US Preps Export Rule That Hammered Huawei To Target Russia’s Access To Global Electronics

The White House has informed the US chip industry that it must be prepared for potential new restrictions on exports in the event Russia attacks Ukraine, according to Reuters, as the Biden administration is still mulling the unprecedented move of preventing Russian consumers from getting US phones, computers, and cars – which would be an expansion of the Foreign Direct Product Rule previously used by Trump against Chinese telecoms firm Huawei.

“We have been very clear that if Russia further invades Ukraine, the United States is looking at a range of options – with allies and partners – to deliver severe costs to the Russian economy,” a White House spokeswoman said, after being asked about a phone call made Friday with the Semiconductor Industry Association (SIA), the foremost chip lobbying group in D.C.

Russia’s demographic and labor collapses have prevented it from pursuing broadscale technological advancement. These days about the only real work that is happening locally is in military engineering. Everything else must be imported. https://t.co/c23IAyFI4b

— Peter Zeihan (@PeterZeihan) January 24, 2022

It’s yet more “all options” talk and imposing severe “costs” on the Russian economy as the White House since last week has echoed its belief Russia is poised for a Ukraine offensive, even as urgent high level diplomatic engagement between Moscow and Western powers continues in Europe.

An official with SIA described the call with the White House as follows: “The NSC relayed in blunt and stark terms the gravity of the situation they are currently grappling with in Ukraine, noting that this is an extraordinary situation and potentially the worst cross border invasion to take place since WWII,” according to Reuters. “The NSC indicated that the administration is actively considering any and all options.”

Should such a retaliatory move be enacted, it would be akin to Trump-era actions taken against China’s telecoms giant Huawei – and also resembling current far-reaching export controls on Iran, which have devastated key sectors in the Middle East country.

Meanwhile there are already signs the Ukraine crisis and growing war-rhetoric surrounding it is hitting Russia’s business elite hard, also as the ruble continued its steep slide Monday:

Russia’s business elite is bracing for possible military conflict, billions in lost value and new rounds of hard-hitting Western sanctions in silent despair — unable to influence the course of events and unwilling to speak out publicly, business owners and representatives told The Moscow Times.

Russia’s stock market has been in steep decline in recent weeks and the value of the ruble has cratered to an almost all-time low as the standoff between Russia and the West over Ukraine shows no sign of abating. 

Russian default odds surging…

As for blocking chip exports, the latest statements from the administration suggest they’re not willing to pull the trigger unless Russia makes an advance on Ukraine. Antony Blinken in Sunday and Monday comments said its too early to step up sanctions, but the threat remains.

The Secretary of State said Sunday of ongoing diplomatic dialogue with Russia, “I tried to make clear both paths in my meeting with Foreign Minister Lavrov in Geneva this week, and we’ll see if we can advance the diplomacy.” Some Western pundits have noted that a large Russian offensive remains unlikely unless the Ukrainian army moves against the breakaway republics in Donbass first.