US still receiving goods, despite Russia sanctions six months into war

More than 3,600 shipments have arrived at American ports since Moscow invaded Ukraine

Six months into the war in Ukraine, American companies — including federal contractors — continue to buy everything from birch wood flooring to weapons-grade titanium from major Russian corporations. AP
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On a hot, humid East Coast day this summer, a massive container ship pulled into the Port of Baltimore in Maryland loaded with sheets of plywood, aluminium rods and radioactive material — all sourced from the fields, forests and factories of Russia.

US President Joe Biden promised to “inflict pain” and deal “a crushing blow” on Russian President Vladimir Putin through trade restrictions on commodities such as vodka, diamonds and gasoline after Russia’s invasion of Ukraine six months ago. But hundreds of other types of unsanctioned goods worth billions of dollars, including those found on the ship bound for Baltimore from St Petersburg, continue arrive at US ports.

The Associated Press found more than 3,600 shipments of wood, metals, rubber and other goods have arrived at US ports from Russia since it began launching missiles and air strikes into its neighbour in February. That is a significant drop from the same period in 2021 when about 6,000 shipments arrived. However, it still adds up to more than $1 billion worth of commerce a month.

In reality, no one involved actually expected trade to drag to a halt after the invasion. Banning imports of certain items would likely do more harm to those sectors in the US than in Russia.

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“When we impose sanctions, it could disrupt global trade. So our job is to think about which sanctions deliver the most impact, while also allowing global trade to work,” ambassador Jim O’Brien, who heads the State Department’s Office of Sanctions Co-ordination, told the AP.

Experts say the global economy is so intertwined that sanctions must be limited in scope to avoid driving up prices in an already unstable market.

Also, US sanctions do not exist in a vacuum; layers of EU and UK bans result in convoluted trade rules that can be confusing to buyers, sellers and policymakers.

For example, the Biden administration and the EU released separate lists of Russian companies that cannot receive exports. However, at least one of those companies — which supplies the Russian military with metal to make fighter jets currently dropping bombs in Ukraine —- is still selling millions of dollars of metal to American and European firms, AP found.

While some US importers are sourcing alternative materials elsewhere, others say they have no choice. In the case of wood imports, Russia’s dense birch forests create such hard, strong timber that most American wooden classroom furniture, and much home flooring, is made from it. Shipping containers of Russian items — groats, weightlifting shoes, crypto mining gear, even pillows — arrive at US ports almost every day.

A breakdown of imported goods from Russia shows some items are clearly legal and even encouraged by the Biden administration. These include the more than 100 shipments of fertiliser that have arrived since the invasion. Now-banned products such as Russian oil and gas continued to arrive in US ports long after the announcement of sanctions owing to “wind-down” periods, allowing companies to complete existing contracts.

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In some cases, the origin of products shipped out of Russian ports can be difficult to discern. US energy companies are continuing to import oil from Kazakhstan through Russian ports, even though that oil is sometimes mixed with Russian fuel. Trade experts warn that Russian suppliers are unreliable, and opaque corporate structures of most major Russian companies make it difficult to determine whether they have ties to the government.

“It is a general rule: when you have sanctions, you’ll have all kinds of murky schemes and illicit trade,” said Russian economist Konstantin Sonin, who teaches at the University of Chicago. “Still, sanctions make sense because even though you cannot kill 100 per cent of revenue, you can reduce them.”

Russia and the US were never major trading partners, and so sanctioning imports is only a very small slice of the retaliatory strategy. Restrictions on exports from the US cause more damage to the Russian economy. Sanctioning the Russian Central Bank has frozen Russia’s access to roughly $600bn in currency reserves held across the US and Europe.

Nonetheless, sanctions carry a symbolic weight beyond the financial harm they might inflict, particularly for American consumers horrified by the war.

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Updated: August 25, 2022, 3:49 PM