How Harsh U.S. Sanctions Are Advancing Chinese and Russian Interests Abroad
December 15, 2020 Topic: Security Region: Americas Blog Brand: The Buzz Tags: RussiaChinaSanctionsCAATSAAllies

How Harsh U.S. Sanctions Are Advancing Chinese and Russian Interests Abroad

A sustained maximum pressure campaign will only further incentivize Tehran and Caracas to strengthen ties with Beijing and Moscow for survival.

Over the last four years, harsh U.S. sanctions have pushed Venezuela and Iran further into the arms of traditional U.S. adversaries. China and Russia seek to exploit this collective enmity toward the United States through offering economic lifelines, advanced technology, and military training programs to Caracas and Tehran in defiance of U.S. sanctions. Moreover, the ongoing coronavirus pandemic has provided Beijing and Moscow with more clout in domestic Venezuelan and Iranian affairs as they grow heavily dependent on Chinese and Russian aid. While increased economic entanglement with Venezuela and Iran could strap China and Russia with financial liabilities, it provides coveted geopolitical leverage for greater hedging against the United States and its sanctions regimes.

According to the UN World Food Programme, approximately one-third of Venezuela’s total population are food insecure. Although hyperinflation and poor management of national funds are mostly responsible for the country’s economic strife, unilateral U.S. sanctions have exacerbated the situation. Fearing growing domestic support for U.S.-backed political opponent Juan Guaidó and U.S. military intervention, illegitimate Venezuelan leader Nicolás Maduro has consistently rejected humanitarian aid from the United States. Although he later accepted twenty-four tons of medical equipment from the Red Cross in April 2019, China had already seized this opportunity to expand its foreign influence. Between April and December 2019, China provided at least 40 percent of all food imports to Venezuela and a large number of medical supplies to address the ongoing pandemic. However, the China-Venezuela alliance extends beyond humanitarian aid and trade.

In 2017, under the auspice of a $70 million government effort to allegedly strengthen national security, Caracas hired Chinese tech giant ZTE to create a new identification smart card to monitor and control citizen behavior. ZTE also dispatched a special workers unit to join CANTV, Venezuela’s state-run telecommunications company, in order to provide managerial oversight and expertise to CANTV employees. Most recently, the Department of the Treasury designated the China National Electronics Import & Export Corporation (CEIEC) for supporting CANTV’s anti-democratic efforts to restrict internet service and conduct digital surveillance and cyber operations against political opponents. Although Beijing has reportedly reduced its financial support in recent years, it continues to violate U.S. sanctions to the benefit of the Maduro regime.

In addition to economic lifelines and military contracts, Russia has also sought greater involvement in Venezuela’s domestic affairs. In 2019, Russian president Vladimir Putin denounced the United States for challenging the legitimacy of Maduro’s presidency and telephoned Caracas to voice his support. During the same year, the Treasury Department designated Moscow-based Evrofinance Mosnarbank for aiding Venezuela in evading U.S. sanctions through financing the nation’s failed cryptocurrency, the Petro.

However, Moscow and Caracas most recently displayed their strengthening alliance following Maduro’s illegitimate seizure of the Venezuelan National Assembly (AN) on December 7, 2020. Just a day after the fraudulent election, Maduro convened with Russian officials on national television and thanked President Putin for his “interest and support for democracy in Venezuela,” adding, “Russia is an example of respect and cooperation.” Maduro’s swift acknowledgement of President Putin after consolidating both political and legal power, albeit illegitimate, signals future unified hedging against the United States and its sanctions regimes.

Similarly, Iran has pursued greater cooperation with China and Russia under heavy U.S. sanctions. For example, Beijing reportedly inked a 25-year plan with Tehran involving a $280 billion investment in Iran’s oil, gas, and petrochemical sectors, $120 billion upgrade of Iran’s transport and manufacturing infrastructure. In addition, Tehran now has an alleged joint military agreement with Moscow. Although the exact investment numbers are contested, Iran also allegedly agreed to grant Chinese and Russian bombers, fighters, and transport planes unrestricted access to Iranian air bases. Furthermore, Tehran will apparently conduct annual joint military training with Chinese and Russian armed forces. Regardless of whether the military aspect of this deal holds true, any 25-year-long deal between Iran and sanctions-busting countries like China and Russia has dire implications for U.S. sanctions enforcement capabilities and American national security at large.

Although China was the first country to deliver aid and medical supplies to Iran amidst the pandemic, Russia swiftly followed suit with 50,000 diagnostic kits and a reinforced will to defy U.S. sanctions. In November 2020, Russian Deputy Foreign Minister Sergei Ryabkov blatantly expressed Moscow’s continued intent to violate U.S. sanctions on Iran, stating that “it [sanctions] will not affect our policy in any way.” Russia has also helped escort Iranian oil tankers to Syria and lobbied other Iran Deal signatories to resume economic relations with Iran. In recent years, China and Russia have also sought to enhance cooperative security efforts with Iran, including joint naval drills in the Indian Ocean and the Gulf of Oman in December 2019. As harsh U.S. sanctions continue to strip Iran’s ability to revitalize its economy by its own means, a sustained maximum pressure campaign will only further incentivize Tehran to strengthen ties with Beijing and Moscow for survival.

As four years of maximum pressure failed to invoke significant behavioral change, U.S. policymakers must now consider alternative ways to achieve immediate foreign policy goals with Tehran and Caracas. For the incoming Biden administration, this can involve supporting the UN World Food Programme, UNICEF, Save the Children, and other international humanitarian efforts in Iran and Venezuela to ensure that coronavirus-related aid reach the most vulnerable populations. While providing aid is only a palliative approach to de-risking Venezuela and Iran, it can lower their ultimate reliance on China and Russia as economic self-sufficiency remains a national priority. Going forward, the U.S. government should avoid attributing humanitarian aid to transparent political incentives and regime change efforts as this will only make room for increased Chinese and Russian intervention.

Jason Bartlett is a research assistant in the Energy, Economics, and Security Program at the Center for a New American Security (CNAS).

Emily Jin is a research assistant in the Energy, Economics, and Security Program at the Center for a New American Security (CNAS).

Image: Reuters.