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Article

19 Oct 2023

Author:
Oleksandr Liemienov, Zn.ua

Russia circumvents Western sanctions for production of military technology by importing equipment through third countries, new investigation shows

How the Russian Federation circumvents sanctions for the production of high-tech weapons? 19 October 2023

The full-scale phase of the Russian-Ukrainian war continues. During this time, the Russian Federation became a world leader among countries subject to international sanctions. However, the loopholes that allow the Russian Federation to bypass them remain and exist. Civilian technology is quickly adapting to the military needs of a terrorist state, and the long process of improving sanctions and restrictions is obviously not keeping up with these changes.

For example, metalworking machines with numerical program control (CNC machines, hereinafter – сomputer numerical control machines) are necessary for high-precision milling and are currently the most demanded "civilian" equipment used by the Russian Federation for military purposes. Of course, most of this equipment is produced outside the Russian Federation and, unfortunately, despite the sanctions, Russians are actively buying it...

The geography of the supply of high-tech metalworking machines is impressive in its diversity. These are units manufactured in Japan, Germany, the USA, Switzerland, South Korea, Italy, the Czech Republic and other countries. Of course, trade with these countries is somewhat more difficult, although not impossible, but you can always try to buy something similar in China...

...And so far, only Japan has completely banned the export of machines with the computer numerical control (CNC) to Russia. This happened in April 2023.

Other G7 countries limited themselves to strengthening export controls. But such actions, as we can see, are not enough.

Russia began to import these units through other countries – China, Turkey, UAE, Kazakhstan, Kyrgyzstan. The Russians call their smuggling "parallel imports".

As part of the Trap Aggressor project, we investigated the geography and volumes of "parallel" deliveries of the computer numerical control machines (CNC). Among the countries – suppliers of aggregates worth more than 100 thousand dollars in 2023. In the USA we find China, Taiwan, South Korea, Germany, Japan, Switzerland, Turkey, Italy.

China, Taiwan, South Korea, India, Germany, Turkey, Japan, and Italy are among the countries that supply aggregates worth more than ten thousand dollars...

From January 2021 to July 2023, Russia imported more than 15,000 the computer numerical control (CNC) machine tools with a total value of $1.42 billion. Of these, 3,160 cars cost more than $100,000 per unit.

It is interesting that Russia does not hide at all that it uses machines from the manufacturing companies of the G7 countries for the production of weapons. On the contrary, the Russian Federation is proud of this achievement...

Major manufacturers of the computer numerical control (CNC) machine tools should at least be concerned about being sanctioned in the USA. Because who would believe that manufacturing companies do not know the final "consumers" of the respective products in a world where any counterparty is not far from each other...

Moreover, secondary sanctions against dubious importers will help slow down the pace of equipment deliveries to the Russian Federation. Special attention should be paid to manufacturers of the computer numerical control machines (CNC) modules, i.e. such companies as Siemens (Germany), Heidenhain (Germany), Fanuc (Japan).

After all, it's time to launch new control methods for tracking the final "consumer", in particular, for these giant companies.

It is also advisable not to forget about the countries that help Russia with so-called double imports. In the case of importing aggregates to China, Turkey, the UAE, Hong Kong, multiple checks of final counterparties should be a mandatory element of control. At the same time, it is necessary to take additional special measures for Kazakhstan and Kyrgyzstan – the final consumer must prove that the companies really exist and are not just written on paper. With the provision of photos and videos of the facilities, as well as copies of existing contracts with their customers and other suppliers. Finally, in this perspective, we note that special attention must be paid to the supply of spare parts for high-tech machines.

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