[ad_1]
Shortly after Russia invaded Ukraine last year, engineers at Convex, a Russian telecommunications company, needed to find American equipment to transmit data to the country’s feared intelligence service. But no gear was flowing in after Western nations imposed sweeping new trade limits on Russia.
Convex’s employees soon found a solution.
While Cisco, a U.S. tech provider, had halted sales to Russia on March 3, 2022, Convex’s engineers easily obtained the Cisco gear they needed through an obscure Russian e-commerce site called Nag, which had gotten around international trade restrictions by buying the American equipment through a web of suppliers in China.
Convex engineers then visited the offices of Russia’s Federal Security Service, known as the F.S.B., in Yekaterinburg to install the gear that would help categorize and send data to the authorities. “Coordinate with the F.S.B. the placement of the Cisco Catalyst WS-C4948E switch,” a Convex engineer wrote on March 23, 2022, according to a company communications log obtained by The New York Times.
In the 22 months since the war in Ukraine began, Russia has largely continued getting the technology it needs to keep its economy running. After export restrictions and corporate bans initially led to trade disruptions, Russian suppliers found loopholes and cultivated workarounds. Almost no piece of commercial hardware — including basic telecom equipment, surveillance gear, microchips for advanced computing and weapons systems, and drones — has been too hard to get.
Russian authorities and companies have united to take advantage of cracks in the global response. They have tapped webs of intermediaries, including middlemen in China, and disguised their activity through shell companies, according to leaked Russian government emails, trade documents and records of online conversations between Russian engineers obtained by The Times.
They have also turned to countries that have staked out neutral positions in the conflict, such as Morocco and Turkey, and used their ports to receive goods from global tech manufacturing centers that are then placed on other ships headed toward Russia, a process known as transshipment. The prohibited tech products were then made available to buy from well-known suppliers and on easy-to-use e-commerce sites like Nag.
Flexibility has been paramount. In weekly emails, Russian trade officials shared tips on which ports would transfer goods, who would trade in rubles and where Russian-flagged ships could be repaired, the documents show. If one supplier stopped selling, they found another. If a shipping route was cut off, new ones took up the slack.
The documents offer a rare glimpse of a race in which Russian traders have reliably stayed one step ahead of U.S.-led efforts to cut them off. Their success shows how difficult it is to stop the global movement of commercial technology, raising questions about the effectiveness of Western trade restrictions and whether tech giants should better control the destinations of their products — and if it is even possible to do so.
Cisco declined to comment. Convex did not respond to requests for comment.
Understaffed government investigators in the United States and Europe cannot keep pace with the often shadowy flow of goods, said Elina Ribakova, an economist who has studied sanctions evasion at the Peterson Institute for International Economics, a U.S. think tank. Major tech companies, she added, must do more to cut off supplies to Russia.
“It’s an endless Whac-a-Mole game,” she said. “There should be alarm, particularly among the policymakers, that we have announced a lot of sanctions and may believe they are working but in reality they are not.”
A Beautiful Friendship
As sanctions against Russia took effect last year, ProSoft, a Moscow-based electronics provider, experienced the fallout.
Officials at the company, which sells biometric surveillance equipment and tech for heavy industry and critical infrastructure, emailed the Russian government trade mission in Morocco for help, according to a message reviewed by The Times.
“Just a week ago, it was not difficult to ship them to us from American and European suppliers,” a ProSoft executive wrote, referring to now-banned tech. Now “we run the risk of starting to reduce production (there are small reserves in the warehouse).”
A spreadsheet attached to the message listed hundreds of American, European and Japanese microchips and sensors that ProSoft needed.
At the time, Russia’s economy was absorbing the initial effects of trade restrictions. The ruble tumbled, inflation and interest rates soared, Russian banks were cut off from large swaths of the global financial system and oligarchs sat helpless as their yachts were seized.
But the pain did not last as President Vladimir V. Putin remade Russia’s economy. Russian officials and executives swiftly teamed up to find workarounds. Political loyalists profited as Western companies fled.
In Morocco, Russia’s trade office, which looks after the country’s economic interests overseas, also helped Russian companies regain their footing. After ProSoft reached out for help, trade officials jumped into action.
“We’re in constant contact with the general director” of Morocco’s state-run port of Tanger Med, one Russian official wrote in an April 2022 email. “In the event of ships entering under the Russian flag, there will be no problems with maintenance.”
A spokeswoman for Tanger Med, which hugs the Strait of Gibraltar, said the port leased space to shipping companies and had “no information nor responsibility” about vessels moving through the complex. The port, which handles more than eight million containers annually connecting to 180 international ports, was “not aware” of shipped goods calling at Russian ports before or after being at Tanger Med, or maintenance of Russian ships being performed, she added.
By November 2022, Russian trade officials in Morocco were bragging that their “direct support” had turned the African country into an electronics transshipment hub. Goods from Taiwan, China and other manufacturing centers were offloaded at Tanger Med and then placed on other ships headed to Russia.
“Given the long-term nature of the cooperation with the Moroccan partner, the volume of supplies could amount to about $10 million per year,” the trade officials wrote about their work for ProSoft.
ProSoft also maintained supplies of Western tech with the help of an obscure scrap metal company registered in Casablanca, Morocco. After the war began, the company, Invent Maroc, set up a new website and routed restricted technology through Morocco to Russia, including microchips from Texas Instruments, Intel and NXP, according to trade data. In 2022, the United States had limited the export of semiconductors made with American equipment or intellectual property to Russia.
Invent Maroc, run by a man named Alexander Trinz, had no prior history of international exports. Yet it sourced electronics from Costa Rica, Malaysia, Taiwan, China, Japan and Mexico, according to trade records.
In a call this month, Mr. Trinz said he had supplied technology to Russia in the past, but not since the war. “Before, we worked with Russia, but in this moment we can’t,” he said.
An analysis of ProSoft’s offerings found nearly 300 products for sale that contain Intel chips, as well as components made by Nvidia and an A.I. optimized computer chip designed by Google. Although it is unclear how the imports were ultimately used, American chips have been found on Russian missiles and drones, according to weapons experts.
Nvidia, Intel and Google declined to comment. Texas Instruments said it opposed “the illicit diversion of our products to Russia.” ProSoft, NXP and Russia’s trade representative to Morocco did not respond to requests for comment.
In October 2022, Russian trade officials said they had established 20 operators at the Tanger-Med port to “promptly carry out” the logistics of getting cargo loaded onto “feeder” vessels ultimately bound for Russia, according to a weekly shipping report. Another report noted that ports in Turkey, a member of the North Atlantic Treaty Organization, had accepted payment in rubles.
“The sanctions restrictions have been successfully overcome,” one government report said of a Turkish trade route this March.
Click and Buy
On little-known Russian e-commerce sites like Nag, OCS Distribution, 3Logic Distribution and 4Telecom, complex technologies made by major American and European telecom manufacturers, such as Cisco, HP, Juniper, Ericsson and Nokia, are listed for sale.
Many of these sites freely sold Western technology for decades, but overhauled their supply chains because of the war. Since then, the platforms have received hundreds of millions of dollars in technology from China, according to trade records.
China and Hong Kong supplied 85 percent of semiconductors imported to Russia from March 2022 to September 2023, up from 27 percent before the conflict, according to the Silverado Policy Accelerator, a nonprofit that studies Russian trade routes.
Nag, which sells hardware to regional telecoms and surveillance contractors, is one major platform. Through intermediaries, it has bought roughly $100 million in restricted American tech since the war began, according to trade data. In total, it imported $150 million in hardware from China this year, the data show. Communications gear, which has ostensibly been prohibited from reaching Russia, is readily available on its site, filtered by price, product type and quantity.
Nag employees have talked about logistical challenges that international sanctions have caused, according to internal communications. In May 2022, a Nag employee wrote to a Russian customer that “the old transit system has ended,” delaying delivery of $20,000 of Juniper equipment. A month later, Nag followed up to say that the problem had been resolved and that the gear would arrive in the coming months.
Tech for building online surveillance and censorship was also available. Russian telecom operators are required by law to provide communications data about customers to the security services, meaning they must buy specialized equipment that sends the information to government agents. On Nag message boards, now accessible only from within Russia, engineers posted technical tips for making the systems work to F.S.B. specs.
Ericsson, Juniper, Nokia and IBM said any imports into Russia were done without their consent. OCS Distribution said that it “does not sell products in violation of international sanctions and restrictions” and that any such tech listed on its website for purchase was there because it was in the midst of an overhaul. HP, 3Logic Distribution and 4Telecom did not respond to requests for comment.
A network of Nag-operated companies and brands in Kazakhstan, Uzbekistan and the United Arab Emirates has also helped obscure shipments of sanctioned technology. In total, Nag brought in almost $10 million in Cisco equipment and about $1 million in Nokia and Intel products to Russia over the past year.
At the F.S.B. offices in Yekaterinburg, the Cisco gear that Convex engineers installed sat alongside routers made by Juniper, according to Convex’s records. Less than a year later, the availability of Western tech was so abundant that Convex’s engineers could shop around.
In a conversation on Convex’s internal messaging system this year, engineers focused on a new supplier that they had “spotted.” Operating under the name sale-server.ru, the supplier had plenty of restricted name-brand technology from HP, IBM and others. More important, the price was right.
“Cheaper than Nag,” one Convex employee wrote.
Source link
