1 00:00:00,040 --> 00:00:05,760 Speaker 1: They are importing what would seem like harmless items washing machines, refrigerators, 2 00:00:05,760 --> 00:00:09,760 Speaker 1: and then they're stripping those items down for parts basically 3 00:00:09,760 --> 00:00:17,479 Speaker 1: and taking the microchips out of them. From Bloomberg News 4 00:00:17,480 --> 00:00:24,200 Speaker 1: and iHeartRadio, it's the big take. I'm West Gasova today. 5 00:00:24,600 --> 00:00:29,560 Speaker 1: How are American made chips winding up inside Russian weapons 6 00:00:29,600 --> 00:00:39,479 Speaker 1: of war. We've talked before on this show about how 7 00:00:39,520 --> 00:00:43,879 Speaker 1: the US and its European allies have imposed crushing economic 8 00:00:43,920 --> 00:00:47,839 Speaker 1: sanctions on Russia that restrict its ability to buy and 9 00:00:47,880 --> 00:00:52,080 Speaker 1: sell all kinds of products from other countries. Today, in 10 00:00:52,159 --> 00:00:55,280 Speaker 1: concert with our allies, we would agree a massive package 11 00:00:55,320 --> 00:01:00,360 Speaker 1: of economic sanctions designed in time to hobble the Russian economy. 12 00:01:00,720 --> 00:01:05,320 Speaker 1: We will target strategic sectors of the Russian economy by 13 00:01:05,319 --> 00:01:10,400 Speaker 1: blocking the excess to technologies and markets. The DAKI for 14 00:01:10,560 --> 00:01:16,680 Speaker 1: Russia Today, I'm authorizing additional strong sanctions and new limitations 15 00:01:16,680 --> 00:01:20,680 Speaker 1: on what can be exported to Russian This is going 16 00:01:20,760 --> 00:01:24,360 Speaker 1: to impose severe cost on the Russian economy, both immediately 17 00:01:24,360 --> 00:01:27,880 Speaker 1: and over time. One of the most stringent of these 18 00:01:27,920 --> 00:01:32,360 Speaker 1: restrictions is on microchips, a critical component in drones and 19 00:01:32,600 --> 00:01:36,480 Speaker 1: missiles and other weapons. The Russian military needs to wage 20 00:01:36,480 --> 00:01:41,280 Speaker 1: its war in Ukraine. The sanctions explicitly prohibit the sale 21 00:01:41,280 --> 00:01:45,280 Speaker 1: of microchips to Russia, and yet these chips, some of 22 00:01:45,319 --> 00:01:49,080 Speaker 1: them US made, are finding their way into Russian arms 23 00:01:49,200 --> 00:01:53,120 Speaker 1: used against Ukraine. The US has charged a Russian citizen 24 00:01:53,280 --> 00:01:56,960 Speaker 1: and his alleged associates and what prosecutors say was an 25 00:01:56,960 --> 00:02:00,880 Speaker 1: elaborate scheme to mislead chip makers into leaving they were 26 00:02:00,880 --> 00:02:05,440 Speaker 1: selling to legitimate companies, when in fact, prosecutors alleged that 27 00:02:05,600 --> 00:02:09,560 Speaker 1: chips were destined for the Russian military. Then Bartenstein is 28 00:02:09,600 --> 00:02:12,519 Speaker 1: one of several Bloomberg journalists who worked on a deeply 29 00:02:12,560 --> 00:02:17,440 Speaker 1: reported story unraveling how this alleged enterprise worked, and he 30 00:02:17,520 --> 00:02:23,480 Speaker 1: joins me now from Dubai Ben, your story focuses around 31 00:02:23,520 --> 00:02:26,280 Speaker 1: a man called artem Us. Can you tell us who 32 00:02:26,320 --> 00:02:30,560 Speaker 1: he is? He's a forty year old son of prominent 33 00:02:30,800 --> 00:02:34,480 Speaker 1: governor in Siberia. Flashy's one way you could describe him. 34 00:02:34,800 --> 00:02:37,080 Speaker 1: I mean, anyone who is a regular reader of Russian 35 00:02:37,120 --> 00:02:41,000 Speaker 1: media would see his name quite frequently. He owned a 36 00:02:41,040 --> 00:02:44,280 Speaker 1: lot of fancy real estate, had a lot of luxury cars, 37 00:02:44,520 --> 00:02:47,720 Speaker 1: was connected to a variety of Italian hotels. He spent 38 00:02:47,760 --> 00:02:50,880 Speaker 1: a lot of time in Italy. He owned several hotels there, 39 00:02:51,200 --> 00:02:54,760 Speaker 1: so he's a regular, in particular in the area around Milan. 40 00:02:55,280 --> 00:02:58,160 Speaker 1: He was sort of a jetsetter type of frequently traveling 41 00:02:58,160 --> 00:03:01,840 Speaker 1: across Europe is our understanding. Aside from all of his 42 00:03:02,080 --> 00:03:05,920 Speaker 1: jet setting, he was also alleged to be involved in 43 00:03:06,120 --> 00:03:11,840 Speaker 1: an international scheme I suppose to smuggle chips into Russia. 44 00:03:11,919 --> 00:03:16,840 Speaker 1: How exactly did that work? As the chip industry has 45 00:03:16,880 --> 00:03:20,839 Speaker 1: become so crucial, in particular when it comes to sort 46 00:03:20,880 --> 00:03:25,440 Speaker 1: of the defense sector and Putin's war efforts. In the 47 00:03:25,520 --> 00:03:28,840 Speaker 1: run up to the war, there were efforts by Moscow 48 00:03:28,960 --> 00:03:31,440 Speaker 1: to try to tap up at stockpile to make sure 49 00:03:31,480 --> 00:03:33,280 Speaker 1: that they had a lot of chips in supply, and 50 00:03:33,280 --> 00:03:35,480 Speaker 1: there were a variety of sort of sophisticated networks that 51 00:03:35,480 --> 00:03:39,640 Speaker 1: were put into place two route chips from the US 52 00:03:39,680 --> 00:03:43,600 Speaker 1: to Russia. Because even before the invasion of Ukraine last year, 53 00:03:43,840 --> 00:03:46,480 Speaker 1: the US Commerce Department had already started to clamp down 54 00:03:46,520 --> 00:03:49,760 Speaker 1: a bit on this trade. They were more concerned about 55 00:03:50,000 --> 00:03:53,240 Speaker 1: sensitive jurisdictions that might try to acquire more chips Russia 56 00:03:53,240 --> 00:03:56,480 Speaker 1: and China in particular, So there are certain additional export 57 00:03:56,520 --> 00:03:59,160 Speaker 1: controls that were put into place, and then on the 58 00:03:59,200 --> 00:04:02,440 Speaker 1: Russia side, of course, there are efforts then to try 59 00:04:02,480 --> 00:04:05,240 Speaker 1: to navigate around these controls to still be able to 60 00:04:05,280 --> 00:04:09,000 Speaker 1: maintain that supply. And that's where artem Use comes into 61 00:04:09,040 --> 00:04:13,240 Speaker 1: the picture. US prosecutors alleged that US set up this 62 00:04:13,360 --> 00:04:16,080 Speaker 1: web of shell companies from the Middle East to Europe 63 00:04:16,080 --> 00:04:18,880 Speaker 1: in Asia to help route chips from the US to 64 00:04:18,960 --> 00:04:22,880 Speaker 1: Russia through these third jurisdictions. The chips trade has obviously 65 00:04:22,960 --> 00:04:27,680 Speaker 1: become increasingly geopolitically significant, so even prior to the invasion, 66 00:04:28,000 --> 00:04:31,159 Speaker 1: there was a bigger push by Moscow to make sure 67 00:04:31,160 --> 00:04:34,200 Speaker 1: that they had adequate stockpiles. Of course, now as the 68 00:04:34,240 --> 00:04:37,000 Speaker 1: war has dragged on those stockpiles, as we talk to 69 00:04:37,200 --> 00:04:40,559 Speaker 1: certain experts who track this trade, those stockpiles are starting 70 00:04:40,600 --> 00:04:44,080 Speaker 1: to dwindle, putting even greater urgency on the part of 71 00:04:44,120 --> 00:04:47,240 Speaker 1: Moscow to try to reinforce the supply chain and keep 72 00:04:47,279 --> 00:04:51,680 Speaker 1: this supply going and moving forward. Why did the authorities 73 00:04:51,720 --> 00:04:55,560 Speaker 1: say that US allegedly set up these shell companies. The 74 00:04:55,680 --> 00:04:58,239 Speaker 1: thing is that as these export controls have been ramped 75 00:04:58,320 --> 00:05:01,600 Speaker 1: up by Washington, big US companies that are part of 76 00:05:01,600 --> 00:05:04,480 Speaker 1: the chips trade have had to ramp up their own 77 00:05:04,520 --> 00:05:09,240 Speaker 1: internal compliance efforts. However, there's still hurdles to get around that. 78 00:05:09,640 --> 00:05:12,360 Speaker 1: So on the Russia side of the equation, the key 79 00:05:12,680 --> 00:05:18,000 Speaker 1: component is establishing companies outside of Russia in jurisdictions that 80 00:05:18,680 --> 00:05:22,200 Speaker 1: US chipmaker wouldn't teem as sensitive. So at least on 81 00:05:22,240 --> 00:05:25,040 Speaker 1: the initial compliance check, it would pop up a company 82 00:05:25,040 --> 00:05:28,599 Speaker 1: in the UAE or Malaysia or Germany that wouldn't necessarily 83 00:05:29,120 --> 00:05:33,200 Speaker 1: sound any alarms and checks that box, and it chipped 84 00:05:33,240 --> 00:05:35,280 Speaker 1: outside of the US. At that point, it's sort of 85 00:05:35,320 --> 00:05:39,479 Speaker 1: outside of their oversight. Then you and our other Bloomberg 86 00:05:39,520 --> 00:05:44,680 Speaker 1: colleagues report in this story that in court documents, the 87 00:05:44,800 --> 00:05:49,080 Speaker 1: US prosecutors alleged the people involved in this operation went 88 00:05:49,120 --> 00:05:53,400 Speaker 1: to all kinds of links to make themselves look legitimate. 89 00:05:54,120 --> 00:05:58,279 Speaker 1: They allege that they used fake purchase orders and shipping 90 00:05:58,320 --> 00:06:01,839 Speaker 1: documents that were supposed to fool the American chipmakers and 91 00:06:02,240 --> 00:06:06,200 Speaker 1: hide where the products were headed. Exactly. Yeah, it's a 92 00:06:06,240 --> 00:06:09,520 Speaker 1: classic layering technique that you see when you look at 93 00:06:09,600 --> 00:06:13,159 Speaker 1: sanctions policies over the years. It's just sort of a 94 00:06:13,200 --> 00:06:18,159 Speaker 1: constant cotton mouse game. If one shell company is recognized 95 00:06:18,200 --> 00:06:20,279 Speaker 1: and shut down, another one is set up it's a 96 00:06:20,320 --> 00:06:23,719 Speaker 1: constant game of obfuscation to try to continue this really 97 00:06:23,760 --> 00:06:27,120 Speaker 1: important supply chain. Could you take a moment to explain 98 00:06:27,160 --> 00:06:30,159 Speaker 1: what exactly is a shell company? How do you set 99 00:06:30,200 --> 00:06:33,839 Speaker 1: one up? In some ways their companies on paper only. 100 00:06:34,040 --> 00:06:37,520 Speaker 1: There isn't necessarily a big office. Perhaps there's a door 101 00:06:37,800 --> 00:06:41,080 Speaker 1: with no employees inside. Perhaps there's a small office, or 102 00:06:41,080 --> 00:06:43,880 Speaker 1: perhaps there is no office at all. But it's registered 103 00:06:44,000 --> 00:06:48,640 Speaker 1: in a different domicile, and it allows the ultimate beneficial owner, 104 00:06:48,680 --> 00:06:51,600 Speaker 1: who could be in a completely different country, to route 105 00:06:51,680 --> 00:06:55,640 Speaker 1: goods in a way to circumvent sanctions, to circumvent export controls, 106 00:06:56,279 --> 00:06:59,839 Speaker 1: or tax authorities, any range of reasons in which they 107 00:07:00,040 --> 00:07:02,600 Speaker 1: might get set up. You know, ultimately, if the authorities 108 00:07:02,640 --> 00:07:05,360 Speaker 1: on the ground don't clamp down, then it can sort 109 00:07:05,400 --> 00:07:08,560 Speaker 1: of hide the ultimate business that a completely different company 110 00:07:08,640 --> 00:07:12,720 Speaker 1: might be doing. Where does the case against us stand? 111 00:07:12,840 --> 00:07:17,000 Speaker 1: He's in Milan, Italy. What is the US seeking and 112 00:07:17,480 --> 00:07:20,560 Speaker 1: where does it go from here? Officials in the US 113 00:07:20,600 --> 00:07:24,720 Speaker 1: want us extradited. You would, of course very valuable source 114 00:07:24,720 --> 00:07:28,680 Speaker 1: of information about how this alleged chip smuggling network works. 115 00:07:29,400 --> 00:07:33,000 Speaker 1: His lawyers certainly want to keep him in Italy. It's 116 00:07:33,000 --> 00:07:35,000 Speaker 1: worth pointing out that it's not just the US that 117 00:07:35,040 --> 00:07:38,280 Speaker 1: has clamped on its export controls, the EU has as well. 118 00:07:38,640 --> 00:07:42,240 Speaker 1: That's where Italy comes into play, as well as the 119 00:07:42,320 --> 00:07:45,800 Speaker 1: judicial system there. But US authorities certainly want to bring 120 00:07:45,880 --> 00:07:49,000 Speaker 1: him to the US. A bit of geopolitics there as 121 00:07:49,000 --> 00:07:51,600 Speaker 1: well as far as how much the US might be 122 00:07:51,640 --> 00:07:55,680 Speaker 1: pushing Italy to hand him over. And the US is 123 00:07:55,680 --> 00:08:01,360 Speaker 1: accusing him of sanctions violations, Yes, accusing and his associates 124 00:08:01,360 --> 00:08:05,280 Speaker 1: of violating US sanctions And what does US say about 125 00:08:05,320 --> 00:08:08,320 Speaker 1: all of this? US says that he didn't do anything wrong, 126 00:08:08,640 --> 00:08:11,880 Speaker 1: that he's not responsible for what his associates did, and 127 00:08:12,000 --> 00:08:14,920 Speaker 1: he argues that he shouldn't be extradited. He doesn't think 128 00:08:14,920 --> 00:08:17,679 Speaker 1: he would be treated fairly in the US, in particular 129 00:08:17,800 --> 00:08:20,920 Speaker 1: given all the geopolitics since the Russian invasion of Ukraine. 130 00:08:21,600 --> 00:08:24,760 Speaker 1: We should note that those other dependants also deny wrongdoing. 131 00:08:25,360 --> 00:08:36,880 Speaker 1: Our conversation continues after the break. What does it say 132 00:08:37,080 --> 00:08:41,680 Speaker 1: about the state of Russia's military that they need to 133 00:08:41,720 --> 00:08:44,840 Speaker 1: do all this? The experts we talk to who monitor 134 00:08:44,920 --> 00:08:48,680 Speaker 1: this say that stockpiles of chips are running quite low 135 00:08:48,720 --> 00:08:51,760 Speaker 1: in Russia, and of course chips are quite central to 136 00:08:51,840 --> 00:08:55,560 Speaker 1: Moscow's efforts to continue the war, so they're making a 137 00:08:55,640 --> 00:08:58,800 Speaker 1: real effort now to resolve those shortages. That's why this 138 00:08:58,960 --> 00:09:02,680 Speaker 1: alleged chips smuggling has become so important for them. And 139 00:09:02,880 --> 00:09:06,440 Speaker 1: what are these chips used for. They can be used 140 00:09:06,440 --> 00:09:11,600 Speaker 1: in a range of different weaponry, whether it's drones, whether 141 00:09:11,600 --> 00:09:15,160 Speaker 1: it's other aerial devices. Part of the effort on the 142 00:09:15,280 --> 00:09:18,800 Speaker 1: Ukraine side has been that there are different investigators who 143 00:09:18,840 --> 00:09:22,560 Speaker 1: are actually getting the weaponry from the battlefield and taking 144 00:09:22,600 --> 00:09:26,280 Speaker 1: them apart in these different military facilities around Kiev to 145 00:09:26,400 --> 00:09:29,400 Speaker 1: try to understand where these parts are originating from. So 146 00:09:29,440 --> 00:09:31,840 Speaker 1: that's another part of this story is that as they're 147 00:09:31,880 --> 00:09:36,960 Speaker 1: taking these military weapons apart, they're identifying the companies where 148 00:09:36,960 --> 00:09:39,720 Speaker 1: they originated. And that's also where we're seeing some of 149 00:09:39,720 --> 00:09:42,240 Speaker 1: these US companies come into play, that their parts are 150 00:09:42,320 --> 00:09:44,920 Speaker 1: ending up in the battlefield. It's worth pointing out that 151 00:09:45,040 --> 00:09:47,800 Speaker 1: some of these parts were acquired prior to the invasion 152 00:09:48,160 --> 00:09:51,000 Speaker 1: and at that time there were different export controls put 153 00:09:51,000 --> 00:09:55,040 Speaker 1: in place. So you have the US trying to prosecute 154 00:09:55,200 --> 00:10:00,480 Speaker 1: our toe US, you have Ukraine forcefully demanding stop to 155 00:10:00,559 --> 00:10:04,600 Speaker 1: the export of these chips that go to Russia. What 156 00:10:04,800 --> 00:10:08,360 Speaker 1: is the US now trying to do to cut off 157 00:10:08,480 --> 00:10:11,959 Speaker 1: these supply lines. The US has been focusing more on 158 00:10:12,000 --> 00:10:15,800 Speaker 1: these so called third jurisdictions, So those are the jurisdictions 159 00:10:15,840 --> 00:10:19,880 Speaker 1: that are initially receiving the parts from the US and 160 00:10:19,920 --> 00:10:23,559 Speaker 1: then ultimately on shipping those parts to Russia. A lot 161 00:10:23,559 --> 00:10:26,200 Speaker 1: of the attention has been fixated now on China and 162 00:10:26,240 --> 00:10:29,640 Speaker 1: the UAE in particular. There have been several different trips 163 00:10:29,679 --> 00:10:33,360 Speaker 1: from senior US officials to China to the UAE raising 164 00:10:33,400 --> 00:10:36,880 Speaker 1: these concerns. The big question now comes again to these 165 00:10:36,880 --> 00:10:41,559 Speaker 1: third jurisdictions. How forceful will the US Treasury be as 166 00:10:41,600 --> 00:10:45,600 Speaker 1: far as enforcing potential secondary sanctions violations. That's something that 167 00:10:45,640 --> 00:10:48,080 Speaker 1: we haven't seen too much of to date. But when 168 00:10:48,120 --> 00:10:50,480 Speaker 1: we look at all these different entities that are popping 169 00:10:50,559 --> 00:10:53,240 Speaker 1: up in China and the UAE in particular, how much 170 00:10:53,280 --> 00:10:57,880 Speaker 1: will there be additional restrictions on these entities? How much 171 00:10:57,920 --> 00:11:01,960 Speaker 1: will these governments potentially face s additional repercussions. That's a 172 00:11:02,000 --> 00:11:05,280 Speaker 1: step that Washington hasn't necessarily taken so far. It's been 173 00:11:05,280 --> 00:11:07,360 Speaker 1: something that we've heard in the rhetoric, but we haven't 174 00:11:07,400 --> 00:11:10,080 Speaker 1: necessarily seen the action. You know, it's always a question 175 00:11:10,120 --> 00:11:14,760 Speaker 1: of strategic priorities in the diplomatic relationship, the bilateral US 176 00:11:14,840 --> 00:11:18,439 Speaker 1: China relationship, the bilateral USUE relationship. Where does sort of 177 00:11:18,480 --> 00:11:22,040 Speaker 1: sanctions enforcement fall into the priority list. The fact that 178 00:11:22,120 --> 00:11:25,800 Speaker 1: chips are national security concern though, could kind of bump 179 00:11:25,800 --> 00:11:28,960 Speaker 1: it up the list. Ben Burtenstein, thanks for speaking with 180 00:11:28,960 --> 00:11:34,760 Speaker 1: me today. Thank you. Clearly sanctions aren't entirely effective. So 181 00:11:35,360 --> 00:11:38,439 Speaker 1: what can the US and its allies due to tighten 182 00:11:38,480 --> 00:11:42,400 Speaker 1: the screws so they can't be evaded. Nick Wadham's leads 183 00:11:42,400 --> 00:11:46,720 Speaker 1: Bloomberg's US National security coverage, and he knows more about 184 00:11:46,760 --> 00:11:50,480 Speaker 1: how sanctions work and don't work than anyone I know. 185 00:11:50,600 --> 00:11:55,600 Speaker 1: And he's here with me in our Washington studio. Nick, 186 00:11:55,640 --> 00:12:00,240 Speaker 1: despite sanctions, Russia has managed to get micro chips, and 187 00:12:00,320 --> 00:12:04,360 Speaker 1: the case Ben Bartenstein described is just one example of 188 00:12:04,400 --> 00:12:08,040 Speaker 1: how Russia allegedly has done this. US authorities say Russia 189 00:12:08,040 --> 00:12:12,040 Speaker 1: has found other ways too to sneak chips into the country. 190 00:12:12,559 --> 00:12:16,120 Speaker 1: Can you start by telling us how the US sanctions 191 00:12:16,120 --> 00:12:18,920 Speaker 1: are supposed to work, how they're supposed to stop that 192 00:12:19,080 --> 00:12:21,959 Speaker 1: from happening. Well, there are a few things happening here. 193 00:12:22,000 --> 00:12:24,840 Speaker 1: One is the export controls, So the US limits the 194 00:12:24,880 --> 00:12:30,120 Speaker 1: type of technology, chiefly semiconductors that companies can export to Russia. 195 00:12:30,240 --> 00:12:33,840 Speaker 1: So that's one thing they're not allowed to buy, the 196 00:12:33,920 --> 00:12:38,720 Speaker 1: semiconductors that they would need to put into high tech armaments, 197 00:12:38,840 --> 00:12:41,480 Speaker 1: hypersonic missiles, the kind of thing they've used in Ukraine. 198 00:12:41,760 --> 00:12:44,640 Speaker 1: The other thing they've done is put severe limits on 199 00:12:44,920 --> 00:12:49,880 Speaker 1: Russia's banks, so company's ability to get financing. Basically, if 200 00:12:49,920 --> 00:12:53,360 Speaker 1: you're a Western bank, it's become all but impossible to 201 00:12:53,520 --> 00:12:56,160 Speaker 1: do any sort of financial transaction with a Russian bank. 202 00:12:56,600 --> 00:12:58,880 Speaker 1: And then the other thing they've done is put a 203 00:12:58,880 --> 00:13:03,439 Speaker 1: ton of sanctions on individual Russian companies and people CEOs 204 00:13:03,480 --> 00:13:06,559 Speaker 1: of companies, primarily in the defense sector. So if you're 205 00:13:06,559 --> 00:13:09,840 Speaker 1: a Russian company, you can't really do any foreign trade. 206 00:13:09,920 --> 00:13:12,880 Speaker 1: If you're a CEO of that company, you can't even 207 00:13:12,920 --> 00:13:15,600 Speaker 1: have a bank account in the West, you can't travel 208 00:13:15,679 --> 00:13:19,160 Speaker 1: to the West. So it's essentially on paper, designed to 209 00:13:19,200 --> 00:13:22,920 Speaker 1: be a massive economic squeeze on every sector of the 210 00:13:23,000 --> 00:13:27,640 Speaker 1: Russian economy, but primarily the defense sector. Sanctions come with 211 00:13:27,720 --> 00:13:31,200 Speaker 1: heavy penalties if they're violated. What happens to companies or 212 00:13:31,240 --> 00:13:34,520 Speaker 1: individuals who are found to be in violation of a 213 00:13:34,679 --> 00:13:37,640 Speaker 1: US or EU sanction. Well, this is the sort of 214 00:13:37,640 --> 00:13:42,160 Speaker 1: crazy thing about sanctions because enforcement is a huge question mark. 215 00:13:42,200 --> 00:13:44,640 Speaker 1: So you impose these sanctions, you say, okay, you a 216 00:13:44,679 --> 00:13:47,439 Speaker 1: Western bank can't do business with this Russian company, or 217 00:13:47,520 --> 00:13:51,079 Speaker 1: you Russian company, you don't have access to the Western 218 00:13:51,120 --> 00:13:54,439 Speaker 1: financial system, whatever it may be. When they start then 219 00:13:54,520 --> 00:13:58,480 Speaker 1: doing transactions with companies or banks based in Turkey or 220 00:13:58,480 --> 00:14:00,959 Speaker 1: the United Arab Emirates or ever it else it may be, 221 00:14:01,760 --> 00:14:04,600 Speaker 1: there's a big question of who is actually on the 222 00:14:04,640 --> 00:14:08,240 Speaker 1: lookout for, whether those transactions are actually happening, and then 223 00:14:08,400 --> 00:14:12,079 Speaker 1: what you do in response. So we know that Treasury's 224 00:14:12,120 --> 00:14:15,400 Speaker 1: department that handles sanctions is pretty understaffed, so they don't 225 00:14:15,440 --> 00:14:18,040 Speaker 1: have a lot of the folks who are actually basically 226 00:14:18,080 --> 00:14:21,040 Speaker 1: minding the store. The other thing is the system in 227 00:14:21,040 --> 00:14:25,880 Speaker 1: the past has been designed to impose very very steep punishments, 228 00:14:25,920 --> 00:14:28,960 Speaker 1: you know, potentially billions of dollars. If you're a Western 229 00:14:29,000 --> 00:14:32,960 Speaker 1: bank that does business with a sanctioned entity. The likelihood 230 00:14:32,960 --> 00:14:35,200 Speaker 1: that you're going to get caught is actually pretty low. 231 00:14:35,280 --> 00:14:37,160 Speaker 1: If you do get caught, we're going to come after 232 00:14:37,200 --> 00:14:41,800 Speaker 1: you really hard. How effective have those sanctions been, by 233 00:14:41,840 --> 00:14:45,680 Speaker 1: and large, the way that you figure out how sanctions 234 00:14:46,040 --> 00:14:49,480 Speaker 1: have worked is a matter of huge debate within the 235 00:14:49,520 --> 00:14:53,040 Speaker 1: international community. What we can say is that they have 236 00:14:53,200 --> 00:14:56,680 Speaker 1: had a very large effect, But whether they've actually been 237 00:14:56,720 --> 00:15:01,160 Speaker 1: effective in constraining Rush's ability to wage war in Ukraine 238 00:15:01,240 --> 00:15:03,440 Speaker 1: is an entirely different matter. So we can say, yes, 239 00:15:03,480 --> 00:15:06,480 Speaker 1: there's definitely been a huge effect. These companies have not 240 00:15:06,600 --> 00:15:09,280 Speaker 1: really been able to do business with any Western partners 241 00:15:09,320 --> 00:15:13,560 Speaker 1: that they had remaining. Their cash flow has been severely restricted, 242 00:15:13,720 --> 00:15:16,120 Speaker 1: but what we see is that they are finding other 243 00:15:16,160 --> 00:15:19,000 Speaker 1: ways to get the material that they want. We are 244 00:15:19,320 --> 00:15:22,920 Speaker 1: also seeing, obviously that Russia's ability to wage war in Ukraine, 245 00:15:22,960 --> 00:15:25,960 Speaker 1: though it has been constrained, we're still seeing that Russia 246 00:15:26,040 --> 00:15:28,920 Speaker 1: is able to wage that war, and for example, the 247 00:15:29,000 --> 00:15:31,560 Speaker 1: fighting around buck Moot, Russia just went back on the 248 00:15:31,600 --> 00:15:35,480 Speaker 1: counter offensive. You have not had the sort of devastating, 249 00:15:35,600 --> 00:15:40,680 Speaker 1: crippling impact that Western policymakers said would be the result 250 00:15:40,720 --> 00:15:44,040 Speaker 1: of these sanctions. How has Russia been able to get 251 00:15:44,160 --> 00:15:48,120 Speaker 1: hold of technology that they're not supposed to have to 252 00:15:48,320 --> 00:15:51,520 Speaker 1: use against Ukraine when there are these big sanctions in 253 00:15:51,560 --> 00:15:55,160 Speaker 1: place and everyone is watching, Well, they have done so 254 00:15:55,240 --> 00:15:57,960 Speaker 1: in a lot of pretty creative ways. So one example 255 00:15:58,040 --> 00:16:00,520 Speaker 1: we learned about in the last couple of weeks is 256 00:16:00,600 --> 00:16:06,640 Speaker 1: that via other countries around Russia's periphery, Central Asia, Turkey, 257 00:16:06,840 --> 00:16:10,240 Speaker 1: the United Arab Emirates, what's happening is that they are 258 00:16:10,320 --> 00:16:15,520 Speaker 1: importing what would seem like harmless items, washing machines, pumps 259 00:16:15,600 --> 00:16:20,040 Speaker 1: so that women can express breast milk, refrigerators, and then 260 00:16:20,080 --> 00:16:24,280 Speaker 1: they're stripping those items down four parts basically, and taking 261 00:16:24,320 --> 00:16:28,160 Speaker 1: the microchips out of them and then using them for 262 00:16:28,200 --> 00:16:30,800 Speaker 1: whatever ends it deems it needs to, whether that's in 263 00:16:30,840 --> 00:16:33,040 Speaker 1: the defense sector or something else that it's lacking. So 264 00:16:33,080 --> 00:16:36,880 Speaker 1: they're actually bringing in fairly you totally innocuous goods and 265 00:16:36,880 --> 00:16:39,800 Speaker 1: stripping them down for parts. The thing that sanctions have 266 00:16:39,880 --> 00:16:42,040 Speaker 1: not really been able to contend with is what happens 267 00:16:42,040 --> 00:16:44,440 Speaker 1: when you have a country that's perfectly willing to ignore 268 00:16:44,480 --> 00:16:47,280 Speaker 1: them but is basically too big to punish in any 269 00:16:47,320 --> 00:16:51,280 Speaker 1: meaningful way, like China. China has been very willing to 270 00:16:51,320 --> 00:16:54,600 Speaker 1: do business with Russia. The US has not found that 271 00:16:54,640 --> 00:17:00,000 Speaker 1: it's directly supplying Russia's war effort through weapons and guns 272 00:17:00,000 --> 00:17:03,440 Speaker 1: and bullets, but they are finding that China is perfectly 273 00:17:03,480 --> 00:17:06,320 Speaker 1: willing to do business with Russia, and obviously you have 274 00:17:06,680 --> 00:17:09,520 Speaker 1: countries like Iran as well, So they're able to get 275 00:17:09,560 --> 00:17:13,240 Speaker 1: those chips in a surreptitious way by breaking down innocuous goods. 276 00:17:13,240 --> 00:17:15,600 Speaker 1: They're also just able to get them from countries like 277 00:17:15,720 --> 00:17:19,639 Speaker 1: China that are willing to provide them. Are they importing 278 00:17:19,680 --> 00:17:22,960 Speaker 1: washing machines and other common appliances with the express intent 279 00:17:23,119 --> 00:17:25,120 Speaker 1: of breaking them down for the chips, or are they 280 00:17:25,160 --> 00:17:27,760 Speaker 1: just comman daring a lounge of washing machines and stealing 281 00:17:27,760 --> 00:17:30,760 Speaker 1: the chips. It's early days still, but it looks like 282 00:17:30,800 --> 00:17:33,480 Speaker 1: they are actually doing that. I mean, Secretary of State 283 00:17:33,520 --> 00:17:37,760 Speaker 1: Tony B. Lincoln went to Kazakhstan and Uzbekistan a couple 284 00:17:37,760 --> 00:17:42,119 Speaker 1: of weeks ago with the express message, Hey, we know 285 00:17:42,320 --> 00:17:46,600 Speaker 1: your country is a transshipment point for items that Russia 286 00:17:46,720 --> 00:17:49,680 Speaker 1: is taking and stripping for parts. So you guys need 287 00:17:49,720 --> 00:17:52,639 Speaker 1: to do more to crack down on that practice because 288 00:17:52,680 --> 00:17:55,080 Speaker 1: it's a big problem. So this is a big enough 289 00:17:55,119 --> 00:17:58,240 Speaker 1: issue that the Secretary of State of the United States 290 00:17:58,359 --> 00:18:01,320 Speaker 1: goes to the countries where the shipments are happening and 291 00:18:01,359 --> 00:18:04,160 Speaker 1: tells them to knock it off. If they're able to 292 00:18:04,200 --> 00:18:07,159 Speaker 1: get chips from countries like China, why do they have 293 00:18:07,200 --> 00:18:10,919 Speaker 1: to go through these extraordinary measures to import appliances to 294 00:18:10,960 --> 00:18:14,640 Speaker 1: get the chips inside them, because China, for one thing, 295 00:18:14,720 --> 00:18:18,640 Speaker 1: has been very careful in testing the limits, So especially 296 00:18:18,680 --> 00:18:21,520 Speaker 1: early on in the invasion, there was a real sense 297 00:18:21,560 --> 00:18:24,680 Speaker 1: from US policymakers. I talked to several of them myself, 298 00:18:25,080 --> 00:18:29,200 Speaker 1: who felt, listen, we are actually seeing China obey the sanctions. 299 00:18:29,240 --> 00:18:31,640 Speaker 1: They are very interested in the letter of the law. 300 00:18:31,720 --> 00:18:33,840 Speaker 1: They want to make sure they don't get on the 301 00:18:33,880 --> 00:18:37,240 Speaker 1: wrong side of those sanctions. It was in that environment 302 00:18:37,280 --> 00:18:39,560 Speaker 1: where you had China still trying to figure out which 303 00:18:39,560 --> 00:18:41,760 Speaker 1: way it was going to go on this thing, where 304 00:18:41,760 --> 00:18:44,600 Speaker 1: you really started to see those flows. Now though, what 305 00:18:44,680 --> 00:18:47,680 Speaker 1: we're seeing particularly is the US and China get into 306 00:18:47,920 --> 00:18:53,280 Speaker 1: a much bigger rhetorical battle in almost every sector. China 307 00:18:53,359 --> 00:18:57,480 Speaker 1: has been increasingly willing to push those boundaries and not 308 00:18:57,560 --> 00:19:01,000 Speaker 1: necessarily open the floodgates, but maybe look the other way 309 00:19:01,200 --> 00:19:05,440 Speaker 1: as companies provide dual use items that Russia could use. 310 00:19:06,200 --> 00:19:10,240 Speaker 1: Just to note here, an official from the UAE said 311 00:19:10,560 --> 00:19:14,080 Speaker 1: in a statement to Bloomberg that the UAE adheres to 312 00:19:14,560 --> 00:19:20,080 Speaker 1: and strictly enforces international laws and un mandated sanctions alongside 313 00:19:20,119 --> 00:19:25,800 Speaker 1: agreements established with international partners, including the US. China's Foreign 314 00:19:25,840 --> 00:19:29,920 Speaker 1: ministry said that it isn't aware of the details surrounding 315 00:19:30,080 --> 00:19:34,320 Speaker 1: the chips issue and said the US has frequently spread 316 00:19:34,440 --> 00:19:39,240 Speaker 1: false information on the subject of China's relations with Russia, 317 00:19:39,280 --> 00:19:43,240 Speaker 1: and a Kremlin spokesman said that Russia doesn't consider the 318 00:19:43,280 --> 00:19:47,359 Speaker 1: restrictions placed by the US quote legal from the point 319 00:19:47,400 --> 00:19:52,199 Speaker 1: of view of international law. All that said, more with 320 00:19:52,320 --> 00:20:04,520 Speaker 1: Nick Wadham's When We come Back, you mentioned Iran A 321 00:20:04,600 --> 00:20:06,640 Speaker 1: moment ago, we had done an episode of the show 322 00:20:06,800 --> 00:20:10,000 Speaker 1: talking about how Russia has turned to countries like Iran 323 00:20:10,119 --> 00:20:14,080 Speaker 1: to create an entirely new supply chain in trade routes 324 00:20:14,160 --> 00:20:17,360 Speaker 1: that are out of reach of US sanctions. Are there 325 00:20:17,359 --> 00:20:21,159 Speaker 1: other avenues that Russia is using can use to essentially 326 00:20:21,640 --> 00:20:24,720 Speaker 1: trade in technology that the US just can't see or 327 00:20:24,760 --> 00:20:28,040 Speaker 1: even reach. That's one of the fascinating things that's happening 328 00:20:28,080 --> 00:20:30,399 Speaker 1: with sanctions, where you now have so many countries that 329 00:20:30,440 --> 00:20:34,800 Speaker 1: are sanctioned like Iran, mean, mar North Korea, Venezuela, that 330 00:20:34,880 --> 00:20:39,679 Speaker 1: it's creating essentially an entirely alternate global economy. I mean, 331 00:20:39,720 --> 00:20:43,320 Speaker 1: obviously much smaller, but it's almost like a shadow economy 332 00:20:43,359 --> 00:20:45,440 Speaker 1: where the US is not able to do anything. But 333 00:20:45,600 --> 00:20:47,720 Speaker 1: then on the other hand, you also have these sort 334 00:20:47,720 --> 00:20:53,240 Speaker 1: of in between countries, the UAE, for example, where they say, hey, 335 00:20:53,320 --> 00:20:56,359 Speaker 1: if you the United States come to us with a 336 00:20:56,520 --> 00:20:58,920 Speaker 1: name of a company or a person and you say 337 00:20:59,240 --> 00:21:02,359 Speaker 1: this person is violating sanctions, you got to do something 338 00:21:02,359 --> 00:21:04,919 Speaker 1: about them. Will help you out. But otherwise all that 339 00:21:05,040 --> 00:21:08,679 Speaker 1: enforcement stuff, the monitoring, that's not our job. We're not 340 00:21:08,680 --> 00:21:10,880 Speaker 1: going to pay attention to those things. So you start 341 00:21:10,920 --> 00:21:14,359 Speaker 1: to see situations where if Russia wants to do business 342 00:21:14,480 --> 00:21:19,000 Speaker 1: with companies based in places like the UAE and others 343 00:21:19,040 --> 00:21:22,800 Speaker 1: that are putatively US partners, they're able to do that 344 00:21:22,880 --> 00:21:26,280 Speaker 1: because those countries essentially have no enforcement mechanism in place 345 00:21:26,400 --> 00:21:30,240 Speaker 1: to go after sanctions on their own without explicit instruction 346 00:21:30,320 --> 00:21:33,240 Speaker 1: from the United States, and that's basically then just open 347 00:21:33,280 --> 00:21:37,399 Speaker 1: season for Russia. One other thing that we see sometimes 348 00:21:37,600 --> 00:21:41,080 Speaker 1: is that legitimate companies who try very hard not to 349 00:21:41,119 --> 00:21:45,240 Speaker 1: evade sanctions get caught up in a situation where the 350 00:21:45,359 --> 00:21:49,080 Speaker 1: chain of custody of these illegal goods that do break 351 00:21:49,119 --> 00:21:52,640 Speaker 1: sanctions is so long that they don't even know that 352 00:21:52,680 --> 00:21:57,000 Speaker 1: they're part of a sanctions busting supply line right. That 353 00:21:57,040 --> 00:22:00,880 Speaker 1: has happened with some frequency. And it's really interesting because 354 00:22:00,920 --> 00:22:03,600 Speaker 1: in the past the US has said that's not an excuse, 355 00:22:03,680 --> 00:22:05,760 Speaker 1: So that can't save you. If you're a US company 356 00:22:05,800 --> 00:22:08,720 Speaker 1: and your products when their way through the supply chain 357 00:22:08,760 --> 00:22:11,800 Speaker 1: and eventually enter into or come into contact with the 358 00:22:11,880 --> 00:22:15,600 Speaker 1: sanctioned entity, they can still be punished. So that is 359 00:22:15,600 --> 00:22:18,160 Speaker 1: one way that the US has tried to enforce these things. 360 00:22:18,200 --> 00:22:20,480 Speaker 1: But again, when you're dealing with China, you know some 361 00:22:21,000 --> 00:22:24,439 Speaker 1: company that's providing aerospace parts. I mean, the US just 362 00:22:24,520 --> 00:22:28,080 Speaker 1: tried to sanction a Chinese company because supplying aerospace parts 363 00:22:28,119 --> 00:22:31,520 Speaker 1: for an Iranian company that makes the drones that then 364 00:22:31,600 --> 00:22:34,920 Speaker 1: go on and have been used by Russia in Ukraine. 365 00:22:35,400 --> 00:22:37,680 Speaker 1: It's like they can impose sanctions and say, all right, 366 00:22:37,720 --> 00:22:40,160 Speaker 1: you have no access to the US financial system, but 367 00:22:40,359 --> 00:22:42,880 Speaker 1: those companies still have plenty of access to the Chinese 368 00:22:43,080 --> 00:22:46,320 Speaker 1: financial system and they're able to do that trade basically unimpeded. 369 00:22:47,560 --> 00:22:52,400 Speaker 1: Are sanctions then more effective at putting pressure on politicians, 370 00:22:52,840 --> 00:22:57,040 Speaker 1: putting pressure on people in a country against the government 371 00:22:57,160 --> 00:23:01,400 Speaker 1: to effect change than they are at actually stopping goods 372 00:23:01,480 --> 00:23:04,959 Speaker 1: from moving around the world. You're getting into an area 373 00:23:05,040 --> 00:23:08,760 Speaker 1: that is just so ripe and full of debate at 374 00:23:08,760 --> 00:23:10,920 Speaker 1: the moment, and it's a bit of a hobby horse 375 00:23:11,280 --> 00:23:14,000 Speaker 1: of mine, because what you see over the last many, 376 00:23:14,080 --> 00:23:17,520 Speaker 1: many years is that successive administrations roll out these big 377 00:23:17,560 --> 00:23:21,240 Speaker 1: sanctions packages and they say, Okay, we're going after Russia's 378 00:23:21,240 --> 00:23:25,119 Speaker 1: Wagner Group, the paramilitary group that's basically fighting alongside Russian 379 00:23:25,160 --> 00:23:28,840 Speaker 1: forces in Ukraine, or we're going after the junta in Myanmar, 380 00:23:29,280 --> 00:23:31,879 Speaker 1: and they come out with these big, splashy announcements and 381 00:23:31,920 --> 00:23:34,320 Speaker 1: they say like, Okay, this is it. This is going 382 00:23:34,359 --> 00:23:36,480 Speaker 1: to be the thing that really nails these guys and 383 00:23:36,520 --> 00:23:38,720 Speaker 1: gets them to cut it out, and it never does. 384 00:23:38,840 --> 00:23:41,360 Speaker 1: I mean, you look at the Wagner Group. They are 385 00:23:41,480 --> 00:23:45,800 Speaker 1: essentially operating unimpeded in Ukraine even though they've been under 386 00:23:45,840 --> 00:23:49,280 Speaker 1: these crushing financial sanctions. It has worked in some cases. 387 00:23:49,320 --> 00:23:52,200 Speaker 1: The US points to the Iran nuclear deal that sanctions 388 00:23:52,200 --> 00:23:55,760 Speaker 1: on Iran were instrumental in pressing the Iranian government to 389 00:23:55,800 --> 00:23:59,400 Speaker 1: come into that deal. But otherwise there's a real growing 390 00:23:59,480 --> 00:24:02,800 Speaker 1: feeling amongst some skeptics about sanctions that they're basically a 391 00:24:02,840 --> 00:24:07,000 Speaker 1: signaling move, a way to express disapproval about something that 392 00:24:07,119 --> 00:24:10,879 Speaker 1: someone's doing. But the sense that there's actually a follow 393 00:24:10,960 --> 00:24:14,280 Speaker 1: up and ability to bring about some sort of change 394 00:24:14,480 --> 00:24:18,080 Speaker 1: or new calculus and how a policymaker makes a decision. 395 00:24:18,600 --> 00:24:20,959 Speaker 1: People are a lot more skeptical about that. Is there 396 00:24:20,960 --> 00:24:23,879 Speaker 1: a way that sanctions would be more effective, Is something 397 00:24:23,880 --> 00:24:27,320 Speaker 1: that they're not doing that they could well. This is 398 00:24:27,320 --> 00:24:31,280 Speaker 1: always the challenge because US policy makers, for example, they 399 00:24:31,400 --> 00:24:33,480 Speaker 1: know a lot of things they could do that could 400 00:24:33,520 --> 00:24:37,399 Speaker 1: truly devastate Russia's economy, but obviously then you have blowback 401 00:24:37,680 --> 00:24:41,240 Speaker 1: on Western economies. So it's always finding that balance between 402 00:24:41,320 --> 00:24:43,439 Speaker 1: what's the thing that is going to hurt Russia the most, 403 00:24:44,040 --> 00:24:47,000 Speaker 1: that's not going to have blowback and tank the US 404 00:24:47,119 --> 00:24:52,200 Speaker 1: financial systems. One example would be if you barred all 405 00:24:52,440 --> 00:24:55,960 Speaker 1: sales of Russian oil and gas anywhere in the world. 406 00:24:56,000 --> 00:24:59,199 Speaker 1: You put a total embargo on Russian petroleum part of it. 407 00:24:59,200 --> 00:25:00,960 Speaker 1: So you just said RUSSI is not allowed to sell 408 00:25:01,000 --> 00:25:04,679 Speaker 1: any of its crewed anywhere in the world or natural gas. 409 00:25:05,320 --> 00:25:07,760 Speaker 1: That would cause the price of oil to spike, and 410 00:25:07,840 --> 00:25:11,040 Speaker 1: that would potentially have massive effects on the US economy. 411 00:25:11,080 --> 00:25:12,920 Speaker 1: So what the US is doing in the case of 412 00:25:13,000 --> 00:25:15,600 Speaker 1: Russia is saying, Okay, we're going to try to impose 413 00:25:15,640 --> 00:25:18,200 Speaker 1: a price cap, so we don't want other countries to 414 00:25:18,240 --> 00:25:23,040 Speaker 1: buy Russia's petroleum products above a certain price. So they 415 00:25:23,080 --> 00:25:25,359 Speaker 1: still want Russia to be able to sell, they just 416 00:25:25,400 --> 00:25:27,520 Speaker 1: don't want Russia to be able to profit as much 417 00:25:27,560 --> 00:25:30,119 Speaker 1: for it. And you see, it's an enormous song and dance. 418 00:25:30,480 --> 00:25:32,680 Speaker 1: They're really trying to put pressure on companies to buy 419 00:25:32,760 --> 00:25:35,719 Speaker 1: below that cap. India is a big example. But again, 420 00:25:36,000 --> 00:25:38,359 Speaker 1: what the result is is that Russia still gets a 421 00:25:38,400 --> 00:25:42,080 Speaker 1: ton of revenue from those sales. Looking forward, where does 422 00:25:42,119 --> 00:25:44,639 Speaker 1: all this head? Do you think sanctions continue to be 423 00:25:44,680 --> 00:25:49,760 Speaker 1: a widely used tool. The political pressure for administrations to 424 00:25:49,880 --> 00:25:54,680 Speaker 1: use sanctions is so high because they're very easy to impose. 425 00:25:55,080 --> 00:25:58,560 Speaker 1: Congress can impose them, the administration can do so on 426 00:25:58,600 --> 00:26:01,600 Speaker 1: its own without needing to get approval from anyone else. 427 00:26:01,920 --> 00:26:05,320 Speaker 1: They have a strong signaling effect. That's a way to show, Okay, 428 00:26:05,359 --> 00:26:08,480 Speaker 1: we disapprove of this person. If they can impose sanctions, 429 00:26:08,520 --> 00:26:11,560 Speaker 1: it makes it look like they're doing something. That person 430 00:26:11,600 --> 00:26:14,600 Speaker 1: also then no longer has access to the US financial system, 431 00:26:15,080 --> 00:26:18,000 Speaker 1: so there's a ton of pressure to keep using this tool. 432 00:26:18,119 --> 00:26:21,879 Speaker 1: The question arises, though, well does it actually work and 433 00:26:22,040 --> 00:26:24,280 Speaker 1: does the US end up actually losing leverage. I mean, 434 00:26:24,320 --> 00:26:26,879 Speaker 1: you look at a country like North Korea, probably the 435 00:26:27,000 --> 00:26:30,840 Speaker 1: most sanctioned nation on the planet, but Kim Jong un 436 00:26:31,040 --> 00:26:33,439 Speaker 1: is more entrenched in power than he's ever been. He 437 00:26:33,480 --> 00:26:36,159 Speaker 1: shows no sign of going anywhere. His nuclear program is 438 00:26:36,240 --> 00:26:40,040 Speaker 1: running basically unchecked. The US now has no leverage to 439 00:26:40,080 --> 00:26:43,359 Speaker 1: try to get anything from that regime. So there's a 440 00:26:43,400 --> 00:26:47,200 Speaker 1: real question of efficacy. Okay, you impose these sanctions, Well, 441 00:26:47,240 --> 00:26:49,080 Speaker 1: does that actually help you get what you want? Or 442 00:26:49,119 --> 00:26:50,960 Speaker 1: do you just end up shooting yourself in the foot? 443 00:26:52,320 --> 00:26:55,399 Speaker 1: Looking more specifically at Russia's war in Ukraine, do you 444 00:26:55,600 --> 00:26:59,320 Speaker 1: see the US imposing more sanctions? Is there anything left 445 00:26:59,359 --> 00:27:02,119 Speaker 1: to sanction? Well, this brings us around to what you 446 00:27:02,200 --> 00:27:04,560 Speaker 1: were saying at the beginning. So what they are saying 447 00:27:04,640 --> 00:27:07,440 Speaker 1: now is the first year was about imposing the sanctions. 448 00:27:07,480 --> 00:27:10,400 Speaker 1: The second year of the war is about enforcing them. 449 00:27:10,680 --> 00:27:13,720 Speaker 1: And that's where you're really seeing the administration's attention turn. 450 00:27:13,840 --> 00:27:16,880 Speaker 1: So they've maxed out a lot of what they can 451 00:27:16,920 --> 00:27:20,200 Speaker 1: do without getting the blowback on Western economies. What they 452 00:27:20,240 --> 00:27:22,720 Speaker 1: want to do now is really pushed to make sure 453 00:27:22,880 --> 00:27:25,640 Speaker 1: that the sanctions they have in place are being followed. 454 00:27:25,720 --> 00:27:30,119 Speaker 1: So the microchips, for example, restricting those flows of technology 455 00:27:30,200 --> 00:27:33,320 Speaker 1: or whatever else it might be to Russia. And they 456 00:27:33,320 --> 00:27:36,440 Speaker 1: continue to maintain that, Hey, this is a long term proposition. 457 00:27:36,600 --> 00:27:39,560 Speaker 1: This is not something that we ever expected to work overnight. 458 00:27:39,600 --> 00:27:42,440 Speaker 1: But what we want to be able to do is gradually, 459 00:27:42,480 --> 00:27:46,280 Speaker 1: over time, tighten the screws to really restrict Vladimir Putin's 460 00:27:46,280 --> 00:27:49,800 Speaker 1: ability to wage war. They're racing against his ability to 461 00:27:49,880 --> 00:27:53,080 Speaker 1: adapt and find new sources of chips or whatever else. 462 00:27:53,280 --> 00:27:56,480 Speaker 1: But that's the calculus that they're trying to make. They say, listen, 463 00:27:56,520 --> 00:27:58,600 Speaker 1: don't judge us by what's happened in the first year. 464 00:27:58,720 --> 00:28:01,240 Speaker 1: Judge by what happens three or four or five years. 465 00:28:01,920 --> 00:28:05,720 Speaker 1: Nick Wadhams, thanks for being here, Thank you, thanks for 466 00:28:05,800 --> 00:28:07,680 Speaker 1: listening to us here at The Big Take. It's a 467 00:28:07,760 --> 00:28:11,399 Speaker 1: daily podcast from Bloomberg and iHeartRadio. For more shows from 468 00:28:11,440 --> 00:28:15,119 Speaker 1: my Heart Radio, visit the iHeartRadio app, Apple Podcasts, or 469 00:28:15,160 --> 00:28:17,800 Speaker 1: wherever you listen, and we'd love to hear from you. 470 00:28:18,160 --> 00:28:21,840 Speaker 1: Email us questions or comments to Big Take at Bloomberg 471 00:28:21,880 --> 00:28:25,639 Speaker 1: dot net. The supervising producer of The Big Take is 472 00:28:25,720 --> 00:28:30,720 Speaker 1: Vicky Burgolina. Our senior producer is Katherine Fink. Federica Romanello 473 00:28:30,840 --> 00:28:36,200 Speaker 1: is our producer. Our associate producer is Zenobsiddiki. Hilda Garcia 474 00:28:36,359 --> 00:28:40,280 Speaker 1: is our engineer. Our original music was composed by Leo Sidrin. 475 00:28:40,720 --> 00:28:44,040 Speaker 1: I'm West Kasova. We'll be back tomorrow with another big take.