This is a military radio,
so it’s an encrypted Russian radio that’s been issued to Russian troops,
a personal radio, that they use.
Normally there’s an antenna coming here, and then there’s a battery here.
There’s an encryption key that comes here.
And that’s been recovered from the battlefield in Ukraine?
Yeah.
Damien Spleeters has been analyzing Western technologies found in Russian weapons recovered
from the battlefields in Ukraine since the invasion began in February of 2022.
Can you show me what’s inside? These Western components.
Sure. So once you start opening it up and digging inside, you have to remove
several layers of circuit board.
And then you start finding what I was explaining earlier, those chips.
This is just one example of how Russia is taking microchips
and other advanced Western technologies typically found in everyday items,
such as phones and laptops, and repurposing them in missiles,
radios, drones and armored vehicles for use on the battlefield.
You can find them on your tablet, even in the washing machine, dishwashing machine.
In fact, an analysis of 58 pieces of critical Russian military equipment
recovered from Ukraine’s battlefield uncovered
around a thousand foreign components, primarily Western semiconductor technologies.
Russian military has been acquiring, stockpiling,
a large number of different types of high-tech systems,
including microelectronics, for use in any number of systems, which include radios, communications,
sensory equipment, electronics warfare, drones and even advanced missile systems.
Convoluted trade routes via China, Turkey, the UAE and elsewhere
mean that these essential technologies are still entering the country,
adding to Russia’s pre-war stockpile of raw materials for its military industry.
In 2022, the year Moscow launched its full-scale invasion of Ukraine,
Russia imported $2.5 billion worth of semiconductor technologies,
up from $1.8 billion in 2021.
Microchips and semiconductors play a crucial role in modern day warfare,
powering drones and missiles seen on the frontlines.
But many of these critical components were subject to bans under Western sanctions,
imposed in the wake of the war,
which made me think, how did they get to Russia?
The earlier study of recovered Russian military equipment
found that microchips and processors made up
almost half of the one thousand individual foreign components.
In fact, Western chips were present in each of the 58 pieces of equipment investigated.
The sanctions evasion and avoidance is surprisingly brazen at the moment.
Some of the companies even have these ironic names about Heavenly Mechanics.
Elina Ribakova, a senior fellow at the Peterson Institute for International Economics,
and one of the authors of the study, says the findings expose
Russia’s continued access to Western tech imports.
For us, the biggest takeaways to demonstrate was highly granular, detailed data,
that Russia is still being able to import
all the necessary Western-produced critical components for its military.
To be clear, not all advanced technologies are subject to Western sanctions on Russia.
Many are dubbed dual-use items, meaning they have both civilian and military applications,
and therefore fall outside of the scope of targeted export controls.
Still, many originate from Western nations with trade bans against Moscow.
According to Elina’s study,
around two-thirds of the foreign components identified in Russian military equipment
ultimately originated from companies headquartered in the U.S.,
with others coming from Western allies including Japan and Germany.
Whether it happens knowingly or unknowingly from the Western companies, it's not clear.
A separate study from the Royal United Services Institute,
found that Russia’s military uses over 450 different types
of foreign-made components in its 27 most modern military systems,
including cruise missiles, communications systems and electronic warfare complexes.
Many of those parts are made by well-known U.S. companies
that create microelectronics for the U.S. military.
Well, the dependence on imported high-tech technologies is really an old one.
Over decades, non-Russian high-tech systems and technologies became more advanced
and really have become industry and global standards.
So, a Russian military, as well as its civilian economy,
have become dependent on this readily available,
globally available set of technologies, both hardware and software.
The ubiquity and wide-reaching applications of such technologies have caused them
to become intertwined in global supply chains and therefore harder to police.
Meanwhile, sanctions on Moscow are largely limited to Western allies,
meaning many countries continue to trade with Russia.
It’s difficult to stop strictly civilian microelectronics
from crossing borders and from taking place in global trade.
And this is what the Russian industry as well as the Russian military
and its intelligence services are taking advantage of.
Those trade flows can be messy.
Typically, a shipment may be sold and resold several times,
often through legitimate means, before eventually reaching
a neutral intermediary country, where it can then be purchased and exported to Russia.
Take, for example, a U.S. company that develops microchips for computers.
It may manufacture its products in South Korea,
ship to Singapore for assembly, and then sell to a distributor in China.
From there, those goods may be sold on to Russia, with or without the original company knowing.
This can happen time and again through various possible routes.
So this is a very big part of this sanctions evasion or avoidance.
We see more than 80% of this kind of on-shipment happening by China,
Hong Kong and Turkey for these specifically dual-use goods.
Data suggests China is, by far, the largest transhipper to Russia
of microchips and other technologies found in crucial battlefield items.
Sellers from China, including Hong Kong,
accounted for more than 87% of total Russian semiconductor imports
in the final three months of 2022,
compared with 33% in the same period of 2021.
More than half of those goods were not manufactured in China,
but instead produced elsewhere and shipped to Russia
via Chinese and Hong Kong-based intermediaries.
Big Chinese procurement companies, which are just distributors, exporters,
they are exporting not only to Russia, but to other countries too.
This also should not be taken as a surprise because China is really trying to accumulate
and to make profits and gains on the fact that Russia is economically isolated.
There is also a new, very interesting story emerging here, which we haven't
covered yet, is what I call on-production.
So, in China, Malaysia, Vietnam, we see companies
producing these Western components and then shipping them directly to Russia.
This is unlike the usual means of production in Western nations.
The trade departments of China, Malaysia, and Vietnam
did not respond to a request for comment on the findings, nor did the Russian government.
Elsewhere, data suggests Moscow has been obtaining an increased number of dual-use items
through so-called intermediary countries in the Caucasus, Central Asia and the Middle East.
Exports from Georgia, Armenia and Kyrgyzstan to Russia, for instance, surged in 2022,
with vehicles, aircraft and vessels accounting for a significant share of the uptick.
That comes as EU and U.K. exports to those countries rose over the same period,
while direct trade with Russia plunged.
We reached out to the governments of Georgia, Armenia
and Kyrgyzstan for comment on the increase
but didn’t get a response.
A lot of these countries are either willing or unwilling partners.
And a lot of these countries really cannot sever certain types of trade with Russia,
especially those nations which are, either bordering Russia, like Georgia, for example,
that has been cited as one of the major transshipment points
for all manner of goods and services,
which may or may not have been sanctioned,
as well as nations in Central Asia,
which maintain a very significant trade balance with the Russian Federation.
The burgeoning trade flows have prompted calls from Western allies
to either get such countries on board with sanctions,
or slap secondary sanctions on certain entities operating within those countries
in a bid to stifle Russia’s war.
In June 2023, the EU adopted a new package of sanctions,
which includes efforts to restrict the “sale, supply, transfer or export”
of specified sanctioned goods and technology to countries acting as intermediaries for Russia.
The 11th sanctions package introduced a new measure.
This is the anti-circumvention tool, and this really is a measure of last resort,
something that would allow the European Union to block
the export of a certain good, for example, a dual use good
that could be used by the Russian military, stopping that good going to a certain third country.
Again, cracking down on circumvention,
cracking down on those loopholes that people might be taking advantage of.
The package also adds 87 new entities in countries spanning China, the United Arab Emirates
and Armenia to the list of those directly supporting Russia’s military
and restricts the export of 15 technological items found on the battlefield in Ukraine.
We are not sanctioning these countries themselves.
What we are doing is preventing an already sanctioned product,
which should not reach Russia, from reaching Russia through a third country.
However, some are skeptical that the measures will go far enough,
particularly when it comes to major global trade partners.
It may work against, let's say, Armenia or Georgia,
which are not big trade partners for European Union or for the United States.
But in when it comes, for instance, to China or to Turkey, that's a very unlikely scenario.
Meanwhile, others say that the responsibility ultimately lies with companies,
which need to do more to monitor their supply chains
and avoid their goods falling into the wrong hands.
The companies themselves should have the infrastructure to be able to track it
and comply with export controls.
If we have certain moral values or national security objectives,
we cannot be giving with one hand and then, you know, giving to Russia with the other.