The Russian army bombards Ukraine every day and every night, in particular with missiles and drones, among the components of which there are Western chips. Russia uses a loophole to export dual-use products, the US says. How to find out the “path” that a chip takes from the moment of production to the moment when it becomes a private Russian missile or drone? And can these “paths be blocked”? About this Voice of America asked the person responsible for export restrictions in the US government, the Deputy Secretary of Commerce, Matthew Axelrod.
«Some of the elements that make up Russian weapons come from China , but there are also elements from other countries, – said President of Ukraine Volodymyr Zelenskyi on June 2 in a speech at the “Shangri-La” security forum. in Singapore. – But there is a solution. If we see that goods are entering the market of the Russian Federation to circumvent sanctions, we pass this information on to our partners to stop such transit.
Against the background of the increasing intensity of Russian shelling of the entire territory of Ukraine, the United States and allies are intensifying efforts to block the possibility of microelectronics and chips entering Russia. The US has already issued more than a dozen charges against suppliers of microelectronics to Russia and there are several sentences, said US Deputy Secretary of Commerce Matthew Axelrod.
Axelrod went to Ukraine and saw with his own eyes that there are Western chips in the Russian weapons that kill Ukrainians.
- What is the USA doing to prevent American microchips from getting into Russian missiles and drones ? strong>
- How to prevent Russia from obtaining Western components for the creation of weapons?
– The US and its allies imposed many sanctions after Russia's full-scale invasion of Ukraine. What role do export restrictions play?
– This is a significant role. After the full-scale invasion, the United States and a number of other countries in the world came together and imposed unprecedented parallel restrictions on the supply of goods from their countries to Russia in order to really damage Russia's ability to continue to wage war against Ukraine, and thanks to the leadership of the United States and other countries, this broad coalition was able to form.
– Despite export restrictions, Russian tanks drive and planes fly. Are these restrictions succeeding in disrupting Russia's war machine?
– There is some success. But it is absolutely necessary to do more.
I was in Kyiv in October together with representatives of the US Department of Justice and the FBI. We talked about the fact that American components, in particular microelectronics and semiconductors, continue to find their way into Russian missiles and drones found on the battlefield in Ukraine. This is unacceptable to us.
We are trying to attack this problem from all sides.
First, we are working with the US Department of Justice and other law enforcement agencies to bring criminal charges against the networks that deliver these Western components to Russia. We have already made more than a dozen such accusations.
The Russian government is paying twice as much for microelectronics and semiconductors as before the war… They are forced to constantly rebuild their procurement networks. They turn to pariah countries, such as Iran and North Korea, whose goods are more expensive and less reliable.
We also maintain a list of organizations. Before sending goods to companies on this list, you must ask for permission from the US Department of Commerce.
Since the beginning of the war, more than 900 companies have entered this list, including 250 outside Russia. These are the countries where the goods go, which then end up in Russia.
We also work very closely with companies, tell them about the problem. Senior US officials are making very high-level calls to company executives, business leaders, and microchip and microelectronics vendors to inform them of the problem, what to watch out for, and even give them a list of more than 600 companies in these third countries that continue to supply to Russia.< /p>
We also work with financial institutions and carriers, because every time there is a sale – there is also a financial side. We ask banks to monitor whether export restrictions are violated. We also work closely with international partners in the EU, "Group of Seven" and "Alliance of five eyes".
But your question is good – why despite all these efforts, these goods are still going.
We are doing everything we can and will continue our efforts to stop this. But semiconductors are quite widespread and are in many places around the world. Therefore, it is necessary to act from all sides. And we've had some success.
The Russian government is paying twice as much for microelectronics and semiconductors as it was before the war.
If the goal – make it difficult for Russia to wage war, then one of the ways – increase costs. They are forced to constantly rebuild procurement networks. They turn to pariah countries, such as Iran and North Korea, whose goods are more expensive and less reliable. Therefore, we will continue to do everything we can, but even more must be done by us and by other countries to further limit access to these goods.
– You mentioned cooperation with prosecutors. Were there arrests in these cases?
– So. Arrests and sentences
– US Commerce Secretary Gina Raimondo said the Russians are recycling microchips from consumer products.
– We deal less with consumer goods. It's a very cumbersome process to track down if someone wants to import a consumer product to get the microchip out of it. Rather, we see the transportation of microchips. Sometimes chips made in the United States then go to third countries. But in most cases, these chips are produced abroad and then sent to Russia, or supplied to Russia through third countries, and I think the biggest return will be precisely because of the impact on these supplies.
China considers semiconductor trade with Russia to be normal. trade.
– In what ways does Russia circumvent export restrictions?
– There are several. The Russian government has historically created procurement networks to circumvent sanctions and export restrictions. I think now they have activated the networks they used in the past. Everyone knows – it is not possible to deliver directly to Russia. However, when it comes to microelectronics and semiconductors – these are chips of a lower level, so to speak. They are quite common. Their circulation is not restricted in most of the world.
For example, these chips can be sold from the US to China, but once they reach China, there is no law in China that prohibits the sale of these semiconductors from China to Russia.< /p>
This is prohibited by US law, but if you – a Chinese company and you buy a semiconductor from an American company, or a company in China and send them to Russia, you are not breaking Chinese law, you are breaking our law. This is a challenge.
China declares neutrality in the Russian war against Ukraine, but, according to the US, supplies Russia with goods for the military industry.
– When you take steps against China and their companies, does Europe support you and do European countries introduce mirror measures?
– So. I think it is unprecedented and a great luck that a coalition of like-minded countries has come together to introduce restrictions in parallel.
We are currently working on coordinating compliance with the regime, because before the full-scale Russian invasion of Ukraine, there was no actual mechanism for coordinating export restrictions . Therefore, we work closely with partners from the G7, the EU, South Korea and Japan – all these countries coordinate compliance with the regime.
We successfully coordinate with international partners, share information and experience, and even cooperate on a couple of cases.
– How to track microcircuits that are supplied to third countries, or produced in third countries, and then go to Russia via China or Central Asia?
– We are working with the government of Ukraine and partners on cases where we find American components inside seized missiles and drones. We receive such information from the Ukrainian government. We need as much information as possible about the markings on the chips. Because then we can take this information and go with it to American companies and say – this is what was found.
And it can help American companies find out how the chip got from production to a Russian missile or drone. It depends on the batch number, other marks. Sometimes they physically need a chip, it's more difficult, but sometimes based on a photo they can investigate the networks of foreign buyers.
– Russia, China and others create many shell mines to circumvent sanctions. They are quite difficult to track. But creating such shell companies takes time and money. If the goal – to create as many difficulties as possible for Russia, we need to knock out shell companies when we discover them.
– We do that, and it's very difficult, because when we bring criminal charges against individuals or companies, or put them on the sanctions list, there is of course a risk that they will create new shell companies. But it takes time and money to create such shell companies.
It's not a silver bullet, it doesn't solve the problem, but if the goal – create as many difficulties as possible for Russia, then we need to knock out shell companies when we discover them.
– The White House is concerned that China is helping Russia supply components for military production. Could it dilute the regime of export restrictions?
– China very clearly states that it does not provide lethal weapons to Russia and the nuance is that semiconductors and microelectronics are not considered lethal weapons. Beijing sees this as normal trade. The problem is that these semiconductors and microelectronics drive missiles and drones that kill Ukrainians. The US government is talking about it with Chinese government officials.
– What is India's position on export restrictions?
– India is not part of any group of countries that have come together for parallel restrictions.
– How do you assess Russia's efforts to organize its own production of microchips?
– As far as I know from open sources, they did not achieve significant success. In other words – the main problem – supply of chips to Russia from abroad. If domestic production occurs – it won't bother us, but as far as I know, it's mostly imports.
– According to the Kyiv School of Economics, if the West stops all supplies of microchips to Russia, the Russian military industry will stop. Are these also your grades?
– I don't know if we can make sure that absolutely no semiconductor in the world gets to Russia. It would have a tremendous impact, but I don't think it's a useful approach to export restrictions in general, not just semiconductors.
There are too many of them, produced in too many countries in the world, to completely cut off supplies. This is not the goal. If you measure success like this, you will never achieve it.
The goal – worsen, complicate, make more expensive. It won't stop an army in a day or a week. That's not how it works. This will make it difficult for Russia to wage war against innocent people in Ukraine.