Hotly debated is how to respond to the Ukraine crisis. Another option is to deny Russia access to vital technology.
If Russia continues to invade Ukraine’s territories, the Biden administration may deprive it a vast array of low- or high-tech US-made goods. This includes commercial electronics, computers and semiconductors as well as aircraft parts.
This would be achieved by President Joe Biden requiring that companies wishing to ship a larger list of goods to Russia get licenses from the United States. The administration would then deny those licenses according to people familiar with the matter.
These measures, whose details were not reported previously, are part an initial set of sanctions for export that the United States had prepared to damage Russia’s economic, and include everything from lasers, telecoms equipment, and maritime items.
The White House and Commerce Department, the US’s export control agency, did not immediately reply to Reuters’ requests.
‘Degrade Russia’s industrial production’
Even though some White House officials pledged to spare Russian consumers the brunt, the package was still being refined over the weekend.
The goal of the export control measures is “to degrade Russia’s ability to produce industrial production in a few key sectors”, Peter Harrell, who sits in the White House’s National Security Council, stated in a speech last month.
“We’re more interested in how can we degrade Russia’s industrial production and other high-tech industries than how can we target the Russian people at large,” he said.
In response to the Russian troops advancing along Ukraine’s borders, the Obama administration has been vowing to strike Moscow with a potent combination of export controls and bank sanctions for weeks.
The Biden administration announced a first package of sanctions on Tuesday against Russian oligarchs. The UK announced its own sanctions against the military, media, and political sectors.
The Russian president Vladimir Putin has declared two separatist regions of Ukraine independent. He also instructed Russia’s defense ministry that troops would be deployed to the two regions in order to “keep peace.” This is a further increase in tension with the West regarding Ukraine.
The most expansive measure in the initial export control package would be to take a page out of the previous restrictions placed on Chinese telecom giant Huawei Technologies Co Ltd, by former president Donald Trump.
US leverage on semiconductors
It would significantly expand the scope of the so called Foreign Direct Product Rule. It requires firms that use US technology to create technology overseas to obtain a US licence before shipping them to Russia.
“It’s extraordinaryly novel and has the potential to be far more significant than controls only on exports of such items from the United States,” stated Kevin Wolf, a Washington lawyer and former official at US Department of Commerce.
The majority of chips are made from American equipment, which gives the US leverage to control the flow electronics to Russia.
US suppliers would also need to apply for licenses for Russia-bound items, including civil aircraft parts. Although it remains to be determined if Europe will follow the US lead with similar measures, authorities on both sides of Atlantic have indicated that they are working together to prepare a coordinated response.
The package would make certain that license applications would be subject to a strict “policy for denial” standard. Only rare cases would the administration approve them.
Russian companies, which are listed as “military end-users” for their alleged ties, would also be added to the entity blacklist. This would expand the range of items companies would need licenses to acquire.
The administration would also expand the list of products that would require approval from the United States before they could be sent to Russian military end users.