Russia-Related Export Controls Are Being Evaded 'Left and Right,' Panelist Says

Russia has been able to sustain its war effort against Ukraine because of its ability to evade Western export controls on key military parts and semiconductors, said Maria Snegovaya, a senior fellow with the Europe, Russia and Eurasia Program at the Center for Strategic and International Studies. She said Russia is importing large amounts of controlled items from China and continuing to indirectly buy from Eastern European nations like Turkey through transshipment tactics and shell companies.

“The key problem underlying this dynamic is overall the failure, unfortunately, of the export controls to really radically undermine what Russia is getting,” she said during a CSIS event this week. “The export controls are being circumvented left and right.”

Snegovaya, an expert in Russian domestic and foreign policy, said Moscow is importing many of the “major” technologies it needs for its military -- such as semiconductors and computer numerical control machines -- primarily from China and Hong Kong. But it’s also continuing to buy from Turkish companies, which are increasingly transshipping products through other central Asian states before those products arrive in Russia, which Snegovaya said is “an effort to somewhat comply with the Western sanctions.”

She also said Russia has succeeded in finding creative ways to continue buying export-controlled items, including by creating shell companies to make those purchases. Snegovaya said her research shows a “majority” of the companies that are supplying key parts to Russia are “fairly new,” and are “shell companies created deliberately for this purpose.”

“This is the key problem that, essentially, we need to be targeting,” she said. “And so far, the export controls have not been very successful.”

The Bureau of Industry and Security has sent letters to U.S. manufacturers and distributors flagging nearly 700 foreign companies -- including businesses in China, Turkey, India and elsewhere -- that are sending controlled items to Russia (see 2406060041). The U.S. has also sanctioned or placed export restrictions on a range of shell companies that Russia is using to buy sensitive dual-use parts (see 2406120036 and 2406170039).

Still, Russia is continuing to find more companies to buy from. Snegovaya said senior government officials are constantly traveling to countries that may be willing to sell Moscow parts and electronics.

“Russia is very proactively seeking new opportunities, going all over the world,” she said. “So there's a lot of creativity.”

Although Snegovaya said export controls aren’t doing enough to damage Russia’s war effort, they are making that effort more expensive. She added Russian producers have complained that they’re being forced to sell weapons to the Kremlin at a “fixed price” even though prices of foreign components have been “consistently rising.”

“So, it wouldn't be fair to say that sanctions don't work at all,” she said. “But, unfortunately, we could be doing much, much better.”