioned, as was a pulp paper manufacturer.

In its statement announcing the sanctions, the Treasury Department said it was targeting a “major cog” in Russia’s financial infrastructure, sanctions evaders around the world and entities in the military-industrial base.

HD Parts OY is one of the few foreign companies on the list with apparent operations. Based in Vartaa, Finland, the company describes itself on its website as “family owned” since 1976 and supplies parts for Volvo and Scania trucks. Treasury accused the company of providing “thousands of shipments of spare parts since 2022, making it one of the largest foreign suppliers of truck parts to Russian companies.”

Cubit Semiconductor, an Irish company, allegedly made dozens of shipments of sensitive electronic components to a sanctioned Russian company, according to Treasury.

Neither company responded to requests for comment.

Treasury also devoted a section of its press release about the sanctions to what it called the Diegelmann Illicit Finance Network, including a Liechtenstein-based precious metals investment firm owned and run by a pair of Germans. The network allegedly disguised the Russian origin of the precious metals it traded and allowed Russians to buy and sell them for cash, laundering funds.

Edited by Bloomberg

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