G7 plans to send tough warning to Chinese banks about ties with Russia - Reuters
Kyiv • UNN
The G7 is expected to issue a strict warning to small Chinese banks to stop helping Russia evade Western sanctions over the war in Ukraine.
U.S. officials expect the group of seven (G7) to send a tough new warning to smaller Chinese banks this week to stop helping Russia evade Western sanctions, citing two people familiar with the matter Reuters reports.
Details
The G7 leaders, who are meeting for the June 13-15 summit in Italy hosted by Prime Minister George Meloni, are expected to focus their private meetings on the threat posed by rising Sino-Russian trade to fight in Ukraine and what to do about it.
These conversations are likely to lead to public statements about the issue related to Chinese banks, according to a U.S. official who was involved in planning the event and another person informed about the issue.
It is expected that the United States and its G7 partners - Great Britain, Canada, France, Germany, Italy and Japan - will not immediately take any punitive measures against any banks during the summit, such as restricting their access to the SWIFT messaging system or suspending access to the dollar. They say they are focused on small institutions rather than the largest Chinese banks, one of the sources said.
According to the sources, negotiations on the exact format and content of the warning were still ongoing. Plans for consideration of this topic in the G7 format were not previously reported.
The U.S. President's deputy national security and economic adviser told The Center for new American security this week that he expects G7 leaders to target China's support for the Russian economy, which is now reoriented around the war.
"Our concern is that China is increasingly becoming a factory of the Russian war machine. You can call it an arsenal of autocracy, given that Russia's military ambitions obviously threaten the existence of Ukraine, but increasingly European security, NATO and transatlantic security," he said.
Singh and other senior Biden administration officials say Washington and its partners are willing to impose sanctions and tighter export controls to reduce Russia's ability to circumvent Western sanctions, including secondary sanctions that could be used against banks and other financial institutions.
Washington is ready to announce significant new sanctions on financial and non-financial targets this week, a source familiar with the plans said.
This year's G7 summit is also expected to focus on leveraging the profits generated from Russian assets frozen in the West in favor of Ukraine.
Washington has so far been unwilling to impose sanctions on China's major banks - analysts have long considered it a "nuclear" option - because of the huge ripple effects it could have on the global economy and U.S.-China relations.
Concerns about the possibility of sanctions have already forced China's major banks to limit payments for cross-border transactions involving Russians or refuse to participate at all, Reuters reported.
This has pushed Chinese companies to small banks at the border and pushed them to use underground financing channels or banned cryptocurrencies. Western officials are concerned that some Chinese financial institutions are all facilitating trade in dual-use civilian and military goods.
Beijing has accused Washington of baseless claims about what it calls a normal trade exchange with Moscow.
The Biden administration this year began investigating what sanctions tools it might have at its disposal to thwart Chinese banks, a U.S. official told Reuters, but had no plans to take such steps anytime soon. In December, US President Joe Biden signed a decree threatening sanctions to financial institutions that help Moscow circumvent Western sanctions.
In the past, the US has imposed sanctions on small Chinese banks, such as Bank of Kunlun, over various issues, including cooperation with Iranian institutions.
China and Russia have contributed to increased trade in the yuan instead of the dollar since the war in Ukraine, potentially protecting their economies from possible US sanctions.
