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Biden’s war on the Russian economy is missing a key player

Russia’s invasion of Ukraine has accelerated an historic expansion in the use of export controls, well beyond their traditional focus on stopping the spread of nuclear and conventional weapons.

But that shift towards new goals, such as inflicting economic pain on adversary nations and preventing the abusive use of new technologies to monitor populations, is taking place in the United States without a key official in place — the undersecretary of Commerce for industry and security, the post that oversees implementation of U.S. export controls.

Nine months after President Joe Biden announced he had picked former Defense Department official Alan Estevez for the job, the full Senate still hasn’t voted on the nomination, thanks to a policy dispute between the Biden administration and Senate Foreign Relations Chair Bob Menendez over regulating firearms exports. That’s left the Commerce Department’s Bureau of Industry and Security without a chief at a time when the department is trying to enforce an unprecedented array of new restrictions.

On Friday, the Commerce Department published a list of Russian-owned aircraft that have flown into Russia in recent days and warned that providing any services to those planes would violate the new U.S. export controls — effectively grounding the planes from international travel.

“Never before have there been more complex issues involving export controls than exist today,” said Kevin Wolf, a former assistant secretary of Commerce for export administration in the Obama administration, who has spent three decades working in the area. “By definition, there needs to be leadership leading this intellectually difficult exercise.”

While BIS career officials and the agency’s two new assistant secretaries did “an extraordinary job” in rolling out new export controls on Russia after its attack on Ukraine, the unprecedented demands on the agency require it to be fully staffed, Wolf said.

Having a Senate-confirmed undersecretary at BIS for the first time since early in the Trump administration would also be an important signal that Congress values the work the agency does, said Doug Jacobson, a lawyer specializing in export controls at Jacobson Burton Kelley.

The last BIS undersecretary, Mira Ricardel, served briefly in the post before moving to the Trump White House to become deputy national security adviser. After that, BIS was overseen for several years by an acting undersecretary.

“BIS has very experienced and dedicated career civil servants, so they can still manage. But I think the key point is that in any federal agency having stable Senate-confirmed leadership is important,” Jacobson said. “They are spread very thin right now.”

Firearms fight: Estevez sailed through his Senate Banking Committee confirmation hearing in September and won bipartisan backing from the panel in October.

He then ran into a hold on his nomination by Sen. Tom Cotton (R-Ark.), a non-Banking Committee member who demanded more information on how Estevez would handle export control issues involving China. However, that turned out to be a temporary hiccup; Cotton lifted his hold in November after Estevez replied to a number of written questions.

That appears to leave Menendez (D-N.J.) as the biggest remaining obstacle to Estevez’s confirmation. And his opposition stems less from personal concerns about Estevez’s qualifications than from a decision made by the Trump administration to transfer export oversight of most firearms and ammunition from the stringent control of the State Department to more export-friendly Commerce Department regulations.

Menendez has long been an opponent of the move, which has its roots in a major revamp of export controls conducted by the Obama administration.

The New Jersey Democrat contends that candidate Biden promised to reverse the move, a claim that is supported by the gun safety page on the president’s 2016 campaign website, which says “Biden will ensure that the authority for firearms exports stays with the State Department, and if needed, reverse a proposed rule by President Trump.”

So far, there’s been no progress on that issue, Menendez has complained.

White House officials realize they need to deal with the firearms issue if they want Menendez’ cooperation in scheduling a quick vote on Estevez, a Menendez aide said. But although the two sides have had talks, no deal has been reached.

Estevez worked for more than 40 years at the DOD. He spent five years working as assistant secretary for Defense, and then as principal deputy undersecretary of Defense for acquisition, technology and logistics until 2017.

Given that background, he is expected to rely heavily on BIS career staff as he familiarizes himself with the highly specialized world of export controls. But “there’s really no excuse why the Senate should not confirm him,” Jacobson said.

Wolf emphasized he was neutral on the issues in discussion between Menendez and the administration, and that his far bigger concern is the need for Estevez to be confirmed as undersecretary.

How soon that happens at this point could largely depend on whether Senate Majority Leader Chuck Schumer decides to force a vote on the nomination, as he has done for a number of other Biden nominees blocked by Republicans.

An export control revolution: The delay is taking place against a whirl of activity on the export control front that has only become more frenetic since Russia launched its invasion of Ukraine.

Since the end of World War II, export controls traditionally have been used to limit the spread of weapons of mass destruction, as well as conventional weapons and a long list of “dual use” items which have both military and commercial applications.

However, the Trump administration began using the controls for new purposes, such as preventing China from acquiring cutting edge technology that would erode the U.S.’ competitive edge or that could be used by government authorities to spy on oppressed minorities, such as China’s Uighur Muslim minority.

Most recently, the Biden administration has weaponized the use of export controls to weaken the Russian economy by denying its access to semiconductors and other technology made using U.S. equipment anywhere in the world.

“When you start getting into issues like technology leadership, or civil-military fusion, or human rights or supply chain security or strategic economic competition, those are all non-traditional uses for export controls for which there is not really authority outside the U.S. to control something for any of those other reasons,” Wolf said.

That’s because the international export control regime developed during the Cold War reflects the traditional aims of stopping the spread of weapons of mass destruction, preventing any destabilizing buildup in conventional weapons and regulating the commodities, software, and technology necessary for their development, production, or use.

But spurred on by Russia’s invasion, other countries are beginning to give themselves the legal authorities to impose controls outside the traditional regime-based system. A new undersecretary for industry and security would help the Biden administration distill its own thinking about the future direction of export controls, and work with allies in Europe and other parts of the world to coordinate joint actions, Wolf said.

The United States and the EU were already heading down that path, prior to the Ukraine war, as part of the joint Trade and Technology Council inaugurated last year. One of the 10 working groups under that structure is on export controls.

According to a September 2021 joint statement, the U.S. and the EU have agreed that dual-use export controls could be used for a variety of purposes.

Those include trying to curb overseas human rights abuses; promoting a fair and rules-based global trading system; addressing legal, ethical, and political concerns about emerging technologies; responding to China’s civil-military fusion policies; avoiding disruptions of strategic supply chains; and responding to foreign technology acquisition strategies.

Those ideas have all been discussed in U.S. policy circles in recent years, but the joint statement is the first time a U.S. ally has agreed to an expanded use of export controls outside of the traditional Cold War-era applications, Wolf said.

Gavin Bade contributed to this report.

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