Russia is importing Western weapons technology, bypassing sanctions

WASHINGTON – Late in March, the United States and European Union officials traded information on millions of dollars’ worth of banned technology that was slipping through the cracks of their defences and into Russian territory.

Senior tax and trade officials noted a surge in chips and other electronic components being sold to Russia through Armenia, Kazakhstan and other countries, according to slides from the March 24 meeting obtained by The New York Times.

And they shared information on the flow of eight particularly sensitive categories of chips and other electronic devices that they have deemed as critical to the development of weapons, including Russian cruise missiles that have struck Ukraine.

As Ukraine tries to repel Russia from its territory,

the US and its allies have been fighting a parallel battle to keep the chips needed for weapons systems, drones and tanks out of Russian hands.

But denying Russia access to chips has been a challenge, and the US and Europe have not made a clear victory.

While Russia’s ability to manufacture weaponry has been diminished because of Western sanctions adopted more than a year ago, the country is still gaining circuitous access to many electronic components.

The result is devastating: As the US and EU rally to furnish Ukrainians with weapons to keep fighting against Russia, their own technology is being used by Russia to fight back.

US officials argue that the sweeping sanctions they have imposed in partnership with 38 other governments have severely damaged Russia’s military capacity, and raised the cost to Russia to procure the parts it needs.

“My view is that we’ve been very effective in impeding Russia’s ability to sustain and reconstitute a military force,” Mr Alan Estevez, who oversees US export controls at the Bureau of Industry and Security at the Commerce Department, said in an interview in March.

“We recognise that this is hard, hard work,” Mr Estevez added. “They’re adapting. We’re adapting to their adaptations.”

There is no doubt that the trade restrictions are making it significantly harder for Russia to obtain technology that can be used on the battlefield, much of which is designed by firms in the US and allied countries.

Direct sales of chips to Russia from the US and its allies have plummeted to zero. US officials say that Russia has already blown through much of its supply of its most accurate weapons and has been forced to substitute lower quality or counterfeit parts that make its weaponry less accurate.

But trade data shows that other countries have stepped in to provide Russia with some of what it needs.

After dropping off sharply immediately following the Ukrainian invasion, Russia’s chip imports crept back up,

particularly from China.

Imports between October 2022 and January were 50 per cent or more of median pre-war levels each month, according to tracking by Silverado Policy Accelerator, a think-tank.

As Russia has tried to get around restrictions, US officials have steadily ratcheted up their rules, including adding sanctions on dozens of companies and organisations in Canada, China, Iran, Russia and and elsewhere.

The US has also expanded its trade restrictions to include toasters, hairdryers and microwaves, all of which contain chips, and set up a “disruptive technology strike force” to investigate and prosecute illicit actors trying to acquire sensitive technology.

But the illicit trade in chips is proving hard to police given the ubiquity of semiconductors.

Companies shipped 1.15 trillion chips to customers globally in 2021, adding to a huge worldwide stockpile. China, which is not part of the sanctions regime, is pumping out increasingly sophisticated chips.

The Semiconductor Industry Association, which represents major chip companies, said that it was engaging with the US government and other parties to combat the illicit trade in semiconductors, but that controlling their flow is extremely difficult.

“We have rigorous protocols to remove bad actors from our supply chains, but with about 1 trillion chips sold globally each year, it’s not as simple as flipping a switch,” the association said in a statement.

So far, the Russian military appears to have been relying on a large stockpile of electronics and weaponry it accumulated before the invasion. But that supply may be drying up, making it more urgent for Russia to obtain new shipments.

A report issued on Tuesday by Conflict Armament Research (CAR), an independent group that examines Russian weaponry recovered from the battlefield, revealed the first known example of Russia making weapons with chips manufactured after the invasion began.

Three identical chips, made by a US company in an offshore factory, were found in Lancet drones recovered from several sites in Ukraine in February and March, according to Mr Damien Spleeters, who led the investigation for CAR.

The parent company of the firm that designed the drone, the Kalashnikov Group, a major Russian weapons manufacturer, has publicly challenged the West’s technology restrictions.

“It is impossible to isolate Russia from the entire global electronic component base,” Mr Alan Lushnikov, the group’s president, said in a Russian language interview in 2022, according to a translation in a report from the Centre for Strategic and International Relations, a think-tank. “It’s a fantasy to think otherwise.”

That quote included “some bluster”, Mr Gregory Allen, one of the report’s authors, said at an event in December 2022. But, he added, “Russia is going to try and do whatever it takes to get around these export controls. Because for them, the stakes are incredibly, incredibly high.”

As the documents from the March meeting show, US and European officials have become increasingly concerned that Russia is obtaining American and European goods by re-routing them through Armenia, Kazakhstan and other Central Asian countries.

One document marked with the seal of the US Bureau of Industry and Security said that in 2022, Armenia imported 515 per cent more chips and processors from the US and 212 per cent more from the EU than in 2021. Armenia then exported 97 per cent of those same products to Russia, the document said.

In another document, the Bureau of Industry and Security identified eight categories of chips and components deemed critical to Russian weapons development, including one called a field programmable gate array, which had been found in one model of Russian cruise missile, the KH-101.

The intelligence sharing between the US and Europe is part of a nascent but intensifying effort to minimise the leakage of such items to Russia.

While the US has deeper experience with enforcing sanctions, the EU lacks centralised intelligence, customs and law enforcement abilities.

The US and EU have both recently dispatched officials to countries that were shipping more to Russia, to try to cut down that trade.

Mr Estevez said that a recent visit to Turkey had persuaded that government to halt trans-shipments to Russia through their free trade zone, as well as the servicing of Russian and Belarusian airplanes in Turkish airports.

Biden administration officials say that shipments to Russia and Belarus of the electronic equipment they have targeted fell 41 per cent between 2021 and 2022, as the US and its allies expanded their restrictions globally. NYTIMES