Jan 11, 2024
By Daniel Bush
Russia’s latest onslaught of drones and missiles against Ukraine has been made possible by imports of Western technology through the “widespread and systemic” evasion of sanctions imposed by the U.S. and its allies, a new Ukrainian study shows.
Russia each month imports billions of dollars in technology for its war effort, evading Western sanctions by routing the trade through China, NATO member Turkey and other countries, according to a new report by the KSE Institute, a think tank at the Kyiv School of Economics, to which Newsweek was given exclusive access.
The sanctions evasion has helped sustain Russia’s military as President Vladimir Putin in recent weeks has signaled plans for a protracted conflict in Ukraine. The war has reached a critical stage, with Russian forces dug in in eastern Ukraine and Ukraine struggling to defend its territory without additional military aid from the West.
“The sanctions are not effective enough right now,” Olena Bilousova, the senior researcher on military and dual-use goods at KSE Institute, told Newsweek. Russia’s barrage of missile and drone strikes inside Ukraine underscore the problem, she said. “They’re all made from Western components.”
The KSE Institute report was produced jointly with the Yermak-McFaul International Working Group on Russian Sanctions, which is led by Andrii Yermak, a senior adviser to President Volodymyr Zelensky of Ukraine.
In the first 10 months of 2023, Russia imported $8.7 billion in semiconductors, communications technology and other high-priority goods produced primarily for military use that fall under export controls put in place against Russia by the U.S., the European Union and other nations backing Ukraine, according to the study.
During the same period, Russia imported $22.2 billion in electronics, computer components and other so-called critical components that can be used for civilian purposes or adapted for military use, the report found.
A majority of the critical components, also known as dual-use goods, that have turned up in Russian weapons in Ukraine were made by companies headquartered in the U.S., the analysis found, highlighting a persistent problem for the Biden administration in enforcing its sanctions regime against Moscow.
The White House has defended the sanctions put in place by the U.S. and its allies, arguing they’ve had an impact on degrading Russia’s military capability.
“We still believe that the export controls and the sanctions that we and our partners have put in place have had a detrimental effect on [Russia’s] defense industrial capacity,” National Security Council spokesman John Kirby told reporters at a press conference last week.
Nevertheless, the Ukrainian government has identified hundreds of components of Western technology in Russian missiles, drones, tanks and a wide range of other weapons systems and military equipment destroyed on the battlefield in Ukraine, according to the KSE Institute.
The report is based on Russian trade data and the Ukrainian government’s analysis of Russian weapons found in Ukraine. Newsweek and other news outlets have reported on Russia’s export control and sanctions evasion in the past. The new report contains previously unreported details on the scope of Russia’s sanctions evasion since it invaded Ukraine in February, 2022, including new data from the first three quarters of 2023.
The new findings show that the sanctions have only had a marginal impact, said George Barros, a Russia analyst at the Institute for the Study of War.
“Sanctions are an important and necessary thing, but they’re not a substitution for a clear-eyed strategy for how to really defeat the Russians,” Barros told Newsweek.
The latest snapshot of Russia’s sanctions evasion contains some glimmers of hope for Western policymakers seeking to slow Moscow’s military machine.
Russia experienced a sharp decline in critical technology imports in the early months of the war as the first round of sanctions took effect. Moscow quickly recovered, however, and ramped up technology imports in the second half of 2022.
But last year Russian imports of banned technology slowed, the data shows, a sign that Russia may face limits in accessing some critical Western goods.
The very fact that Russia continues importing advanced technology from the West for weapons systems also suggests that Moscow is unable, at least right now, to produce the technology on its own, Bilousova said.
There was widespread concern in the West at the start of the war that Russia would respond to sanctions by producing its own advanced technology or sourcing it from China. But so far that hasn’t happened.
A spokesman for the Chinese embassy in Washington, D.C., told Newsweek that China “prudently handles the export of dual-use items” while maintaining normal economic and trade relations with Russia.
“China does not sell weapons to parties involved in the Ukraine crisis and prudently handles the export of dual-use items in accordance with laws and regulations,” said the spokesman, Liu Pengyu.
China remains the chief third-party country through which most critical technology is funneled to Russia: in the first ten months of last year, 53 percent of Russian imports of critical components were sold from or shipped through China, according to the trade data.
Yet the vast majority of the goods are manufactured in the West, and American companies play a major role. Since the start of the war, 72 percent of the Russian technology imports for military use have come from companies with headquarters in the United States, the study found.
Most major U.S. technology companies have suspended operations in Russia and don’t sell directly to firms in the country. Russian companies with ties to the military hide the purchases through a complex web of transactions, making them difficult to track.
Still, private sector companies could do a much better job of complying with sanctions and export controls, said Erika Trujillo, the co-founder and managing director of SEIA, a firm in Munich, Germany that advises multinational companies on trade compliance.
“We still have a lot of challenges to overcome in terms of how to do meaningful compliance,” Trujillo said.
Bilousova of the KSE Institute argued governments should step up enforcement measures, better coordinate export controls between countries and take other steps to push companies to ensure critical components don’t reach Russia and wind up in weapons deployed in the fight against Ukraine.
“If we continue to push right now and do more with export controls” it could have a bigger impact on Russia over time, Bilousova said. “The good news here is that we know a lot of the [supply] routes, and we can do more to block them.”
Daniel Bush is a White House Correspondent for Newsweek. He reports on President Biden, national politics and foreign affairs.