Dumfounded by US-led sanctions, Russia has undertaken a circuitous route to acquire much-needed parts to manufacture tanks and radars, among other weapons. The Russian move to circumvent sanctions lays bare the loopholes that are being exploited by Moscow.
Despite the strict sanctions, Russia has managed to procure essential tank components from Japan and Taiwan through intermediaries in China. This revelation has emerged as the Ukraine war approaches its two-year mark, exposing loopholes in the effectiveness of imposed sanctions.
Japan-based Nikkei Asia has disclosed that a company established in China by an individual associated with the Belarusian government, a key ally of Russia, has played a pivotal role in facilitating these transactions.
This development underscores the challenges in enforcing sanctions as trade routes through third-party countries continue to evade scrutiny.
The establishment of Shenzhen 5G High-Tech Innovation in China’s Guangdong province in 2022, allegedly with ties to the Belarusian government, has become a central node in this clandestine supply chain, the report said.
Through this entity, precision instrument parts essential for tank production have been procured from renowned Japanese manufacturers such as Metrol and Oriental Motor.
These parts, including components vital for the production of mainline Russian tanks such as the T-72 and T-90, are believed to have been forwarded to Belarusian arms manufacturers under the control of the Belarus government.
The parts are then provided to the Russian tank manufacturer, UralVagonZavod, for the production of tanks.
Apart from Japanese companies, Taiwanese companies are also participating in supplying components that ultimately find their way to Russia, potentially bolstering its military efforts in the conflict against Ukraine.
In a notable instance, attempts by LLC Laboratory of Additive Technologies to procure encoder disks from Attoptic, a Taiwanese precision instrument manufacturer, were initially thwarted by US sanctions.
Encoder discs, which are located within encoders, are sensors designed to detect the magnitude, direction, and angle of motion. They are utilized in panoramic scopes found in T-72s and various other tanks.
However, the company managed to circumvent the sanctions by routing payments through a financial institution in Georgia, a country not participating in sanctions against Russia.
While Taiwan has imposed trade restrictions in alignment with major economies such as the US and the EU, current dealings with LLC do not violate these sanctions, according to Taiwanese authorities.
Nevertheless, the island nation has expressed readiness to align with international allies should LLC be included in sanction lists in the future.
Western Sanctions Ineffective in Restraining Russia
Following Moscow’s invasion of Ukraine in February 2022, several countries from North America, Europe, and East Asia quickly imposed export controls on critical items for the Russian arms industry.
The move resulted in Russia becoming the world’s most heavily sanctioned country, with approximately 16,000 individuals and entities subject to a complex array of international sanctions and export control measures enforced by a coalition of more than 35 nations.
These export restrictions were so comprehensive that they included everyday items. Additionally, even goods manufactured overseas by foreign companies were prohibited from being sold to Russia if they incorporated US tools or software under a regulation known as the Foreign Direct Product Rule.
Yet, despite these strict export controls, advanced electronics and machinery continue to enter Russia through new and complex supply chains established via third countries like Kazakhstan, Turkey, and the United Arab Emirates, which are not subject to export control efforts.
An investigation conducted by The Insider and the Taiwanese outlet The Reporter uncovered Russia’s reliance on Taiwan as its primary source of banned high-tech machine tools. These tools were obtained through intermediaries in Turkey and China, enabling Russia to bypass sanctions.
These precision machine tools, commonly known as Computer Numerical Control (CNC) machine tools, play a crucial role in the heart of Russian military manufacturing, enabling the production of advanced weaponry like missiles, tanks, aircraft, and radars.
On the other hand, China also appears to be taking cues from Russia on navigating and evading Western sanctions amid increasing pressure to “de-risk.”
Ding Yifan, formerly the deputy director of China’s Institute of World Development under the State Council’s Development Research Centre, recently remarked at a seminar in Beijing that Russia has offered valuable lessons that China could adopt to address financial and economic sanctions in the future.
Meanwhile, on February 23, the United States imposed extensive sanctions to commemorate the second anniversary of Russia’s invasion of Ukraine, aiming at more than 500 individuals and organizations in a bid to escalate pressure on Moscow.
The sanctions specifically focused on the Mir payment system, Russian financial institutions, and its military-industrial base, as well as addressing sanctions evasion, future energy production, and other sectors.
Additionally, officials implicated in the death of Russian opposition leader Alexei Navalny were also targeted, according to statements from the Treasury and State departments.
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