Western technical giants help russia bomb Ukrainian cities: how to stop it

Through third countries, Russia receives electronic parts which are used to make missiles. Can the West do anything about it?

Spoiler – it’s very complicated.

Yuriy Smirnov, special correspondent of Liga.net investigates.

russia has set up the production of the deadliest missiles with which it regularly bombs Ukrainian cities. Exports of key electronics needed by the Russian military machine have returned to pre-war levels, according to the U.S. State Department.

“In the downed missiles used by the Russians to strike our cities, up to 50 components are mostly microelectronics made in other countries,” the Main Intelligence Directorate of the Ministry of Defense (GUR) told LIGA.net. 

“If Russia has no money, they won’t be able to pay for the missile components,” Yuriy Ihnat, the spokesman for the Air Force Command of the Armed Forces of Ukraine, describes the desired scenario to LIGA.net. “Anyway, the army must be fed.”

How Russia circumvents Western sanctions, who helps the Russian army obtain important microelectronics for new missiles and strikes on Ukraine, and most importantly – whether it can be stopped – exclusive documents for LIGA.net.

HOW RUSSIA ADAPTED TO SANCTIONS

On the night of June 13, Russian occupiers struck  a five-story residential building in Kryvyi Rih, killing 11 people. The building was hit by a Russian Kh-101 missile, made this April, the head of the Presidential Office Andriy Yermak  said. According to him, about 50 components in the missile – mainly microelectronics – were produced in the countries of the free world and delivered to the Russian Federation in different ways.

To be more precise, at least 53 types of electronic component base (integrated circuits, chips) are of foreign production, according to a new document of the Yermak-McFaul sanctions group, which is available to LIGA.net.

In particular, components from companies such as STMicroelectronics (Switzerland), Vicor (USA), XILINX (USA), Intel Corporation (USA), Texas Instruments (USA), ZILOG (USA), Maxim Integrated (USA) and Cypress Semiconductor (USA) .

Russia uses at least 45 foreign components to produce the 3M-14 Kalibr sea-based cruise missiles. 9М723 ballistic missiles and 9М728/9М729 cruise missiles of the Iskander complex are equipped with at least 15 and 32 types of foreign ECB, respectively. And Kh-47M2 Kynzhal air-launched ballistic missiles use no at least 48 foreign components.

A chip made by the world-famous American company Intel was found in a Russian Tornado-S missile, in particular in its main part, the GUR told LIGA.net.

Russia’s ability to produce missiles in defiance of sanctions is nothing new.

In December 2022, Conflict Armament Research (CAR) documented  the remains of two Kh-101 missiles that hit Kyiv and concluded that those missiles were almost certainly made no more than two months before they were used (that is, before November 2022).

In August 2022, the British Royal United Services Institute (RUSI), also studied Russian missiles and foundthat Russian weapons are critically dependent on Western electronics. Of the 450 unique foreign-made components, more than a quarter had the logo of Texas Instruments and Analog Devices – two U.S. companies.

NOTE. Since the outbreak of the big war, Analog Devices has ceased commercial operations in Russia, and any shipments of its products is a result of unauthorized resale, the company said in response to an inquiry by the Business & Human Rights Resource Centre.

“We are strengthening our efforts to identify and counter this activity, including implementing enhanced monitoring and auditing processes. We are also enhancing our monitoring of gray market activity overall,” the company added.

Texas Instruments said they stopped selling to Russia and Belarus at the end of February 2022 and “do not support the use of their products in applications for which they weren’t designed.”

In the first seven months of the big war, Russia imported $2.6 billion worth of electronic components, at least $777 million of which were produced by Western firms, according to a joint investigation by RUSI (Royal United Services Institute) and Reuters based on Russian customs data.

In 2022, about $3 billion worth of allegedly ‘household’ chips entered Russia, the GUR told LIGA.net.

“Russia’s military power is fueled by the ‘silicon lifeline, which originates in the United States and runs through the UK, the Netherlands, Germany, Switzerland and France to Taiwan, South Korea and Japan,” RUSI states.

Russia has adapted to sanctions and will produce 1,061 missiles this year, more than double the 512 missiles it was able to produce in 2022. This is stated in the presentation that Ukraine has prepared for the G7 countries, The Guardian reports.

NOTE. According to the GUR, Russia has set up the production of missiles. Now the Russians can produce about 25 Kalibrs per month, 35 Kh -101, two Kinzhals, and 5 ballistic missiles 9M723 to Iskander-M per month. The total is 67 per month.

Exports of key electronics for Russia’s military machine and missile production have returned to pre-war levels as Russia is getting better at evading sanctions, Jim O’Brien, sanctions coordinator at the U.S. State Department, told Politico on June 7.

SPECIAL SERVICES AND ONE-DAY COMPANIES

Electronic components for missiles enter Russia mostly through third countries, the Yermak-McFaul Group told LIGA.net.

In January and February 2023, 80% of components worth $211 million came to Russia from China (in particular, 46% – from Hong Kong). Thailand is the next, on 5.5%. Other significant countries are Turkey, the Maldives, the UAE and Kazakhstan, The Guardian reports. All these countries have not imposed sanctions against the key players of the Russian military industry.

To evade sanctions, Russia uses companies that are not formally involved in the defense industry. They simply buy electronics in the West, as if ‘for themselves’, and then resell them to the Russian Federation.

“According to our partners, Russia uses a number of such companies in Turkey, Kazakhstan, Georgia, the United Arab Emirates and Armenia in order to circumvent Western sanctions,” the Defence Intelligence informed to LIGA.net .

“From a formal point of view, the companies do not violate either the internal legislation of these states or the sanctions restrictions, but in fact this is the same circumvention mechanism: high-tech products of Western manufacturers that can be used for the manufacture of missiles enter the Russian Federation through companies that play the role of buffers,” the Defence Intelligence added.

Besides, Russia is disguising purchases, using illegal networks under the supervision of special services, the Yermak-McFaul group writes. They either hide the name of the product in the customs data or provide a generalized description of it, or the product is imported without documenting the fact of crossing the border.

One-day shell companies are used for purchases, which are massively created and changed. Moreover, the number of intermediary companies between the manufacturer and the Russians is increasing and in some cases may even amount to dozens.

For example, in April 2022, Agu Information Technology was established in Hong Kong. It is still not under sanctions, and its legal address is a residential building, Nikkei Asia writes. In the second half of 2022, the company managed to sell Intel semiconductors for a total value of about $18.74 million to the Russian firm Mistral.

Another example is the export of Intel and AMD semiconductors by Hong Kong-based DEXP International to the Russian company Atlas. In 2023, DEXP International made more than 1,300 deliveries for a total of $242 million to Russia. According to Nikkei, Russian businessman Dmitry Alekseev was involved in creating the DEXP International company.

“Hong Kong is a gold mine for the Russian Federation. There are a lot of companies there that help the Russian Federation, in particular, with oil and microelectronics,” Vladyslav Vlasyuk, secretary of the Yermak-McFaul sanctions group, told LIGA.net .

In addition to classic product supplies, Russia actively uses the capabilities of Chinese companies specializing in reverse engineering. One such company is ELINC China Co., which manufactures analogs of American and Japanese components, the Yermak-McFaul sanctions group informs.

In the catalog of the ELINC China Co products – a chip that is a complete analogue of the product of the American company Analog Devices, which is used in the Iskander-M and Kinzhal missiles.

Chinese companies simultaneously supply various household items to non-sanctioned Russian companies. And this makes it harder to prove that the seller was aware of the delivery specifically for the military industry purposes, the Office of the President states.

Chinese companies also help with the supply of electronics that are used specifically in Russia’s military industry. On the one hand, these are shadow companies for the so-called re-export, on the other – manufacturers of microelectronics. Ukrainian intelligence has the facts that components of Chinese microelectronics are used in the guidance systems of Russian cruise missiles, the Defence Intelligence informed to LIGA.net.

Kazakhstan is also an important supplier of dual purpose goods. Compared to 2021, the export of chips from Kazakhstan to the Russian Federation increased 70 times in 2022: from $245,000 to $18 million.

In January 2023, the Russian company “Steck” received 2,598 microchips from the Kazakh Da Group 22. Also that month, Da Group 22 received the same batch of microchips from the German company Elix-St. The co-owners of the German company are Yevhenii and Olena Chernet. Da Group 22 was registered in March 2022 and belongs to Oleksandr Chernet – presumably their son, Важные истории revealed.

Sanctions coordinator O’Brien calls Russia’s schemes a “substantial problem.” In addition to Kazakhstan, he was discussing the issue with Turkey, Georgia, the UAE and Armenia. In 2022, Armenia imported 515% more chips and processors from the USA than in 2021. Armenia then exported 97% of those same products to Russia, The New York Times claims.

IS IT POSSIBLE TO DEPRIVE RUSSIA OF MISSILE COMPONENTS?

The components received by the Russian Federation through “third” countries mostly have civilian applications, and therefore can be freely used (for example, in small household appliances), Yermak-McFaul’s group states.

“We are talking about civilian components that are available to everyone, – Oleh Katkov, Defense Express editor-in-chief, explains to LIGA.net  – In our case, Armenia or another country can do it third-hand. This system of circumventing sanctions has been preserved since the time of the Soviet Union.”

A complete cessation of the supply of such components is possible only in case of a complete cessation of the export of these goods to the world market, which is impossible, the Yermak-McFaul group’s document says.

“In order to completely exclude intermediary countries… it is necessary to introduce direct economic sanctions against these countries, which may eventually lead to the sanctioning of half of the world’s GDP and the collapse of the sanctions system,” the sanctions group states.

Diplomats of the partner countries have received a list of companies whose products are used by Russia to manufacture missiles, the Defence Intelligence says.

“Our European partners are puzzled, saying that the sanctions do not have an extraterritorial nature: relatively speaking, the EU cannot force other countries of the world not to trade with Russia. But they admit that there is a problem with the circumvention of sanctions, and it is serious,” the Defence Intelligence added.

Therefore, Western partners should strengthen export control over specific components, Vlasyuk believes.

“Some products are the most popular and quite technological: they can be controlled,” he explains. Among possible options are: export only by permission; introduction of the end user certificate in case of export of components; provision of additional guarantees by the importer that these goods will not enter the Russian Federation.

“It will be cheaper for Western partners to spend on sanctions control than to constantly provide anti-aircraft defense, – Vlasyuk believes. – Manufacturers  themselves should be interested in ensuring that their products do not end up in Russian missiles. This is a super-reputable story.”

At the planning stage, the manufacturer must specify the product for which the component is intended, and after its manufacture – the serial number of the product and the installed component, Mykhailo Lyuksikov, editor of the Ukrainian military portal, tells LIGA.net .

“Although it is not known how it will work and whether it will not disrupt the technological process of manufacturers who are not shell companies,” he adds. “But I am also convinced: Western governments themselves must choose an effective control mechanism in order not to harm unsanctioned manufacturers and to prevent shell companies from supplying these products.

What Western partners can definitely do is to synchronize sanctions against the key Russian missile manufacturers. For example, Great Britain has imposed sanctions against only 10 out of 18 companies that Ukraine considers involved in the production of Russia’s deadliest missiles.

It is impossible to completely stop Russia’s acquisition of components for missiles. This is recognized by all LIGA.net interlocutors. “Sanctions do not work when it comes to the supply of civilian components. They can complicate the supply routes, but not stop them,” Katkov believes.

According to the Air Force of the Armed Forces, the problem should be considered more globally. “Our partners must control global sanctions, primarily related to oil and gas. If there is no money in Russia, they will be unable to pay for missile components. Because, the army must be fed,” Air Force spokesman Yuriy Ignat told LIGA.net. 

Tags: EU russia ukraine war russian missile attack russian missiles USA