US Seeks More Ways to Crimp Russia’s War Machine, Oil Revenue, Official Says

The Biden administration continues to consider imposing additional sanctions to reduce China’s export of dual-use goods to Russia’s defense industrial base, a State Department official told a congressional panel July 30.

Asked when the administration will sanction Chinese banks as part of that effort, James O’Brien, the State Department’s assistant secretary for European and Eurasian affairs, said he could not “preview” any future sanctions, but “I assure you this is an area of real focus. I’m not going to promise a date, but I will tell you we work on this every day.”

National Security Adviser Jake Sullivan recently said the administration is preparing new sanctions against Chinese entities, possibly including financial institutions, for supporting Russia's military (see 2407220027). While the administration has already sanctioned hundreds of nonfinancial firms, some lawmakers view the administration’s actions to date as inadequate (see 2406120036 and 2407300033).

O’Brien, who testified before the Senate Foreign Relations Subcommittee on Europe and Regional Security Cooperation, said the administration continues to encourage the EU to take its own actions against China’s support for Russia. While getting the EU to impose sanctions is difficult because unanimity is required, export controls are easier because they only require a “qualified majority,” he noted.

"We'll continue this work with them on all of the ways in which China keeps Russia on the battlefield," he said. "We see our European partners saying that they understand China is helping [Russian President Vladimir] Putin build a military machine that threatens Europe."

O'Brien said the administration also is looking for ways to further reduce Russia’s oil revenue, such as by restricting port access for Russia’s “shadow” tanker fleet. The Russian oil price cap imposed in 2022 (see 2212050014) has driven down the price of Russian oil by $9 to $20 per barrel, he testified. It has also driven up Russia’s export expenses.

Also during the hearing, O’Brien said the administration continues to consider imposing additional economic sanctions on Georgia in response to the country’s recent anti-democratic actions. Another State Department official made a similar comment a week earlier (see 2407230055).

O’Brien also said that Serb Republic President Milorad Dodik seems to be feeling the effects of U.S. sanctions aimed at foreign persons who undermine the 1995 agreement that ended the Bosnian War (see 2406180018). Based on Dodik’s public comments this week, “the sanctions are battering his finances, so he has less and less money,” O’Brien said.