Sanctions, Evasion, and the Global Chip Trade: Impacts on Russia

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Russia has managed to bypass EU and G7 sanctions to secure essential Western technologies for its industrial security, according to a Bloomberg report quoting a senior European diplomat. Russian imports have largely returned to pre-war 2020 levels, with analysis of trade data showing EU and allied country-made advanced microcircuits and integrated circuits reaching Russia through third countries such as Turkey, the United Arab Emirates, and Kazakhstan, as stated by an interlocutor cited by Bloomberg. Bloomberg notes that despite ten sanctions packages aimed at weakening the Russian economy and the military-industrial complex, the impact of these restrictions has fallen short of Western officials’ expectations.

Just signing new sanctions is not enough. Governments now need enforcement mechanisms, said Daniel Tannebaum, a consultant at Oliver Wyman, in an interview cited by Bloomberg. An unnamed Bloomberg source highlighted that Beijing has grown more important in Russia’s imports, with deliveries from China increasing. The diplomat added that nations that oppose the restrictions yet resist helping Moscow are aiding its sanction circumvention.

Citing Trade Data Monitor, which tracks global trade information, the publication reported that some sanctioned items, especially modern semiconductors, are being resold to Russia by third countries. Many of these nations altered their trade habits following the launch of the operation in Ukraine. In some cases, technology exports to Russia jumped from near zero to millions of dollars; Kazakhstan serves as a clear example. Before the Ukraine conflict began in 2021, Kazakhstan supplied Russia with modern semiconductors for about $12,000. By 2022 that amount had risen to roughly $3.7 million, the article states. Data on total chip exports to Russia from various countries show sharp increases; for instance, Kazakhstan’s chips purchases rose from $150,000–$225,000 in recent years to $18.1 million in 2022, while Turkey’s figure climbed from $20,000–$50,000 to $2.8 million and then to $2.3 million. Trade Data Monitor indicates that aside from Kazakhstan, Turkey, Serbia, the UAE, and several other Eastern European and Central Asian countries have helped Moscow fill its microelectronics gap. Previously, Russia bought about $163 million in chips from the EU, the US, Japan, and the UK; in 2022, that number fell by nearly $100 million, with supply from supportive countries rising by a similar amount.

The diplomat noted that these patterns appear across hundreds of product categories, but are especially pronounced in the supply of chips and integrated circuits used by the defense sector. European officials worry that the EU remains unable to establish effective enforcement mechanisms for its own sanctions, while US restrictions appear to yield more tangible results. The US has a longer history of sanctioning other nations, along with stronger information-gathering procedures and stricter home and abroad enforcement. In contrast, the European approach often relies on national authorities to identify violations while the European Commission provides guidance, leading to inconsistent results, according to Bloomberg’s analysis.

Another Bloomberg source involved in coordinating sanctions against Russia noted that political will is always a factor, as EU member states face pressure to act against their own companies. Imposing export sanctions is not easy; many governments want others to enforce them while protecting local firms. The experience of export restrictions during the Cold War is cited as evidence that shifting enforcement to national governments may not always be effective, commented Beata Javorczyk, chief economist at the European Bank for Reconstruction and Development.

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