US hits Turkish and Chinese companies over Russia trade

The US has hit companies in Turkey, the UAE and China with sanctions as part of a sweeping effort to stop the Russian defence industry easily obtaining sensitive technologies for Vladimir Putin’s war in Ukraine.

More than 250 entities were covered by the measures, which also reached deep into Russia’s war economy, even targeting a provincial bakery refitted to make drones.

The latest US package is timed to coincide with Ukrainian president Volodymyr Zelenskyy’s visit to Washington this week, a show of support for Kyiv even amid political roadblocks that have raised doubts about future military aid.

The sanctions target military contractors and civilian companies that have turned to supporting Russia’s war effort, leading to increasing confidence from the Kremlin that it can bolster its arsenal while western resolve to support Ukraine crumbles.

“We will continue to use the tools at our disposal to promote accountability for Russia’s crimes in Ukraine and those who finance and support Russia’s war machine,” said US secretary of state Antony Blinken.

Ukraine’s allies are particularly concerned about Russia using countries such as Turkey, the UAE and China either as sources or conduits for high-end electronics and high-precision goods that Moscow’s war effort is unable to produce domestically.

The US measures also target companies that have helped transfer munitions and military equipment from North Korea to bolster Russia’s defence stocks.

North Korean dictator Kim Jong Un has swung to supporting Moscow after meeting Putin in September, supplying the Russian military with much-needed artillery rounds.

But the US’s main focus is on industrial companies in Russia, many of which are civilian companies that have switched to producing defence equipment under Putin’s drive to put the economy on a war footing.

The continued supplies of technologies from advanced microchips to ball bearings have helped keep artillery, drones and missiles rolling off the production lines at Russian factories. Putin boasted last week that Ukraine’s overreliance on western backing doomed it to lose the war.

“When you don’t have your own raison d’être, no ideology, industry, money, or anything of your own, then you don’t have a future. And we do,” Putin told a group of servicemen in comments published on Sunday.

The Financial Times reported in November that Nato member Turkey’s exports of military-linked parts to Russia have soared since Moscow launched its full-scale invasion of Ukraine last year. 

The US, EU, UK and other western partners say these so-called high-priority goods are items of particular value to Russia’s war effort and include microchips, navigation equipment and scopes.

Janet Yellen, US Treasury secretary, said: “Our sanctions today continue to tighten the vice on willing third-country suppliers and networks providing Russia the inputs it desperately needs to ramp up and sustain its military-industrial base.”

Washington and Brussels are particularly frustrated that Turkish companies are purchasing dual-use items, which have commercial and military applications, from western suppliers and then re-exporting them to Russia either directly or through intermediaries in central Asia and eastern Europe. 

One of the newly sanctioned Turkish companies, Kartal Exim, describes itself as a “multifunctional supplier of technological equipment”. Russian records suggest it has shipped about $2.1mn of goods to Orlan LLC — a St Petersburg company that is a self-described fishing equipment supplier.

By far the largest category of goods shipped from Kartal Exim to Orlan, worth $1.1mn, was listed as “data transmission” equipment, a category on the high-priority goods list. The items, shipped from Istanbul, were made by western suppliers including Hewlett Packard Enterprise, Fujitsu, Dell and Samsung. Kartal did not respond to an FT request for comment.

While Turkey has not applied western sanctions directly on Russia, it says “strict monitoring and prevention of efforts to skirt sanctions through Turkey is an integral part of our . . . policy”.

In the UAE the new sanctions have targeted 12 companies, many of which are involved in moving aircraft parts into Russia. One of the sanctioned entities is Aspect DWC, a UAE company which, according to Russian customs records, has been shipped parts for Dassault business jets.

A significant focus of sanctions on Chinese companies was a procurement network run by Hu Xiaoxun, a businessman. According to the US Treasury, his company — Jarvis HK — has exported ammunition, loitering munitions and semiconductor microchip manufacturing equipment from China into Russia.

The US also listed 17 other Chinese entities, including Beijing Yunze Technology and Chang Guang Satellite Technology.

According to the listing, the two companies supplied satellite imagery used in Russian operations, including by the Wagner Group. Russia, the Treasury noted, had become “reliant on PRC commercial satellite imagery”.

The US also targeted Ivan Tavrin, a private equity executive who has emerged as a central dealmaker for western companies looking to exit Russia, and Expobank, which has financed several of those deals.