Despite the wide-ranging sanctions imposed by the West in response to Russia’s aggression against Ukraine, the Russian economy continues to cooperate with foreign companies through workarounds and intermediaries. Foreign enterprises, especially those from China, Turkey, the UAE, and other countries, provide Russia with critical goods, including microelectronics, industrial equipment, and components for the military-industrial complex.
How it works
- Intermediaries in third countries. Many dual-use goods are supplied through intermediary companies in countries that have not joined the sanctions. This allows Russia to obtain sensitive technologies using complex logistics schemes.
- Shell companies. Russia sets up shell companies in neighboring countries such as Kazakhstan, Armenia, and Kyrgyzstan, through which most of the imports of Western goods go.
- International cooperation. Even under the sanctions, some foreign companies have not left the Russian market or are working with Russia through subsidiaries. For example, the Russian defense industry continues to use Western components in the production of missiles and drones.
Why pressure needs to be increased
- Ensure transparency. Controls over exports of sensitive technologies need to be strengthened and strict mechanisms for tracking supply chains need to be introduced.
- Sanctions against intermediaries. Sanctions pressure should be focused on companies and individuals in third countries that facilitate circumvention schemes.
- International coordination. Coordinated cooperation between the EU, the US, Japan and other allies should be aimed at preventing Russia from using dual-use technologies.
Therefore, increasing sanctions pressure on Russia and its partners is critical to weakening the Kremlin’s military machine. Without access to foreign technologies, the Russian defense industry will lose the ability to develop modern weapons systems, which will be a key factor in deterring its aggression.
