Over 60% of the imported vital components for weaponry come from U.S. corporations, as Russia takes advantage of gaps in export regulations to acquire massive quantities of technology from the West for its conflict against Ukraine.
Even while Western authorities often boast about the export restrictions and sanctions regime they have implemented against Moscow to prevent it from receiving components for weapons, a much larger amount of technology is still making its way to Russia than is widely understood. The KSE Institute at the Kyiv National University of Trade and Economics estimated that between March and December of last year, Russia imported $20.3 billion in components related to military equipment. Sixty-four percent of the dual-use items Russia imported between March and December of 2022 were made by U.S.-based companies. In all, 155 businesses from the Americas, Europe, Asia, and the Middle East supplied Russia with technological goods.
Russia’s ability to skirt international export regulations is demonstrated by its purchase of drones from Iran. China is the main transhipper of microchips and technology to Russia via the Caucasus, Central Asia, and the Middle East, where Moscow ships its dual-use goods. Between October and December, China supplied 87% of Russia’s microchips, with just 40% being made in China. Since the start of the conflict, American businesses have provided Russia with more dual-use items than any other country. It has been discovered that a more significant percentage of Russia’s dual-use items come from major American tech corporations and that Russia is also acquiring access to goods from a greater variety of medium and small-sized organizations.
Compliance with export regulations and sanctions has been certified by the top five US manufacturers of dual-use products used in Russian military hardware. They avoid doing business with Russia and its ally Belarus. Intel and AMD have comprehensive export compliance programs, including thorough background checks of prospective clients and dealers. The government, however, depends on private enterprises to conduct their reviews and give correct data on their trade with customs authorities. Foreign corporations can readily game the regulatory system by making false customs declarations or otherwise hiding the genuine nature of their economic operations inside a complex supply chain.
Many companies’ trade compliance teams are severely understaffed, making it impossible to examine the thousands of transactions that occur each year thoroughly.
As the conflict continues, some of the largest firms in the United States have taken measures to improve their trade compliance procedures. The United States and the other coalition nations supporting Ukraine still confront enormous barriers beyond the private sector. Evaluating China’s two ECOs is challenging since they need permission to conduct end-use checks.
The United States has not stationed an export control officer in Moscow since 2017, and there is an inadequate budget to investigate potentially illegal transactions.
Governments should apply higher penalties notwithstanding the impossibility of eliminating illegal commerce.