The U.S. is having trouble cutting Russia off from computer chips, 12 May 2023

Western governments are on a mission to tighten sanctions aimed at cutting off Russia’s access to computer chips used in weapons production — a task that’s proven devilishly difficult since the Kremlin’s invasion of Ukraine.

Along with their counterparts from the European Union and U.K., senior U.S. Treasury Department officials recently embarked on a world tour during which they met with political and industry leaders in Kazakhstan, Kyrgyzstan, Switzerland, Austria, Italy, and Germany. At the meetings, an American official involved in the effort told Semafor, they presented a list of nine specific high-tech items that the U.S. has banned from sale to Moscow, and urged governments and businesses to take their own more aggressive steps to help shut down shipments.

The document, which was shared with Semafor, also outlines six sanctions evasion schemes Washington believes the Kremlin is using to acquire semiconductors and other electronics central to Russia’s production of the guidance systems for its missiles, drones, tanks, and other military hardware.

Most of this technology is dual use, meaning it could also be used in making regular consumer products like cell phones, radios, printers and washing machines. In some cases, Russia appears to be buying these sorts of goods, then stripping them for their high tech parts.

During their stops in Europe, Treasury officials met with business executives to make sure they understood how their tech could be exported into Russia after being sold to a buyer in another country — a problem known as transhipment.

The document presses countries to make sure their government regulators and private companies “take all necessary steps to ensure any financial transactions involving the following goods are not benefiting Russia or Russia-linked firms.”

Washington’s strategy has involved a mix of cajoling and threats that if countries or businesses don’t cooperate, they could face punishments of their own. In a statement from April, the Treasury Department said it was “outlining the clear business decision at hand: remain connected to the global economy or provide material support to Russia’s war and be denied access to the world’s most important markets.”