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Putin Wants Chinese Banks to Help Military Parts Trade – FT

“Beijing and Moscow were discussing ring-fencing one or more banks that would finance trade in components for Russia’s defence industry” – likely to incur US sanctions


China has been accused of fuelling the war in Ukraine by supplying Russia with a big increase in computer chips and other parts for Russian weapons.
China has been accused of fuelling the war in Ukraine by supplying Russia with a big increase in computer chips and other parts for Russian weapons. This Sputnik photo (via Reuters) shows Russian President Vladimir Putin with Chinese leader Xi Jinping in Beijing, in February 2022.

 

Russian President Vladimir Putin made “three main requests” to his Chinese counterpart Xi Jinping on his visit to Beijing last month, according to a report on Monday by the Financial Times, which said he only had partial success.

Putin allegedly asked for China to snub Ukraine’s peace conference in Switzerland this month. That request appeared to be successful, as Beijing said on Friday it would not attend.

A second request, for a more convenient way to pay for Chinese parts bought by the Russian military, is allegedly under consideration.

 

ALSO SEE: US ‘Looking Closely’ at China Banks Over War Aid to Russia

 

Two sources reportedly told the FT: “Beijing and Moscow were discussing ring-fencing one or more banks that would finance trade in components for Russia’s defence industry — all but certainly incurring US sanctions that would cut any such bank out of the broader global financial system.”

That would appear to be a risky – and tricky – thing to try to achieve, not least because the White House appears to be well aware of this, as the US has given repeated warnings that it would sanction Chinese banks.

US Deputy Secretary of State Kurt Campbell reiterated the threat of possible sanctions on Chinese firms and banks on a visit to NATO late last week over their support for Russia’s war in Ukraine.

Campbell told reporters in Brussels there was an urgent need for European and NATO countries “to send a collective message of concern to China about its actions – which we view are destabilizing in the heart of Europe.”

He said Chinese support was helping Moscow reconstitute elements of its military, including long-range missile, artillery and drone capabilities, and its ability to track battlefield movements.

“Where we are primarily focused are on Chinese companies that have been involved in a systematic way in supporting Russia,” he said when asked if the Chinese leadership and banks could be targeted.

“We’ve also looked closely at financial institutions.”

 

Pipeline deal hits a snag

Meanwhile, a third goal – to get China to sign an agreement on its Power of Siberia-2 pipeline – hit a wall because of demands on price and supply that Moscow felt were unreasonable, the FT said, citing several sources.

That was a “hefty blow” to Putin, analysts believe, because despite reports that Russia’s GDP is growing, some experts say the economic cost of his war in Ukraine has been enormous, halving the country’s national wealth fund and crushing its top source of revenue: Gazprom.

State oil giant Gazprom, which was a vast money-spinner for Moscow for many years, reported a loss of 629 billion roubles ($6.9 billion) last year – its biggest slump in a quarter of a century, after its exports to Europe plunged to less than a tenth of what they were in the decade before the war.

Gazprom has been in talks for years about building the Power of Siberia-2 pipeline to carry 50 billion cubic metres of natural gas a year from the Yamal region in northern Russia to China via Mongolia, Reuters said.

But China asked to pay close to Russia’s heavily subsidised domestic prices and would only commit to buying a small fraction of the pipeline’s planned annual capacity of 50 billion cubic metres of gas, it said.

Russian Deputy Prime Minister Alexander Novak said last month that Russia and China expect to a sign a contract “in the near future” on the Power of Siberia-2 pipeline.

But analysts said the fact Gazprom CEO Alexei Miller did not accompany Putin on his recent short visit to Beijing was a sign that the pipeline proposal was unlikely.

 

  • Jim Pollard with Reuters

 

NOTE: The headline on this report was amended and the text rejigged on June 3, 2024.

 

ALSO SEE:

China Providing 90% of Chips Used in Russia, Despite Sanctions

Chinese, Russian Firms Agree Multiple Deals as Ties Deepen

Chinese Loans to Russia Quadruple Since Ukraine War – FT

20 China Firms Among 300 Sanctioned by US Over Russian War

Blinken Meets Xi, Warns on China’s Support for Russian War

China-Russia Trade ‘Goes Underground’ as Big Banks Pull Back

Drone Maker DJI Next Likely Target of US China Hawks – NYT

US May Sanction Chinese Banks Helping Russian War — WSJ 

NATO Warns China: Good Ties at Risk, if You Keep Backing Russia

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.

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