Procurement: The Russian Smuggling Industry


March 15, 2024: Russia continues to purchase millions of dollars’ worth EU (European Union) weapons technology items that sanctions are supposed to prevent Russia from acquiring. The European Union nations efforts to prevent Russia from obtaining the banned technologies for use in weapons used to attack Ukraine.

Over $20 billion worth of these banned items continue to come from EU countries. The current sanctions are not working, and the EU is under pressure to develop sanctions that work as intended. Most of the sanctioned equipment comes from EU nations.

About $150 million worth of important, sanctioned goods that reached Russia last year came from EU nations. Russia used a network of countries that have long facilitated the smuggling by ignoring it. These countries include Turkey, the UAE or United Arab Emirates, Serbia, and China. In addition, nations neighboring Russia like Uzbekistan, Kazakhstan, Kyrgyzstan, and Armenia also permitted the smuggling of sanctioned goods to Russia. Officially, legal shipments of EU goods stopped after the war began but exports of those goods via smuggling via third countries quickly supplied all that Russia needed. The smuggling effort increased the cost of the goods to Russia, but the Russian still received what was needed to keep fighting in Ukraine.

Meanwhile Ukrainian troops face shortages of weapons because of the inability of EU nations to produce weapons quickly enough and political problems in the United States blocking the release of $60 billion in military aid for Ukraine. The Americans acknowledged the problem and told the Ukrainians that the military aid would be delivered in a month or two.

The EU nations have said they will deal with the smuggling and work to prevent Russia from getting vital military equipment that is made in Europe. This means acting against the nations that tolerate, often for profit, the smuggling while officially denying any involvement.

The bloc’s actions to enforce sanctions have included export restrictions on companies in third countries as well as diplomatic outreach in those nations asking them to curb re-exports to Russia. The EU has also taken powers that would allow it to ban exports of sanctioned goods to a country in the most blatant cases, though some member states have so far resisted using the tool.

Most of the illegal smuggling takes place via thousands of small companies outside the EU, most of them based in China. Shipments are hard to track as they regularly involve chains of multiple vendors and at times re-sellers who may be simply dipping into older stock that they want to get rid of.

The EU has also found that some firms based in the EU are supporting the export of banned weapons or components. Sometimes this is deliberate but more often the goods are sold to a legal buyer who will then resell the goods to someone who will resell the items to firms that are involved, usually deliberately with smuggling. This is a very profitable business and EU companies are willing to risk getting caught and punished because the current sales are so popular and involve documents that make it all look legal. Subsidiaries and subcontractors of some European firms operating outside Europe were producing sanctioned items and exporting them to Russia through intermediaries in countries that were legal buyers.

Major manufacturers always say they abide by all sanctions rules and don’t export to Russia. EU rules do allow some exceptions for export to Russia dual use goods. These are items that can be used for both military and civil purposes, like humanitarian aid for health emergencies, natural disasters, and medical use in general.




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