Sanctions-busting exporters sent $2 billion of tech to Russia through China, Hong Kong, and the UK in 2022
Reports find shipments spiked since sanctions were imposed, feeding Moscow's appetite for high-end kit
Russia has managed to import over $1 billion of technology despite international sanctions, according to customs data. And some of the contraband was allegedly shipped by a UK-based company.
Reports in the Financial Times and Nikkei detail the shipments.
The FT’s account of the exports uses analysis by Maxim Mironov , a professor at IE Business School in Madrid, who accessed Russian customs records and found that a UK-based firm named Mykines Corporation LLP shipped kit made by Huawei, H3C, Intel, AMD, Apple and Samsung to Russia without securing the proper permission to do so. While not all of the tech was likely to nourish Moscow's military or national security agencies, permission would almost certainly have been denied given sanctions imposed on Russia over its illegal invasion of Ukraine.
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Some of the data used by Mironov was reportedly corroborated by a trade analysis firm named ImportGenius that provided data to Nikkei which alleges $570 million of forbidden technology passed through China and Hong Kong en route to Russia.
Nikkei found “3,292 transactions worth at least $100,000 each, and 2,358 of them -- about 70% -- were labelled as products of U.S. chipmakers such as Intel, Advanced Micro Devices, Texas Instruments and many others. The total value of these transactions was at least $740 million.
Both newspapers considered historical trade flows into Russia and found that Mykines, and the Chinese entities involved in shipments, grew markedly after sanctions were imposed.
Some of the paperwork seen by Nikkei mentions Intel products that sell for over $10,000 apiece, a price point that buys a single high-end 4th-gen Xeon CPU (the Xeon Platinum 8490h is listed at $17,000 apiece).
Maybe Moscow wants Chipzilla’s mightiest parts. Or perhaps smugglers are Putin up prices and forcing Russian buyers to pay a premium for illicit goods. The FT report details Mykines’ opaque structure and complex ownership, illustrating how it’s possible to construct entities that appear legitimate but are hard to pin down and are therefore an ideal vehicle for activities such as sanctions-busting exports.
But even well-regulated entities can struggle to prevent illegal export of their wares: Microsoft last week admitted to selling software in contravention of sanctions for around seven years.
- Trade ministers flag researchers as possible vector of tech sanction-busting
- US chip sanctions may push Brazil, others right into China's arms
- Open source software has its perks, but supply chain risks can't be ignored
- Chinese biz banned from buying US tech rent it instead
Sometimes vendors deliberately try to evade sanctions, as shown by ZTE’s sales to Iran and Ericsson’s misadventures with ISIS.
The Biden Administration is aware of “evasion routes” that buyers in nations impacted by sanctions use to get their hands on kit they’re prohibited from buying on the open market and intends to crack down on them to ensure its sanctions stick.
These reports give the Administration some pointers on where to focus their efforts, and perhaps also intelligence on the kind of kit Moscow sees the need to acquire through illicit channels. ®