Chinese companies have helped Iran produce the infamous “Shahed” drones that Russia has used to bombard Ukraine, according to U.S. officials.
Iran’s military drone manufacturer has procured “thousands of aerospace components” from a Chinese company that routed the transactions through a Hong Kong-based front company. Treasury Department officials unveiled sanctions on the supply chain as an exercise in enforcing the existing sanctions on the Iranian company, but the punitive measure raises the curtain on China’s sidelong support for Russia’s war in Ukraine.
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“Iran is directly implicated in the Ukrainian civilian casualties that result from Russia’s use of Iranian UAVs in Ukraine,” Treasury undersecretary Brian Nelson said Thursday. “The United States will continue to target global Iranian procurement networks that supply Russia with deadly UAVs for use in its illegal war in Ukraine.”
Treasury Department officials imposed the sanctions in tandem with the blacklisting of a wider “shadow-banking” network accused of working with major Iranian petrochemical companies.
“These multi-jurisdictional illicit finance systems provide sanctioned Iranian entities access to the international financial system and enable them to obfuscate their trade with foreign customers,” Secretary of State Antony Blinken said Thursday. “Iranian currency exchange houses create front companies abroad to enable trade on behalf of their Iranian clients and help them evade U.S. sanctions. Companies utilizing these networks have generated tens of billions of dollars for the Iranian regime across a variety of fields.”
President Joe Biden’s administration imposed the sanctions as tensions simmer with both Iran and China, stemming in part due to their posture towards Russia. Western efforts to renew the 2015 Iran nuclear deal faltered and then went “on ice” amid the Iranian regime’s arming of Russia and crackdown on protesters following the killing of Mahsa Amini. More recently, Blinken has circulated warnings that China might provide lethal aid directly to Russia, raising the specter of the Kremlin gaining access to vast new arsenals for the war in Ukraine and a new rupture between the West and Beijing.
“I think it would have consequences, but we are now in a stage where we are making clear that this should not happen,” German Chancellor Olaf Scholz said Sunday. “I’m relatively optimistic that we will be successful with our request in this case, but we will have to look at, and we have to be very, very cautious.”
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Blinken didn’t refer to China in his statement on Iran’s “shadow banking” network, but he forecast continued enforcement of U.S. sanctions on Tehran.
“The United States will continue to disrupt attempts to evade U.S. sanctions, and we will use the tools at our disposal to protect both the U.S. and international financial system,” he said.
