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Satellite Operators Find a Way

In the wake of Russia’s incursion into Ukraine, engineers at the Russian telecommunications company, Convex, were faced with the challenge of finding American equipment to transmit data to the country’s intelligence service, in the midst of broad trade limitations imposed by Western nations. Although initially blocked from acquiring Cisco gear following the suspension of sales to Russia by the US tech provider, Convex’s engineers managed to procure the equipment they needed through the lesser-known Russian e-commerce site, Nag. This site exploited international trade restrictions by acquiring American equipment through a network of suppliers in China. The Cisco gear was then installed by Convex’s engineers at Russia’s Federal Security Service office, enabling them to categorize and distribute data to the authorities. The whole process was documented in the company’s communication log.

In the two years since the onset of the Ukraine conflict, Russia has largely evaded the technology restrictions imposed by purchasing and deploying the hardware it requires to sustain its economy. Despite initial setbacks, Russian vendors have discovered and exploited loopholes and devised clever workarounds. From basic telecom equipment and surveillance gear to microchips and weapons and drone systems, practically no piece of commercial hardware has proven unattainable.

The documents unearthed by The Times reveal how Russian authorities and corporations have capitalized on gaps in the global response to sanctions. They have leveraged an intricate web of intermediaries, including middlemen in China, and camouflaged their activities through shell companies. This has enabled them to circumvent export restrictions and acquire prohibited tech products, which have appeared for purchase on conventional suppliers’ websites and user-friendly e-commerce platforms like Nag.

Russian traders have adroitly navigated the ongoing battle to procure the supplies they need. They changed suppliers and shipping routes as obstacles arose, demonstrating the challenge of thwarting the international movement of commercial technology. These events raise doubts about the effectiveness of Western trade limitations and serve as a call for tech giants to play a more active role in controlling the destination of their products.

A Closer Look at the Situation

As the sanctions took hold, US and European government investigators grappled with the shadowy flow of goods, pointing to the need for greater collaboration between the private technology industry, the government, and their allies. Elina Ribakova, an economist at the Peterson Institute for International Economics, believes that these companies should be doing more to cut off supplies to Russia, as they continue to evade sanctions. She contends that the current situation is akin to a never-ending game of Whac-a-Mole.

The response to these restrictions was two-fold. At ProSoft, Moscow-based electronics provider, troubles surfaced as they no longer had ready access to American and European suppliers, which they had relied on heavily. This predicament prompted the company to seek help from the Russian government’s trade mission in Morocco to find solutions that would enable them to continue their operations smoothly.

With collaboration and support from the Moroccan trade office, ProSoft managed to assess the general director of Morocco’s state-run Port of Tanger Med. This paved the way for Russian companies, including ProSoft, to find alternative channels for acquiring electronics and critical technology, solving their urgent supply crisis. As their supply chain needed to adapt to the newly emerging laws and restrictions, a previously unknown company, Invent Maroc, which specialized in scrap metal, entered the picture. This company acted as an intermediary, facilitating the transfer of restricted technology from major international manufacturing centers to Russia through Morocco, providing ProSoft with the necessary microchips and sensors. This was helped further by a closer examination of ProSoft’s offerings, which revealed a wide array of products fitted with American chips, Intel components, and an A.I. optimized computer chip designed by Google, indicating a steady supply of technology making its way to Russian soil.

These developments are a testament to the difficulty of curtailing the procurement of restricted technology. They underscore Russia’s ingenuity in devising creative solutions to circumvent trade restrictions and how they have sustained this ability to stay ahead. This should serve as a wake-up call, prompting policymakers, corporations, and concerned parties to rethink their strategies in light of the current loopholes. The need for stronger, more all-encompassing measures to combat sanctions evasion is the need of the hour, as the playing field continues to prove challenging.

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