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Punishing Putin: How the US Could Cut Russia Off From the Tech World

From sanctions to diplomatic means, how to adequately respond to the growing crisis in Ukraine is being hotly debated. Another potential option is to deprive Russia of access to vital technology.

If Russia further invades Ukraine’s territory, the Biden administration could deprive it of a vast swath of low- and high-tech US and foreign-made goods; from commercial electronics and computers to semiconductors and aircraft parts.

President Joe Biden would achieve this by requiring that companies seeking to ship an expanded list of goods to Russia obtain licenses from the United States, and his administration would then deny those licenses, people familiar with the matter told Reuters.

The measures, whose details have not been previously reported, are part of an initial suite of export control penalties that the United States has prepared to damage Russia’s economy, targeting everything from lasers to telecoms equipment and maritime items.

The White House, and the Commerce Department, which oversees US export controls, did not immediately respond to Reuters’ requests for comment.


‘Degrade Russia’s industrial production’

The package, which was still being fine-tuned over the weekend and could change, comes even as some White House officials have pledged to spare the Russian consumer from the brunt of the penalties.

The goal of the export control measures “is really to degrade Russia’s ability to have industrial production in a couple of key sectors,” Peter Harrell, who sits on the White House’s National Security Council, said in a speech last month. 

We’re sort of thinking about how do we degrade Russia’s industrial production and sort of high-tech sectors rather than how do we sort of target the Russian people writ-large,” he added.

The administration has been vowing to hit Moscow with a potent cocktail of banking sanctions and export controls for weeks, in response to the hundreds of thousands of Russian troops amassing along Ukraine’s borders

On Tuesday, the Biden administration announced an initial package of sanctions against Russian oligarchs and banks. The UK and the EU announced their own sanctions targeting economic, political, military, business and media sectors.

Their roll-out comes after Russian president Vladimir Putin on Monday recognised two breakaway regions of Ukraine as independent and told Russia’s defense ministry to deploy troops into the two regions to “keep the peace,” heightening tension with the West over Ukraine.

By far the most sweeping measure contained in the initial export controls package would take a page from restrictions placed on Chinese telecom giant Huawei Technologies Co Ltd by former president Donald Trump. 

US leverage on semi-conductors

It would dramatically expand the scope of the so-called Foreign Direct Product Rule, requiring firms that use US tools to make technology overseas to obtain a US license before shipping them to Russia.

“It’s extraordinarily novel and has the potential for being far more significant than controls just on exports of these items from the United States,” said Washington lawyer Kevin Wolf, a former official at the US Department of Commerce.

Most chips are made with American equipment, giving the US leverage to control the flow of electronics to Russia.

US suppliers would also have to obtain licenses for certain Russia-bound items that do not currently require them, such as civil aircraft parts. Whether Europe would follow suit with similar measures remains to be seen, but authorities on both sides of the Atlantic have said they were preparing a coordinated response.

Under changes proposed in the package, the license applications, in turn, would face a strict “policy of denial” standard of review, meaning only in rare cases would the administration approve them.

In addition, Russian companies listed as so-called military end-users for their alleged ties to the Russian military, including a handful of aircraft producers, would be added to a trade blacklist known as the entity list. That would broaden the scope of items the companies would need licenses to obtain.

Finally, the administration would expand the scope of products that would need approval from the United States to go to Russian military end-users.

Source: Euronews