Thursday, May 23, 2024

After Russia invaded Ukraine last year, engineers at Convex, a Russian telecommunications company, encountered difficulties in obtaining American equipment after Western nations imposed new trade limitations on Russia. As a result, they turned to an obscure Russian e-commerce site called Nag to obtain the Cisco gear they needed, using a web of suppliers in China to evade international trade restrictions. They subsequently installed the gear at the offices of Russia’s Federal Security Service, known as the F.S.B., to transmit data to the authorities.

In the 22 months since the war in Ukraine began, Russia has managed to acquire the technology needed to maintain its economy, including basic telecom equipment and surveillance gear, despite export restrictions and corporate bans. Russian authorities and companies have found ways to work around the global response, using intermediaries in China and disguising their activity through shell companies to acquire the technnology they need.

They have also utilized ports in neutral countries such as Morocco and Turkey to receive goods from global tech manufacturing centers, and shipments were then made available to buy from well-known suppliers and on e-commerce sites like Nag. This flexibility has enabled Russian traders to reliably stay one step ahead of U.S.-led efforts to cut them off, making it clear that it is difficult to prevent the global movement of commercial technology. This raises questions about the effectiveness of Western trade restrictions and whether tech companies should control the destinations of their products, and whether it is possible for them to do so.

Last year, as sanctions against Russia came into force, ProSoft, a Moscow-based electronics provider, reached out to the Russian government trade mission in Morocco after experiencing difficulties obtaining American and European microchips and sensors. Like Convex, ProSoft used the connections of the Russian trade office in Morocco to acquire the technology they need, and an obscure scrap metal company in Morocco also played a part in providing ProSoft with restricted technology through transshipment. This method has allowed the company to maintain supplies of Western tech.

Chinese suppliers have accounted for 85% of semiconductors imported to Russia from March 2022 to September 2023, up from 27% before the conflict, according to the Silverado Policy Accelerator. Sites like Nag, OCS Distribution, 3Logic Distribution, and 4Telecom have received hundreds of millions of dollars in technology from China as they overhauled their supply chains following the war.

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