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The United States, the EU, and their partners have made use of their tech advancement and Russia’s dependency to curtail both the country’s access to information and communication technologies (ICT) and its future development. |
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While sanctions and export controls are broad and comprehensive, the number of Western ICT companies that have completely exited the Russian market is surprisingly low. |
| As Russia opts to use grey imports and unlicensed IT, it becomes more vulnerable and dependent on third countries. China provides a technological lifeline, but it is not ready to risk secondary sanctions. Second-tier Chinese companies are exploiting Russia’s market, but Beijing keeps its distance in advanced tech. |
The online version of this Analysis only shows the executive summary. To view the full Analysis, including info graphics and footnotes, please download the PDF version here.
Executive Summary
Russia’s full-scale invasion of Ukraine on February 24, 2022, was followed by a series of sanctions by primarily Western countries that were supposed to limit Russia’s ability to wage war. A significant role in these measures is played by sanctions and export controls related to limiting Russia’s access to information and communication technologies (ICT). Given the growing technologization of warfare and digitalization of economies, it was assumed that such restrictive measures would be the most effective ones to curtail an adversary’s power. Further, in light of Russia’s long-standing dependence on key Western hard- and software, those measures were supposed to hit the country especially hard. Indeed, the sanctions and export controls introduced by the United States, the European Union, and their partners have curtailed Russia’s access not only to military and dual use technologies, but also to a wide range of advanced commercial technologies. Moreover, they target a number of Russia’s key manufacturers and research institutes, effectively impeding the country’s future development and preventing it from collaborating with the international scientific community on emerging tech.
More time is needed before the impact of such comprehensive sanctions can be fully grasped. Yet an initial assessment of the dynamics unleashed by the restrictive measures shows discrepancies between assumptions and real developments that must be considered by the international sanctions coalition in their implementation efforts.
First, the comprehensive set of sanctions and export controls has not prevented most Western tech companies from continuing their business with Russia. Only a minor part of them have completely exited the Russian market. While numerous ICT companies have scaled down their activities or stopped new investments in Russia, their services and products remain available there.
Second, Russia has come to rely on China’s support in evading export controls and filling its most urgent tech gaps. On the one hand, China has emerged as a beneficiary of Russia’s predicament, and Chinese companies with limited international exposure are actively exploiting its IT market. However, Sino-Russian cooperation has significant limits related to the risk of secondary sanctions for China’s big tech and to mutual distrust on issues related to security.
Third, the restrictive measures have become a reality check for Russia’s IT – a sector that the government sought to make independent from foreign vendors due to security concerns. The imposed sanctions and export controls have led to more vulnerability in terms of information security and Russia’s growing dependence on third countries and unproven tech. The insufficient development of key domestic technologies has forced the state to rely on grey imports of hardware and unlicensed software.
The introduced sanctions and export controls have significantly affected Russia’s access to ICT and placed the country’s economic and geopolitical standing at risk. However, the success of these measures depends on their implementation. While high-end chips became unavailable for Russia and its telecommunication systems have suffered from the restrictions, loopholes and evasion networks remain in place and undermine the impact of sanctions. The European Union (EU) must prioritize unity and coordination among member states and its partners in implementing the restrictive measures and prevent third countries from helping Russia to evade the sanctions.
Western ICT companies should clearly assess their involvement in facilitating the military power and surveillance capacity of the Russian state and stop their business immediately. At the same time, Western companies that provide internet connectivity and social media platforms should resist the pressure of Vladimir Putin’s regime and continue to keep uncensored communication channels open for the Russian people to prevent the Russian state from monopolizing the country’s information space and further splintering the global internet.
The EU and its partners must be aware of the dynamics and constraints of the Sino-Russian relationship. Despite its proclaimed goal of a technological partnership and the rapidly growing import of chips and hardware from China, Beijing has no interest in a technologically advanced and globally competitive Russia. Instead, China will only take the opportunity to expand its market into Russia in areas that pose no risks of Western secondary sanctions. In other words, China’s own dependency on Western tech seriously limits technological partnership between it and Russia. The EU and its partners should leverage this fact in their implementation of the restrictive measures.
Despite a “no-limits” Sino-Russian partnership in tech being prevented by both the constraints described above and mutual security distrust in emerging technologies, cooperation between China and Russia should not be underestimated by the EU and its partners. Rather, they must be prepared to counter joint efforts to exploit vulnerabilities related to the military, critical infrastructure, and economic espionage. In addition, more sophisticated disinformation campaigns that are coordinated by China and Russia could pose a serious threat and must be prevented.
Given the increasing reliance of Russia on grey imports from third countries to mitigate shortages caused by sanctions, the EU and its partners should closely monitor trade activities and impose restrictions on intermediaries and third countries that violate sanctions. International cooperation among governments, tech companies, investigative journalists, and the expert community is crucial for swiftly uncovering and preventing shipments of sanctioned goods to Russia via third countries.
The early impacts of the restrictive measures toward Russia should be analyzed and the results used to better understand their potential and real dynamics. This knowledge could contribute to establishing a broader framework and policy for regulating advanced technologies that, in turn, could prevent their spread in authoritarian countries.
