Technology Controls Can Strangle Russia—Just Like the Soviet Union

Following Russia’s invasion of Ukraine, Western countries imposed unprecedented sanctions on the Kremlin. Much has been said about the impact of asset seizures, flight bans, and financial restrictions, but it is export controls that are the untold story of the West’s latest attempt to contain Russia. In a highly coordinated fashion, the United States and 37 other countries imposed a novel and complex regime of export controls against Russia. These controls severely restrict the export of strategic technologies, including semiconductors, microelectronics, navigation equipment, and aircraft components, to Russia—harking back to the highly successful Western export restrictions that helped isolate, contain, and ultimately defeat the Soviet Union.

Given time to work, export controls will play a crucial role in undermining Russia’s defense industry and eroding its military capabilities to wage the war. Russian manufacturing companies’ dependence on foreign components and machinery remains high, despite Moscow’s attempts to increase domestic self-sufficiency, such as the import substitution program it launched in 2015. With only limited domestic production of key technologies, Russia’s lifeline on the battlefield is to source these critical items from elsewhere. Export controls are thus a powerful tool to impede Russia’s ability to replenish its depleting stockpiles of weapons and ammunition.

Usually bundled together by nonspecialists, sanctions and export controls have a very different logic of operation. Unlike sanctions, which can halt trade and banking relations almost instantly, export controls are a softer tool directed at curtailing the target’s access to commodities and technologies. Export controls are almost never successful in completely suppressing technology transfers and do not permanently bar the target from catching up by other means—by achieving domestic production, evading controls via third countries, or getting help from controls-busting Western companies. The success of export controls therefore depends on the tightness of restrictions, uniqueness of each technology, and concentration of supply chains. As long as there are alternative suppliers in nonsanctioning countries, such as China and India, the impact of export controls will be weakened. Unilateral export controls are rarely effective, so international coordination is of the essence.

The Western allies had considerable experience in blocking the Soviet Union from access to sensitive technology. At the start of the Cold War, the West used multilateral export controls to halt the flows of strategic materials and technology to the communist bloc in order to prevent it from gaining military advantage. While the global technology landscape has undergone profound shifts since then, the core issues of export controls remain the same: how to balance national security and economic interests, how to ensure that all participating parties share the rationale behind the controls, how to right-size the scope so it’s neither too narrow nor too broad, and how to make sure the controls are efficiently administered. During the Cold War, this was accomplished by national authorities working with the Coordinating Committee for Multilateral Export Controls—widely known as CoCom and shut down in 1994.

The West’s new restrictions on Russia are the most comprehensive controls applied against a single country since the Cold War.

The West’s new restrictions on Russia are the most comprehensive controls applied against a single country since the Cold War. Before the Russian invasion, existing export controls mainly covered a small set of advanced military equipment and dual-use technologies, and they were not always strictly enforced. Now, for the first time since the end of the Cold War, Western countries agreed to expand the scope of controls far beyond current multilateral export control regimes—the Wassenaar Arrangement, the Australia Group, the Missile Technology Control Regime, and the Nuclear Suppliers Group, all of which are narrowly focused on weapons of mass destruction, nonproliferation, or specific arms embargos.

The new controls on exports to Russia include four types of restrictions. First, they ban the export, reexport, and transfer of any commodity, software, or technology essential for Russia’s defense, aerospace, and maritime sectors. To amplify their effectiveness, these controls apply to Russia’s close ally Belarus as well. Second, in coordination with allies and partners, the United States applied the so-called foreign direct product rule, which significantly limits Russia’s access to foreign-made products using U.S. software and technology. Before now, this strict rule has only been imposed on Chinese telecommunications giant Huawei, never on an entire country.

Third, a near-total embargo was put in place to prohibit the export of items with U.S. origin to the Russian military. And fourth, for good measure, more than 100 entities were added to the Entity List compiled by the U.S. Department of Commerce’s Bureau of Industry and Security, including Rostec and Sukhoi Aviation. Companies on the list are subjected to sweeping sanctions, “restricting Russia’s access to items that it needs to project power and fulfill its strategic ambitions.”

The Kremlin, however, has long experience in counteracting and circumventing sanctions. A recent report from the Royal United Services Institute (RUSI) looked at 27 of Russia’s most up-to-date military systems—including communications systems, cruise missiles, and electronic warfare equipment—and found them to contain at least 80 different types of components subject to U.S. export controls. The report’s findings have several implications for the effectiveness of export controls.

First, Russia’s military-civil fusion is as worrying as China’s. “Military-civil fusion” is a term used by U.S. defense analysts to refer to China’s national strategy to bolster military capabilities by systematically eliminating the barriers between the defense industry and ostensibly civilian research institutions. The falling of boundaries between the military and civilian sectors is a Russian phenomenon, too.

Russia has a long-standing history of scientific and technological espionage. During Soviet times, Moscow’s intelligence services targeted leading Western computer and semiconductor companies, particularly in the United States and Japan, as part of an illicit procurement campaign. More recently, Russian research institutes have been actively involved in industrial espionage by redirecting critical items to the defense sector. In April, for example, a Russian scientist working at the University of Augsburg in Germany was convicted of spying—he had passed information on European rocket propulsion technology to Russian intelligence. In the latest batch of sanctions, the United States therefore targeted a number of nominally civilian high-technology entities, including the Moscow Institute of Physics and Technology and the Skolkovo Foundation. The research institutes actively collaborated with numerous Russian defense entities such as Uralvagonzavod, Russia’s largest tank producer; Almaz-Antey, the country’s largest arms producer; and the United Aircraft Corporation, an aerospace and defense corporation.

Second, exempting consumer products is considered a way to spare ordinary citizens, but it can backfire and undermine controls. Russian and Belarusian companies on the Entity List are eligible for exemptions for consumer technology, including computers, memory devices, digital cameras, network access controllers, and software. The theory is that the spread of this technology in Russia will “make it harder for the Russian government to control the message getting to the Russian people.”

While mitigating collateral damage for ordinary Russians is important in the information war, these exemptions can be exploited by the Russian defense sector. RUSI’s report showed cases where semiconductors destined for civilian use ended up in Russian weapons. In May, U.S. Commerce Secretary Gina Raimondo reported that Russia was seemingly resorting to the microprocessors in dishwashers and refrigerators to replenish dwindling chip supplies for military hardware. Reusing consumer-grade semiconductors for military purposes might not ensure the best-quality weapons, but it still serves the purpose for the Russian military to wreak maximum havoc on the battlefield. By repurposing programmable chips, Russia’s use of consumer technology is effective in mitigating the impact of export controls.

Finally, the supply of critical items is hard to close off entirely, as transshipments from third-party suppliers are harder to control. If a certain technology cannot be geographically pinpointed and controlled, procuring it through clandestine networks in third-party jurisdictions is just a matter of time. Russia has reportedly used offshore companies in such jurisdictions as Hong Kong and Vietnam to conceal the ultimate end users. The reexport of noncontrolled goods is another weak spot. RUSI assembled a long list of low-technology consumer goods repurposed for Russian weapons. These items can be shipped to Russia and Belarus as long as they are not specifically destined for military purposes. Those items are particularly hard to control, as they are not listed on the Commerce Control List and require close tracking to ensure they are not used improperly. Using intermediaries to divert components to military end users is a common tactic among sanctions-busters—and when this involves technology that isn’t tightly restricted in the first place, it becomes even easier.

The past success of export controls illustrates that they are well suited for imposing higher hurdles for the target to acquire any given technology. Even if they work slowly, they can be one of the most powerful tools in the West’s toolbox of economic statecraft. But the impacts on Russia’s ability to wage war won’t be automatic—they require constant monitoring, stringent enforcement, and adjusting to Moscow’s evolving adaptation tactics.