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Issue #591

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2014 Media Kit

US looks for Asian cooperation on sanctions against Russia

By: | at 04:58 PM | International Trade  

The United States is lobbying Asian governments to join in sanctions imposed by Washington and the European Union against Russia over its support for separatist rebels in eastern Ukraine, a senior State Department official said.

The European Union and United States announced further financial measures against Russia on Tuesday, targeting its energy, banking and defence sectors in their strongest action yet.

Now they are looking for backing from Asia, given that Russian trade flows are focused increasingly on that part of the world.

“It is certainly our hope that countries in this region, which includes many significant commercial and financial centres, will join us in putting this kind of pressure on Russia,” the official told reporters in Singapore.

He said he had already been to Beijing and Seoul this week, speaking with senior government officials and business leaders about the matter, and would be in Tokyo on Friday.

However, convincing some Asian countries to follow suit could prove difficult. Japan and Australia are the only nations in the region to have imposed sanctions against Russia so far.

China is a key economic and political ally of Russia, and the two countries recently signed a $400 billion gas supply deal.

Financial centre Hong Kong will have to toe the line taken by the mainland Chinese government, while rival banking hub Singapore tends to implement sanctions that are passed by the United Nations - an unlikely event given Russia’s veto power as a UN Security Council member.

India is a major buyer of Russian military hardware.

U.S. Secretary of State John Kerry is in India this week where he is expected to discuss global trade reforms, but it is not clear if he will raise the issue of sanctions.

The U.S. and EU sanctions block several Russian banks from raising long-term debt or equity in the European and U.S. capital markets, meaning they may turn to Asia for finance.

Russia’s Gazprombank recently met with South Korean debt investors in Seoul, with South Korea yet to indicate whether it will introduce sanctions, despite U.S. lobbying efforts.

“The reason we have been engaging in this outreach in this region of the world is because we need to develop a co-ordinated, multinational response to this kind of Russian aggression,” the State Department official said.

“MH17 being shot down brought home to the world that this is a global problem.” (Reuters)