Western Export Controls: Impact on Russian War Economy

Western-made microchips fuel Russia's war against Ukraine, prompting US-led efforts to block their access.

### The Global Effort to Cut Off Russia's Supply of Western-Made Components
* 🇺🇦 Ukrainian experts analyze debris from Russian munitions in a specialized forensics laboratory in Kiev, revealing that **70% of the foreign-made components in Russian weapons systems come from American companies**.
* 🇷🇺 Despite Western sanctions, Russia continues to acquire Western-made microchips, with the US and its allies implementing export controls to **prevent these components from reaching Russian weapons**.
* 🇨🇳 To circumvent these controls, Russia imports vital parts through **third-party countries like Turkey, the United Arab Emirates, and China**.
* 🇺🇸 Western companies, such as Intel and Analog Devices, **deny doing business with Russia** and claim to **comply fully with export laws**.
* 🇺🇸 The US has increased pressure on other nations to curb dual-use trade with Russia, enabling the Treasury to **penalize foreign banks** that facilitate **significant transactions** involving military or dual-use goods.
* 🇬🇧 The British Defense Ministry suggests that identifying and targeting **critical choke points** in the Russian defense industry, such as **machinery imports from the West**, can disrupt Russia's war economy.
* ❌ Russian companies face challenges in securing quality components due to sanctions, increasing the risk of **counterfeit or lower quality products**.
* ⚠ Many observers believe that the Russian economy cannot sustain a war footing for an extended period, but there are concerns that without additional Western support and effective dual-use sanctions, it will be difficult to **save Ukraine from ongoing attacks**.

- This may look like a junkyard, but we're actually outside a specialized forensics laboratory in Kiev, where experts examine debris from Russian munitions. (expert speaks in foreign language.) Drones, artillery shells, and missiles. And what they often find in the remains of these weapons reveals why it's so hard for Ukraine and its allies to win this war. (expert speaks in foreign language.) Despite Western sanctions, Russia continues to get its hands on Western-made microchips, which are helping fuel its war against Ukraine. But the US may have found a new way to stop this. These remains belong to a Russian hypersonic missile. It was part of Moscow's barrage on the Ukrainian capital and other regions earlier this year. Similar debris is brought from all over the country to this Kiev laboratory for examination. And what experts discover provides a glimpse into how Russia's military relies on Western technology to build its weapons. (Andriy speaks in foreign language.)

But according to the lab, American ships are the most common ones found. RUSI, a British defense and security think tank, analyzed Russian weapons systems found during the first four months of the war, and what they found was that 70% of the foreign-made components in those weapons came from American companies. The challenge is to distinguish by looking into those microelectronics whether those are from the stock sourced prior to 2022 invasion or whether those microelectronics were obtained after Vladimir Putin launched his full-scale invasion of Ukraine. To reduce Russia's ability to churn out weapons, the US and its allies are trying to prevent Moscow from getting their hands on components. Microchips and some other dual-use goods are now subject to export controls designed to stop them from finding their way into Russian weapons. In response, Russia has adapted by importing vital parts via third-party countries. According to C4ADS, a global security nonprofit.

Western chips now flow into Russia through countries like Turkey,
the United Arab Emirates, and even the Maldives. But the biggest player
in this trade is China. 70% of the machine tools, 90% of the microelectronics
are coming from China. Now, these are dual-use items, but we know very clearly where
so many of them are going. Western companies say the items are being imported by Russia
without their permission. Both Intel, which owns Alterra, and Analog Devices, another
major US chip maker, said they didn't do business in Russia and had fully complied
with export laws in the US and other countries where they work. Beijing has dismissed
Washington's accusations and said that the trade with
Russia is done above board. But in recent months, the US has put more
pressure on other nations to clamp down on dual-use
trade with Russia. In late 2023, the White
House enabled the Treasury

to penalize foreign banks that aid the Russian war
machine, even indirectly. Any banks that facilitate
significant transactions that channel military or dual-use goods to Russia's defense industrial base expose themselves to the
risk of US sanctions. By March,
Russian companies started to face difficulties transferring payments to some banks in China,
the UAE, and Turkey. That same month, Turkish
exports to Russia fell by 28% from a year earlier. Military experts suggest that
another effective measure is to identify and target
critical choke points in the Russian defense industry. It's much more difficult to acquire manufacturing
machinery from the West, which we do know that the
Russian defense industry are highly reliant on, and this is a point of where their war
economy can be disrupted. In April, the
British Defense Ministry said that a suspected malfunction of a missile in southern Russia indicated the production
issues Moscow faced. Military experts say it's hard

to determine if Russian weapons malfunctions are due to sanctions or other issues like improper storage, but they say that securing quality components is a big challenge for the Kremlin. - The Russian economy is exposed to additional risk of getting counterfeit or lower quality products. Probably that's the best impact that the Western sanctions and the Western export controls have had as of today, I mean. - [Ian] Many Russia observers agree that the country's economy won't be able to sustain a war footing for years on end. (Andriy speaks in foreign language) But concern is growing that without additional Western support and effective dual-use sanctions, it will be much harder to save Ukraine. - At the moment, there are hundreds of Ukrainians who are dying at the front line under the relentless attacks of the Russian drones and missiles, and the challenge here is to prevent that from happening, to save more lives rather than wait until more people die, and then the Russian war economy crumbles down.

Inside the Ukrainian Lab Exposing U.S. Chips in Russia’s Weapons | WSJ

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The Impact of Western-Made Microchips on Russia's War Against Ukraine

A specialized forensics laboratory in Kiev examines debris from Russian munitions, revealing that Russia is using Western-made microchips in its weapons.

70% of the foreign-made components in Russian weapons come from American companies, posing a challenge in distinguishing the origin of these microelectronics.

The US and its allies are implementing export controls to prevent Russia from accessing microchips and dual-use goods, but Russia is adapting by importing vital parts through third-party countries.

The Flow of Western Chips to Russia and the Impact of Trade Restrictions

China plays a major role in supplying machine tools and microelectronics to Russia, despite denials from Western companies.

The US has increased pressure on other countries to limit dual-use trade with Russia, leading to payment transfer difficulties for Russian companies.

Targeting critical choke points in the Russian defense industry is seen as an effective measure, causing disruptions and production issues for Moscow.

Impact of Western Sanctions on the Russian Economy and War Efforts

Russian weapons malfunctions are a challenge due to the difficulty of securing quality components.

The Russian economy is at risk of receiving counterfeit products due to Western sanctions, impacting the country's ability to sustain a war economy.

Without additional Western support and effective sanctions, it will be harder to prevent loss of lives in Ukraine from Russian attacks.

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