US, China talk tough on nukes and banks

National Security Council arms control official Pranay Vaddiraised a lot of eyebrows recently by saying the US may need to expand its nuclear arsenal. Citing the expansion and diversification of nuclear arsenals by Russia, China, and North Korea, Vaddi toldthe annual meeting of the Arms Control Association that "more nuclear weapons are required to deter our adversaries.”

In response, an unnamed Chinese embassy representative told Russia’s state-affiliated Tass news agency that Washington is "undermining nuclear disarmament and non-proliferation regimes and should stop doing it.” The representative criticized the U.S. for “clinging” to a first-use nuclear policy, withdrawing from arms control treaties and enhancing NATO's nuclear capabilities.

Get ‘em back at the bank. But while China is worried about a potential future war, Western countries are trying to curb Beijing’s support for Russia’s invasion of Ukraine. Sources say the US expects G7 nationsto deliver a stern warning to small Chinese banks to stop providing financial assistance to Russia to wage war on Ukraine. “Our concern is that China is increasingly the factory of the Russian war machine,” said Daleep Singh, US deputy national security adviser for international economics, dubbing Beijing “the arsenal of autocracy.”

Observers don’t expect immediate punitive actions, such as restricting access to the SWIFT messaging system or cutting off access to the dollar. And by targeting smaller institutions instead of larger ones, the G7 seeks to curb support for Russia without causing major disruptions to the global economy. We’ll be watching for the statement – and the fallout - at the upcoming G7 summit in Italy June 13-15.