CRANK Call | July 2024
CRANK Call is a monthly review of developments involving cooperation, and at times contention, among China, Russia, Iran, and North Korea (the CRANKs).
July 2024 Highlights
NATO summit accuses China of enabling Russia’s war on Ukraine
The official communique from NATO heads of government issued on 10 July at their summit in Washington accused China of being a “decisive enabler of Russia’s war against Ukraine” and demanded a halt to supplies of “weapons components” and other goods and technologies which strengthen the Russian military. This represents a major departure for NATO, which has previously avoided direct criticism of China’s support for Moscow’s war effort. The statement implicitly threatens sanctions on Chinese firms or individuals involved. China cannot “enable the largest war in Europe in recent history without that negatively impacting its interests and reputation,” the communique said.
While China has not—at least not openly—delivered munitions to Russia like North Korea has, Chinese companies have been major suppliers of dual-use items that are the building blocks of military power. About 70% of Russia’s imported machine tools and 90% of its imported microelectronics come from China, according to remarks from Secretary of State Tony Blinken at the NATO Summit.
China has aimed to avoid Western sanctions by avoiding direct munitions sales and having Chinese companies obscure the sales of dual-use items to the Russian defense industry by using middlemen, sometimes outside China. But the big picture regarding how important China is to the Russian arms industry is becoming clear to Western governments. This has been enough to get the required unanimity within NATO to raise the issue so vociferously, overcoming what had been German concerns about their large volume of industrial exports to China and Hungary’s longstanding affinity to Beijing.
Russia-Iran cooperation agreement advances, slated for October signing
Russia and Iran have “put the finishing touches” on their long-awaited comprehensive bilateral cooperation agreement, which includes the nuclear and defense sectors, according to Russian Deputy Foreign minister Andrei Rudenko. Rudenko said the agreement would be signed at the next top-level meeting between Russia and Iran, probably the BRICS summit scheduled for October in Kazan, Russia. While the agreement may not break much new ground, it demonstrates the degree to which Russia and Iran have increased their substantive cooperation on armaments, sanctions evasion, and in other areas that aid in their competition with the United States.
U.S. sanctions China over supplies to North Korean missile programs
The U.S. Treasury Office of Foreign Assets Control (OFAC) announced sanctions on 24 July against six Chinese individuals and five Chinese organizations that Washington found to have acted as conduits for procurement of dual-use items involved in North Korean missiles programs. The action builds on an earlier round of sanctions in 2023 against Choe Chol Min, a North Korean residing in China. While China has not provided ballistic missiles to North Korea, Treasury has noted an increasing pattern of toleration from Beijing for North Korean entities collaborating with Chinese companies willing to serve as straw purchasers for dual-use items that can contribute to North Korea’s missile and space efforts.
U.S. Arctic strategy aims to counter perceived increase in Russia-China cooperation
The Pentagon released an Arctic strategy report on 22 July that highlighted what it said were indications of increased collaboration between Russia and China in the region. Russia has reopened numerous Cold War-era military outposts, and China has described itself as a “near Arctic” state and deployed three recently-built icebreakers for research, including on underwater drones. Climate change has driven renewed interest in the region in recent years, with the potential development of new fossil fuel reserves as well as shipping routes that avoid perceived choke points like the Strait of Malacca, through which most of China’s seaborne fossil fuel imports currently pass. The report supports increased funding for sensors in the region and new space-based observational platforms with enhanced polar coverage. It also highlights the new Icebreaker Collaboration Effort (ICE) agreement announced at the NATO summit, through which the U.S. will partner with Canada and Finland to catch up to Russia’s larger fleet of icebreakers. China and Russia each responded to the report with statements asserting that their activities in the Arctic are not directed against anyone else.
North Korea’s economic dependency on China intensifies, but …
North Korea’s trade volumes became even more skewed toward China in 2023. An analysis by the Korea Trade-Investment Promotion Agency (KOTRA), a South Korean government body supporting Korean firms, said China accounted for 98.3% of North Korea’s external trade, up from 96.7% in 2022. North Korean exports to Vietnam fell significantly. However, the KOTRA data does not include Russia’s trade with North Korea, as Russia has not released public trade volume data since the invasion of Ukraine in 2022. Anecdotal indicators suggest that the DPRK’s trade with Russia has increased due to exchanges of North Korean munitions for Russian technology and food commodities.
Links
—China and Russia are studying possible cooperation involving the Bank of Russia’s MIR payments system, according to Beijing’s ambassador to Russia. (South China Morning Post)
—Chinese and Russian warships engaged in joint naval drills off Guangdong province in southern China beginning on 15 July. (Associated Press)
—Russia, China, and Laos pledged to respond to ‘extra-regional forces’ during a joint visit by the Chinese and Russian foreign ministers to see their Laotian counterpart in Vientiane. (Straits Times)
—Russia and China conducted their first joint long-range bomber patrol in the Northern Siberia region adjacent to Alaska. The patrol included two Tu-95 Bear and two Xian H-6 nuclear-capable bombers. U.S. and Canadian aircraft intercepted and monitored the flight. (New York Times)
—Amid challenges in clearing payments for trade between Rusia and China through major banks, the Chinese company Qifa is marketing a digital clearing system that relies on Tether, a cryptocurrency “stablecoin” tied to the U.S. dollar. (Reuters)
—Russia and North Korea signed a new law enforcement agreement in Pyongyang on 22 July. Outside observers see this move as aimed more at coordinating sanctions evasion and cyber operations against the West. (NK News)
—Iran and China inaugurated a new freight rail service connecting the two countries via Turkmenistan and Kazakhstan on 21 July. Trains are initially expected to operate twice per week. (MSN)
—Iran has signed a purchase agreement to take 300 million cubic meters (mcm) of Russian natural gas daily for domestic use. Despite its own substantial gas production and having the world’s second-largest reserves, Iran has had severe shortages of gas in recent years, and Russia has excess capacity after losing much of its export volumes to Europe. Iran’s gas production is largely in the south, while its population is largely in the north and northwest. (Asharq al-Awsat)
—Russia and Iran expect the Russian MIR payments system to be functional in Iran soon, after Iran’s foreign ministry announced in April that work on integrating the two countries’ financial systems had begun. (Tasnim News Agency)
—Iran and Russia conducted joint naval search and rescue drills in the Caspian Sea on 22 July, CASAREX24. (Caspian News)
Recent Analysis
Beneath the Harbor: Hong Kong’s Leading Role in Sanctions Evasion (Samuel Bickett, The Committee for Freedom in Hong Kong Foundation)
2024 Arctic Strategy (U.S. Department of Defense)
CRANK Perspectives
US hypes ‘threat from China, Russia’ in Arctic strategy, to push for militarization in the Region (Xu Keyue, Global Times)
NATO’s Eastward pivot is to interfere in regional affairs (Sun Chenghao and Wang Yinuo, China Daily)
CRANK Call
Editor-in-Chief, Paul Saunders
Editor, Greg Priddy ([email protected])
Image credit: Shutterstock