US sanctions due to BRICS ties ‘more profound’ risk than tariffs, says expert

 

Malaysia was recognised as a BRICS partner in October. (EPA Images pic)

PETALING JAYA: 

While Malaysian politics and businesses appear to have realised that tariffs are a concern following the country’s recognition as one of 13 BRICS partner countries, sanctions represent a more profound risk, an expert warns.

Harald Sippel, a senior foreign adviser with Aqran Vijandran – a law firm specialising in commercial and corporate law – said while tariffs primarily impact economic transactions, sanctions carry a broader set of implications including legal, reputational, and operational risks.

The US has already shown that employing sanctions is the cornerstone of its foreign policy, he said.

Sippel said Washington uses sanctions to address perceived threats to its national interests, as well as to influence the behaviour of other nations.

“Yet, this threat has so far been completely underestimated by Malaysian politics and businesses alike,” he wrote in the latest edition of CME Monthly Espresso, a newsletter produced by think tank Center for Market Education.

Sippel, who regularly advises companies on matters related to sanctions, said that US sanctions are often implemented through executive orders, and when it comes to BRICS, two executive orders stand out, namely Executive Order 14024 and Executive Order 14105.

He said that Executive Order 14024 authorises sanctions against individuals and entities engaged in activities detrimental to US foreign policy, such as undermining democratic institutions and cyber attacks.

This order has been a key instrument for sanctioning entities linked to Russia’s geopolitical actions, he added.

Executive Order 14105, on the other hand, broadens the scope of sanctions related to the technology sector, focusing on entities that facilitate artificial intelligence (AI) technologies, he said.

This order highlights Washington’s growing concern over AI’s dual-use potential, particularly in countries like China, he said.

Sippel said Malaysia’s enhanced ties with BRICS members, particularly China and Russia, might inadvertently draw scrutiny under these frameworks.

“While Malaysian businesses would hardly defy US sanctions intentionally, their increased economic engagement with BRICS nations would likely be perceived as contravening US policies,” he said.

Sippel, a CME advisory board member, added that the threat “is not purely of theoretical nature”.

He said the US targeted nearly 400 entities and individuals for enabling Russia’s war in the Ukraine in November 2024, including six Malaysian companies.

Earlier this month, investment, trade and industry minister Tengku Zafrul Aziz said Putrajaya would monitor the development of the threat by US president-elect Donald Trump to impose tariffs on BRICS countries. Malaysia was recognised as a BRICS partner in October.

Trump had threatened to impose 100% tariffs on BRICS nations if they created a rival currency to the US dollar. - FMT