Experts explain: in order to deprive Moscow of Western technologies, certain actions are needed both on the part of governments and companies.
After the beginning of Russia's invasion of UkraineWestern countries have introduced more than one package of sanctions, trying to deprive Moscow of money and means to continue its aggression. However, a year has passed. Sanctions have so far failed to stifle the Russian economy, and Western components that Moscow uses in the manufacture of weapons still find their way into Russian territory.
Why does this happen and how to stop it? As University of Pennsylvania expert Benjamin Schmitt explained during a discussion at the Atlantic Council, the Russian economy was not as badly affected by sanctions in 2022 as expected because the flow of money from the West did not stop completely. After all, for a large part of the year, Europe continued to buy energy carriers from Russia, in particular, gas, with which European storages were filled before the start of the heating season.
“So these financial flows still flowed to the Kremlin. I think that the consequences of sanctions at the macroeconomic level will become more visible this year,” Schmitt is convinced.
In turn, commenting on why Western technology still finds its way into Russia, Royal Joint Services Institute analyst Jack Crawford explained that the implemented export controls played a role. However, these measures, as well as sanctions, cannot be the only solution. And a more dynamic approach is needed.
Read also: Russia is trying to bypass sanctions and buy US technology: how does it happen?
“Just adding things to the list that are subject to export controls has not been 100% effective. Companies are finding workarounds. And in the West, too, companies are finding ways to comply with, implement and support these restrictions,” Crawford said, adding that Russia has established a whole network that allows importing components from the US and Europe legally and not so much.
< p>Crawford said that companies and individuals in Russia use contractors and third countries, forge trade documents, as well as end-user declarations. This is how a very dynamic and rapidly changing procurement system emerged.
“Some of the components that Russia imports are actually not that easy to influence through import controls. They were either unlisted and bought legally, or through some other means that do not require open declaration. Sanctions can be imposed against persons who circumvent the established restrictions. But this, again, goes beyond export controls and is not directly relevant to these efforts. The methods used by Russia are not new. But governments still need to keep track of these efforts. Otherwise, the restrictions will not be effective,” the expert explained.
Director of the “Independent Anti-Corruption Commission” Olena Trygub emphasized that the governments of Western countries also need to find a way to encourage companies in the private sector to increase vigilance and more carefully monitor where their products actually go. She also listed three tips for Western companies to do to prevent Russia from using their technology in the war against Ukraine.
First, manufacturers need to instruct their risk assessment departments to actually start investigating where the supplies are coming from. product. And in this they should proceed from the realities that arose on February 24, 2022, when Russia invaded Ukraine.
“They need to understand that if, for example, their customer shows up after the start of a large-scale intrusion, or if they start buying more components, such as microchips, after February 24, that's already a red flag. That's why they need to conduct deeper checks,” Trigub explained.
Read also: The US may limit some technology investments abroad, in particular to China – WSJ
The second piece of advice is that technology manufacturers should check their supply chains. Trigub emphasized that it is not a secret for anyone how Russia circumvents sanctions.
“We discovered that many companies, mostly American companies, sell Russian products through official distributors in Hong Kong and Turkey. This is public information. And if you have a client in Turkey, you can ask whether this purchase is sometimes not made for Russia,” said the director of the Independent Anti-Corruption Commission.
The third tip is to work more closely with the governments of your countries and civil society to develop a certain system of information exchange. Trigub said that her public organization, with the help of open data, was able to compile a list of more than 30 companies from which Russia buys the components it needs. So Western manufacturers could use this information too.
Also read: US imposes sanctions against two more Russian aviation companies
“If civil society is so easy to find all this on the Internet, why then companies don't want to work with us and send us unsubscribes saying, “Oh, this is such a complicated topic. We couldn't investigate who we were selling our products to.” This cannot be an excuse,” she emphasized.
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Schmitt agreed with her and added that all these measures are much easier to implement than to achieve the implementation of macro-financial or energy sanctions. He also emphasized that governments now need calibrated political approaches that would meet the goals set in the field of national security and foreign policy.
