The recent announcement of the UK government imposing sanctions on Russia’s access to foreign military supplies has raised questions about the effectiveness of these measures. Despite what is claimed to be the “largest ever UK action” targeting Russia, the country still manages to obtain the necessary components to keep its war machine going. The reasons behind this loophole lie in Russia’s ability to acquire vital pieces of Western technology, particularly microchips. These microchips and processors, which are heavily utilized in the Kremlin’s weaponry, are predominantly manufactured by American companies.
The KSE Institute, in partnership with the Yermak-McFaul International Working Group on Russian Sanctions, conducted an analysis of foreign components found in captured Russian weaponry. Among the 1,057 separate components, microchips and processors accounted for approximately half, with around two-thirds of them originating from American manufacturers. Analogue Devices, Texas Instruments, and Intel were identified as the top five manufacturers of these crucial components.
Although many of these components are subject to export controls, Russia has managed to bypass direct purchases from Western suppliers by establishing an intricate network of third-party intermediaries. Investigations have revealed that 75% of US microchips supplied to Russia are routed through Hong Kong or China, involving small or midsize suppliers established after Russia’s full-scale invasion of Ukraine. These suppliers often operate out of anonymous offices in Hong Kong, maintaining a veil of secrecy.
In addition to Hong Kong and China, other countries have also been involved in facilitating Russia’s procurement of essential components through the guise of non-military usage. The KSE & Yermak McFaul report highlights the presence of numerous risk-taking companies across the globe, including the Czech Republic, Serbia, Armenia, Kazakhstan, Turkey, India, and China, willing to fulfill Russian procurement demands. This growing concern about the role of third-party intermediaries prompted the UK to impose sanctions on Turkish companies, Turkik Union and Azu International, known for exporting microelectronics critical to Russia’s military activities in Ukraine.
The UK, EU, and US previously issued a list of 38 “common high priority items,” urging companies to conduct due diligence to prevent their products from reaching Russia. The list encompasses various electronic integrated circuits, semiconductors, lasers, and navigational instruments. While progress has been made, officials acknowledge that Russia still manages to import substantial quantities of semiconductors, often of lower quality. Consequently, Russia has to cope with the absence of certain capabilities, such as thermal imaging, and resorts to repurposing outdated Soviet-era technology.
For Ukraine, Western sanctions alone may never yield immediate or comprehensive results. Researchers at the KSE Institute express concerns about the scope of the recent UK sanctions, questioning whether it is broad enough to address the issue adequately. Chasing third-party intermediaries becomes a game of cat and mouse, as countless little-known companies are involved. Senior economist Ben Hilgenstock suggests the creation of a blacklist of suspect intermediaries to assist producers in discerning who they should and should not engage with. The challenge lies not only in sanctioning entities but also in educating producers about the risks involved.
While the impact of these sanctions on Russia remains to be seen, the continued acquisition of foreign military supplies raises questions about the efficacy of current measures. The reliance on microchips and processors from Western countries highlights the vulnerability of advanced technology trade and the need for stricter controls and transparency to prevent circumvention by third parties. As the conflict in Ukraine persists, Western allies must intensify efforts to monitor and curb the illicit procurement of military components by Russia.
