Report Surveys Russian Success in Circumventing Western Sanctions

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A paper issued by CSIS, a Washington think tank, details progress to date of the Putin regime in maintaining advanced technology supply lines in the face of Allied sanctions.

The report assesses the impact of Western sanctions and allied export regulations on Russia's defense sector, focusing on the production of core weapons and systems.

It also examines the Kremlin's efforts to mitigate the effects of the sanctions regime through import substitution and sanctions-evasion techniques.

While sanctions have created shortages of higher-end foreign components and forced Moscow to substitute them with lower-quality alternatives, the Kremlin still possesses a significant degree of adaptability to these restrictions.

The Kremlin's import substitution efforts have been largely unsuccessful due to the ambitious nature of these projects and the limited domestic capabilities of Russia's defense industry. As a result, Russia has been forced to rely on illicit supply chains and sanctions-evading land corridors to obtain restricted foreign components and technologies.

Iran and China have been key suppliers for Russia, with Iran sharing its experience in circumventing Western sanctions. Land corridors involving post-Soviet countries, the Balkan Peninsula, and Turkey have also been utilized to smuggle sanctioned goods into Russia. While these alternative routes have been somewhat successful in maintaining the flow of restricted components, they also come with increased costs, volatility, and time consumption for Moscow.

While Russia will continue to adapt to the sanctions regime, its efforts to evade sanctions will face limitations and challenges.

The report concludes that, due to these limitations, Russia is likely to opt for a slower-paced attritional campaign in Ukraine, putting pressure on Kyiv and its Western partners while further stressing its military and industrial base.

Recommendations to close loopholes and strengthen the effectiveness of sanctions include:

  1. Continuously supply Ukraine with higher-end military equipment at a pace that exceeds Russia's production rate, making it harder for Russia to maintain an attritional war.
  2. Identify and target illicit networks and individuals involved in sanctions-evasion efforts, and proactively use U.S. leverage in the post-Soviet region.
  3. Restrict existing transactions with Russian and Russia-linked defense companies and their affiliates, preventing the import and sending of sanctioned dual-use technologies.
  4. Eliminate loopholes that allow some Western companies to import equipment into Russia by extending past contracts that preceded the imposition of sanctions.
  5. Work towards creating an EU-level OFAC equivalent to monitor sanctions implementation and compliance, ensuring a more unified approach across EU member states.