Economic Self-Reliance: A Viable Response to Sanctions or Mere Aspiration?

The United States has recently imposed export restrictions on 70 companies across eight countries, including Pakistan, China, and the United Arab Emirates. Among the sanctioned entities, 19 are from Pakistan, 42 from China, and four from the UAE, alongside companies from Iran, France, Africa, Senegal, and the United Kingdom. These restrictions have been enforced for various reasons, including national security concerns, alleged involvement in nuclear and ballistic missile programmes, and other related issues. The US government claims that these entities are operating against its national security and foreign policy interests.

This is not the first time that the US has imposed sanctions on companies from Pakistan and other countries, citing national security threats. In 2018, the US had placed seven Pakistani engineering firms under strict scrutiny, alleging their involvement in nuclear equipment trade, which was deemed a potential threat to US national security and foreign policy interests. Similarly, in December 2021, the US administration sanctioned 13 Pakistani companies for allegedly assisting Pakistan’s nuclear and missile programmes. Again, in April 2024, the US announced sanctions against three Chinese companies and one Belarusian firm for allegedly supporting Pakistan’s missile development programme.

Among the Pakistani companies affected by these sanctions are Allied Business Concern Private Limited, Ariston Trade Links, Brite light Engineering Company, Global Traders, Indentech International, Intralink Incorporated, Linkers Automation Private Limited, and N.A. Enterprises. Additionally, companies such as Auto Manufacturing, Pothohar Industrial and Trading Concern, Proc Master, Professional Systems Private Limited, Rachna Supplies Private Limited, and Rustec Technologies have also been impacted.

Apart from restricting four suppliers of Pakistan’s ballistic missile programme, the US has also imposed sanctions on three Chinese firms and one Belarusian company for allegedly supporting Pakistan’s missile development. According to a statement by US State Department spokesperson Matthew Miller, “The United States is designating these four Pakistani companies for their involvement in the proliferation of weapons of mass destruction and their delivery systems. The US remains committed to taking action against the spread of such weapons.”It is worth noting that while the US imposes such restrictions, it has itself provided over $3 billion worth of weapons to Israel for its military operations in Gaza.

In response, Pakistan’s Foreign Office stated that Islamabad was unaware of the recent US measures. However, it recalled past incidents where entities were listed based on mere suspicion or where items were deemed sensitive despite not being part of the control list.

The US State Department has also released a fact sheet outlining allegations against various entities. It accuses China’s Xi’an Longde Technology Development Company Limited of supplying components and equipment, including filament winding machines, for Pakistan’s long-range ballistic missile programme. According to the US, such machines can be used to manufacture rocket motor casings.

Tianjin Creative International Trade Company Limited has also been accused of supplying equipment, including stir-welding tools, for Pakistan’s long-range ballistic missile programme. These tools, according to US authorities, can be used in the production of propellant tanks for space launch vehicles.

The fact sheet further alleges that China’s Granpect Company Limited collaborated with Pakistan’s Space and Upper Atmosphere Research Commission (SUPARCO) by providing testing equipment for rocket motors. Additionally, it claims that this company has been supplying critical parts to Pakistan for testing large rocket motors.

Pakistan is known to produce MTCR Category-1 ballistic missiles. According to the fact sheet, Belarus-based Minsk Wheel Tractor Plant supplied Pakistan with chassis for its ballistic missile programme. These chassis are reportedly used for the launch support system of ballistic missiles and were supplied to Pakistan’s National Development Complex (NDC).

The US claims that the sanctioned companies are involved in nuclear weapons development, ballistic missile programmes, and drone technology advancements, which, according to CIA and Pentagon reports, pose a threat to American security. The US also accuses Pakistan and China of violating the Non-Proliferation Treaty (NPT) by collaborating on nuclear projects and exchanging missile technology. For instance, Pakistani firms have allegedly imported CL-20, an advanced explosive material, from China, which is used in the Babur-3 cruise missile.

US arms suppliers to Ukraine have reported that Russia has been using Iranian-made drones in its attacks on Ukraine. The components for these drones were allegedly supplied by UAE-based companies. Additionally, some firms suspected of providing defence technology to Russia amid the Russia-Ukraine conflict have also faced US restrictions. As a result, these companies could suffer losses amounting to $1.2 billion.

These US-imposed sanctions may hinder technological advancements in the affected countries by disrupting the import of semiconductors, drone parts, and laboratory equipment. Furthermore, they are likely to strain international relations between the US, its allies, and the sanctioned nations, increasing geopolitical tensions.

The United States, while outlining the reasons for these sanctions, has stated that the mentioned companies are involved in activities that could pose a threat to its national security and foreign policy. According to the U.S. Department of Commerce, these companies are engaged in supporting nuclear and ballistic missile programs, illegal trade, and the unauthorised transfer of advanced technology.

The U.S. claims that some companies were collaborating with countries under strict nuclear non-proliferation monitoring and that these firms had violated non-proliferation policies.

Provision of Ballistic Missile Technology:
Some companies were allegedly assisting Pakistan and other nations in their missile programs. Companies from China, Iran, and other countries were unauthorised in transferring sensitive U.S. and defence technology and were allegedly doing so illegally.

These sanctions could further strain U.S. trade and diplomatic relations with China and Pakistan. They could disrupt the global supply chain, particularly in the electronics and defence sectors. The move may also escalate tensions between the U.S. and the affected nations, leading to an increase in the prices of sensitive goods in international markets.

A total of 19 Pakistani companies, mainly from the defence and engineering sectors, are affected by these sanctions. On December 13, 2021, the U.S. had already imposed sanctions on several Pakistani companies, including the Defence Science and Technology Organisation, Advanced Engineering Solutions (AES), KRL Technical Services, and National Electronics. These companies have been accused of assisting in the development of the Ghauri-III missile’s gearbox and the Babur cruise missile.

Advanced Engineering Solutions has also been accused of manufacturing high-pressure turbines for the Ghauri missile. Following these sanctions, a $50 million contract with China was cancelled. National Electronics Complex has been accused of developing sensors and control systems for Pakistan’s nuclear laboratories. Similarly, KRL Technical Services allegedly developed guidance algorithms for the Shaheen-III missile, which the U.S. claims were based on stolen F-16 software codes. Pakistan’s National Engineering and Scientific Commission has also been accused of developing turbo-fan engines for the Babur cruise missile.

In response to these sanctions, Pakistan’s Defence Minister, Khawaja Asif, stated that these restrictions are an attack on Pakistan’s right to self-defence and that the country will continue its missile program.

The U.S. has imposed restrictions on four suppliers of Pakistan’s ballistic missile program, accusing them of providing essential parts and technology. One Pakistani industry has been specifically accused of supplying missile system components. Another company has been charged with transferring American technology through an illicit network. The third company has allegedly been supplying critical electronic chips for the missile program, while a well-known Pakistani engineering solutions firm has been accused of providing advanced navigation systems. These companies, however, deny any wrongdoing and insist on their transparency. The Pakistani government maintains that its defence advancements comply with United Nations regulations.

Pakistan has consistently asserted that its strategic programs are developed using indigenous resources. The U.S. State Department’s fact sheet explicitly states that all assets of these four companies in the U.S. or in possession of American entities will be frozen. Additionally, the owners of these companies will be barred from entering the U.S., and American citizens will be prohibited from conducting business with them.

China has 42 companies linked to advanced electronics and missile technology, including major names like Huawei Cloud, Sino-Tech Electronics, and Chengdu Aerospace. These companies have been accused of supplying advanced drone technology to China’s People’s Liberation Army. In 2018, Belarus’ Minsk Defence Solutions and seven other engineering companies were also added to this sanctions list.

Similarly, four companies from the UAE—Desert Falcon Technologies and Skyline Defence Solutions among them—have been accused of supplying gyroscopes and drone parts for Iran’s Shahab-III missile.

Defence analysts state that global laws, institutions, and access to technology have always been influenced by geopolitics. Western countries have consistently attempted to limit China’s economic expansion. The responsibility of challenging, responding to, or legally contesting these sanctions now falls upon the Chinese companies implicated.

The U.S. alleges that Pakistan and China are violating the Non-Proliferation Treaty (NPT) by exchanging missile technology. For instance, Pakistani companies reportedly imported CL-20, an advanced explosive material from China, which is used in the Babur-III cruise missile.

The U.S. claims that these sanctions will result in an annual loss of $300 million for Pakistani companies, as 40% of their exports were directed towards the American market. Pakistan’s Ghauri-III missile program has been suspended for six months due to the unavailability of gearboxes essential for its development.

US Arms Suppliers Report Russian Drone Attacks on Ukraine Using UAE-Sourced Components
US arms suppliers to Ukraine have reported that Russia is carrying out drone strikes using Iranian-made UAVs, with critical components allegedly supplied by companies based in the United Arab Emirates.

Meanwhile, China’s JL-3 submarine-launched missile project has faced delays, partly due to the role of Sino Tech Electronics. Additionally, Huawei Cloud’s share value has plummeted by 15%, reducing its market valuation to $20 billion.

This is not the first time the US has imposed sanctions on Pakistan or other countries’ companies. In April 2004, the US sanctioned three Chinese and one Belarusian company for allegedly assisting Pakistan’s missile programme. Similarly, in December 2021, Pakistani companies faced sanctions over alleged involvement in nuclear and missile programmes, while in 2018, seven Pakistani engineering firms were placed under strict monitoring.

In 2018, Karachi Engineering Works was sanctioned for the illegal sale of “Routers” centrifuges, and in 2021, SUPARCO faced sanctions for advancing stealth materials at DESTO. In December 2021, the Defence Science and Technology Organisation (DESTO) was sanctioned for developing a digital guidance system for the Ghauri-4 missile. Global Industrial & Defence Solutions (GIDS) was also sanctioned for producing LED avionics for JF-17 Thunder fighter jets. Similarly, Karachi Engineering Works was blacklisted for allegedly manufacturing components for P-2 centrifuges used in uranium enrichment.

Pakistan’s Wah Nobel Group was sanctioned for the alleged illegal sale of “D2O” heavy water used in nuclear reactors. In April 2024, China’s Chengdu Aerospace was sanctioned for allegedly supplying composite materials for Pakistan’s Babur-III cruise missile, which has a range of 1,000 kilometres. Belarus’ Minsk Defence Solutions was also blacklisted for allegedly assisting in stealth coating development for Pakistan’s Shaheen-III missile.

The US claims that these sanctions are part of its policy to prevent the transfer of sensitive technologies. However, global experts have raised concerns over the double standards applied, as India openly violates similar global restrictions. Despite this, the US and its allies not only continue to assist India under the guise of “civil nuclear technology agreements” but also turn a blind eye to its activities.

International Reactions to US Sanctions
In response to the sanctions, China has condemned the move, calling it a “unilateral action” by the US and has hinted at filing a complaint with the World Trade Organisation (WTO). Beijing has also announced counter-sanctions, labelling US restrictions as “economic terrorism.” China’s Foreign Ministry stated that unilateral US sanctions against Boeing and Lockheed Martin violate international laws.

Pakistan has sought an explanation from the US regarding the sanctions and has formed a high-level committee to address the issue diplomatically. Defence Minister Khawaja Asif declared that Pakistan would not allow anyone to interfere with its defence programmes. Additionally, Pakistan’s Ministry of Foreign Affairs has written to the International Atomic Energy Agency (IAEA), terming the US sanctions unjust. Islamabad asserts that Washington aims to pressure Pakistan into signing the Non-Proliferation Treaty (NPT), while Pakistan maintains that its nuclear capabilities are purely defensive and pose no threat to any nation.

The UAE has not yet issued an official response but has reportedly scaled down its trade activities with Iran. According to reports, the UAE has discreetly shut down companies involved in supplying components for Iran’s Shahab-3 missile. Meanwhile, the UAE’s business community has expressed significant concerns over the situation.

Iran and Russia have denounced the US sanctions as unjust, vowing to respond appropriately. Other affected countries have also condemned the sanctions as violations of international laws and ethical norms, pledging to retaliate at an appropriate time.

Pakistan’s Technological Self-Reliance Strategy
To counter technological restrictions, Pakistan must prioritise indigenous solutions. A key step would be to provide funding to the National University of Science and Technology (NUST) for establishing a semiconductor research laboratory.

International negotiations on the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) should be initiated at the United Nations, where new terms can be discussed to protect third-world countries from the burden of unjust sanctions.

Global analysts suggest that all affected nations can collectively respond to the United States through reciprocal sanctions. A prime example is that the U.S. microchip industry relies on China for 80% of its supply, and in retaliation, China has already announced its intent to counter these unjust sanctions.

It is imperative that diplomatic negotiations with the U.S. be undertaken to seek clarification on these sanctions.

The legality of U.S. decisions should be challenged under international trade laws.

An appeal should be filed against these illegal sanctions at the United Nations or the World Trade Organization (WTO).

Legal measures should be explored to pursue litigation avenues for the affected companies.

Countries affected by U.S. sanctions should immediately adopt alternative trade routes, promoting commerce with China, Russia, Turkey, and other Middle Eastern nations.

Focus should be placed on strengthening domestic resources to enhance defence and industrial capabilities.

A strategy should be developed to ensure that the trade practices of domestic companies align with international laws, promoting transparency and reinforcing internal regulatory mechanisms.

There is an increasing need to enhance reporting on nuclear and missile programmes to international agencies such as the International Atomic Energy Agency (IAEA).

To counter U.S. espionage, secure communication networks should be established, and cybersecurity infrastructure should be strengthened.

The Chinese Ministry of Foreign Affairs has reaffirmed that the China-Pakistan Economic Corridor (CPEC) will be safeguarded against any external pressure. Pakistan and China plan to equip the Gordon Guards Force with advanced security technology to protect CPEC.

To effectively counter U.S. sanctions, a long-term strategy must be developed with a future-oriented approach.

In the modern technological era, information technology has taken precedence over all other domains. Therefore, it is essential to prepare for cyber warfare by equipping Pakistan’s security command with cutting-edge national cyber tools driven by artificial intelligence (AI).

All affected nations should initiate technology-sharing agreements with Russia, China, and Turkey, establishing robust foundations for exchanging security tools.

U.S. sanctions could have profound implications on global trade systems and diplomatic relations. Pakistan, China, and other impacted nations must reassess their policies and take effective measures to safeguard their interests on the global stage. By adopting strategic diplomatic and trade measures, these nations can not only mitigate the adverse effects of the sanctions but also protect their sovereign rights.

These U.S. sanctions are part of a broader geopolitical struggle and reflect the shifting global power balance, with China being the primary target. Pakistan, as a longstanding U.S. ally, is now facing undue pressure despite its significant sacrifices and contributions that have helped the U.S. become the world’s sole superpower. Affected countries must counter these challenges by prioritising domestic technological advancement, international diplomacy, and economic self-sufficiency, as economic independence remains the key to overcoming these challenges. Furthermore, they must uphold their defence rights under international law.