Military production

Intended impacts

Russias military productuin is dependent on western components and technology. Halting the inflow is supposed to limit the capacity for production, and therefore the military capacity.

Knowledge gap

Complex supply chains, lack of transparency in documentation, and opaque financial structures. Military secret one more layer on top of everything else.

Effects on Russia

What can we see from OSINT?

To have an impact on the battlefield during an ongoing armed conflict, the imposed measures need to be implemented fast. Russia was well integrated into the global economy when its full- scale invasion of Ukraine started. Two years since, Russia continues to be able to import critical foreign components for its military production notwithstanding sanctions. Circumvention is extensive, routes through thrid countries have been mapped.

Foreign components in Russian weapons primarily come from Western companies, indicating that substitution is not readily achievable. https://www.bruegel.org/sites/default/files/2024-05/WP%2010%202024_1.pdf

Effects on sending countries

“Violating or not enforcing sanctions could prolong the war, a cost in blood that Ukraine and its people would have to bear. Physical or legal persons who violate sanctions not only risk being liable under sanctions laws, but also becoming complicit in international crimes, with serious ethical, legal and reputational consequences. Moreover, if violations occur on a large scale, it could delegitimize sanctions as an institution, which would also be detrimental to international security and human rights.” (https://www.nhc.no/content/uploads/2023/10/ENDELIG-PRINT-2023-10-24-09-25-06-TheRussiasanctionsasahumanrightsinstrumentViolationsofexportcontrolsregardingwar-criticalgoodstoRussia.pdf “Violating or not enforcing sanctions could prolong the war, a cost in blood that Ukraine and its people would have to bear. Physical or legal persons who violate sanctions not only risk being liable under sanctions laws, but also becoming complicit in international crimes, with serious ethical, legal and reputational consequences. Moreover, if violations occur on a large scale, it could delegitimize sanctions as an institution, which would also be detrimental to international security and human rights.”)

Technology sanctions are going to be part of the economic statecraft toolbox for the foreseeable future. The Russia case will test their effectiveness and credibility, or lack thereof.

Proposals

This report recommends:

• Tasking financial institutions to help monitoring the trade in export-controlled goods and blocking illicit transactions, building on their experience with due diligence in financial transactions.

• Incentivizing non-financial companies to learn from banks’ efforts in the AML/CFT sphere and implement proper due-diligence procedures, ensuring export controls compliance. Incentives can be provided by public-sector investigations and appropriate fines.