China helps Russia thwart US bid to freeze bank’s assets over ‘North Korea sanctions dodge’

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China helps Russia thwart US bid to freeze bank’s assets over ‘North Korea sanctions dodge’

China and Russia blocked a request from the United States to add a Russian bank to a United Nations sanctions blacklist along with a Moscow-based North Korean banker and two companies on Friday, in the latest move showing Beijing and Moscow are strengthening their political ties amid tensions with Washington.

The US last week asked the UN sanctions committee to place an asset freeze on Agrosoyuz Commercial Bank for allegedly helping North Korea to evade the UN-imposed restrictions on its financial transactions. The request also targeted Ri Jong-won, the deputy representative in Moscow of North Korea’s Foreign Trade Bank.

The UN blacklisted Ri’s employer, North Korea’s primary foreign exchange bank, in August last year.

The US’ request followed a US Treasury Department decision to impose unilateral sanctions on the Russian bank, the North Korean official and the two entities.

The two companies were named as Dandong Zhongsheng Industry & Trade Company, based in China, and the North Korea-based Korea Ungum Corporation.

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In a response to the council, Russia raised doubts about the allegations, while China told the council that it objected to the proposed sanctions designations put forward by the US, according to diplomats.

China and Russia have also called on the council to consider easing sanctions to reward North Korea for opening up the dialogue with the US and halting missile tests, demonstrating their common interest in the region.

The Chinese foreign ministry said on Thursday that it is sending its top diplomat to Moscow next week to attend a bilateral strategic security consultation. Yang Jiechi, a member of China’s Communist Party Politburo, is expected to meet the Russian President Vladimir Putin during his four-day trip to seek closer ties as a hedge against the US’ aggressive approach on trade.

The announcement came after the US State Department’s decision on Wednesday to impose more sanctions on Russia, for breaching a chemical and biological warfare law by allegedly poisoning a former Russian agent in the UK earlier this year. The State Department has said it anticipates that the sanctions will take effect around August 22.

Experts say Moscow – which faces economic pressure from Washington – and Beijing will enhance their cooperation to offset the impact or perhaps exploit an opportunity to maximise their interests, especially in Russia’s case.

“If the new wave of sanctions is imposed by the law passed by the US Congress, Russia-US relations may be destabilised for decades to come,” said Vasily Kashin, a senior research fellow at the Centre for Comprehensive European and International Studies at the National Research University in Moscow.

“It is inevitable that Russia will get closer to China politically, and economically significantly closer.”

Kashin said Sino-US friction could offer an opportunity for Russia to expand its market share in China.

“With the US gone [from the Chinese market], Russia could hope to take part of its market share, which will give a very significant boost to bilateral trade and economic cooperation,” he said.

“Russia may replace some of the US’ commodities [in the Chinese market]. The trade war is an opportunity to boost our relationship and upgrade the quality of our cooperation.”

But cooperation with Russia alone may not be sufficient to counter the US’ trade moves, with Russia’s market size being about 12 times smaller than that of the US.

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“The Russian economy is too small and its influence on the global market is limited … so it’s unlikely that [China and Russia alone] may form a meaningful trade bloc that could deter the Donald Trump administration,” said Alexander Gabuev, a senior fellow and the chair of Russia in the Asia-Pacific Programme at the Carnegie Moscow Centre.

Gabuev suggested that Russia would more likely cooperate with China within established organisations such as the World Trade Organisation (WTO) than explicitly make new trade alliances.

“China is on its own in its trade war with the US,” he said. “[But] Russia can be somewhat helpful through the WTO.”

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Observers said the threat of US sanctions could strengthen the ties among North Korea, Russia, China and Iran.

“Iran, Russia and China are important economic partners because they have announced that they will not follow recently imposed US unilateral sanctions against Teheran … They won’t be able to completely make up for the resulting shortfall should most European companies pull out of the Iran business. But they can serve as a temporary lifeline to Iran,” Moritz Pieper , a lecturer in International Relations at the University of Salford at Manchester, said.

North Korean foreign minister Ri Yong-ho visited Tehran on Tuesday, on the first day of the resumption of US sanctions against Iran.

Ri praised the advancing bilateral relations at a time when both nations are facing similar challenges as a consequence of sanctions, hinting that Pyongyang will further strengthen economic cooperation with Tehran to offset their effect.

Additional reporting by Agence France-Presse

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