Dismantling Russia’s military apparatus with sanctions

There’s debate about whether current sanctions against Russia are working or whether sanctions work more generally. But the devil is in the details. The best medicine in the world will have no effect if the patient doesn’t take it. We have sanctions against Russia in place in theory, but is the medicine being administered properly?

A new report from the Yermak-McFaul International Working Group on Russian Sanctions and KSE Institute analyzes the effectiveness of export controls, which are essential for preventing Russia from acquiring components for its weapons. Two notable conclusions emerge:

1. Russia continues to overwhelmingly use Western-made components in its weapons. 72% of foreign weapons components are made by US firms, while only 4% are made by Chinese firms (lower than the percent of Swiss and Japanese components, at 6% and 5%, respectively). This is both bad news and good news. The bad news is that Russia is able to procure these components. The good news is that Russia probably relies on these components for weapons manufacturing and would not have an easy time switching to domestic or Chinese-made ones.
2. Russia has adapted its supply chains to evade sanctions (see chart above) . Most battlefield goods and critical components manufactured by companies headquartered in countries that have imposed sanctions now reach Russia via third-party intermediaries, such as China, Turkey, and the UAE. There is also evidence of sanctions violations, but these appear to contribute less to Russia’s ability to procure weapons components than evasion activities.

The first analysis suggests that it’s clearly worthwhile to pursue better enforcement of sanctions. The second analysis demonstrates that it is possible to trace Russia’s sanction evasion patterns and therefore to counter them. The report suggests five steps to make sure that the sanctions medicine gets to Russia: (1) close gaps in sanctions through better synchronization of policies; (2) enhance the capabilities of government institutions responsible for implementing and enforcing these controls; (3) improve the private sector’s incentives and ability to monitor and enforce compliance; (4) target strategies that enable Russia to import weapons components through third countries; and (5) improve cooperation across jurisdictions.

Won’t this create more bureaucracy and potential collateral damage on honest, well-meaning actors? Are we going to make trade in these goods just as difficult as international banking is due to strict regulations and anti-money laundering laws? Here, it’s important to be explicit about the available options:

1. Tighten export controls as suggested above. Will undoubtedly create some costs and inefficiencies, but will make it substantially harder for Russia to manufacture weapons.
2. Continue providing military aid to Ukraine to counter Russian aggression. Russia will continue exploiting existing weaknesses in sanctions. The weapons we send to Ukraine will cost billions upon billions of dollars, and thousands more Ukrainian lives will be lost. As the report points out, this is the situation we’re currently in, and it “creates a Kafka-esq scenario in which Ukraine’s allies have to provide more military assistance to Ukraine in order to defend it against weapons that Russia can only build because of its continued access to imported components that originate from Ukraine’s allies.”
3. Cut back or eliminate military aid to Ukraine and see what happens. Like ignoring a crack in the foundation of house hoping it’s nothing serious, this option carries with it the illusion of being economical but conceals the looming specter of considerably higher costs in the future. In addition to being much larger than Ukraine, Russia’s concentrated authoritarian regime enables it to coopt the economy for military purposes very effectively. Without Western aid, Ukraine may lose, and the fallout of losing Ukraine would be disastrous for the democratic world (see here and here).

Any inefficiencies from tightening export controls cannot possibly be as costly as the consequences of pursuing the other two options. It is by far the most appealing path to take.

Originally published at https://ukraineinsights.substack.com.