How Exactly Do Sanctions Work?

September 1, 2023
UkraineWorld spoke to Oleh Katkov Editor-in-Chief, Defense Express.
Photo credit: Shutterstock

Key points – in our brief, #UkraineWorldAnalysis:

1. On the impact of Russia's sanctions

  • The impact of sanctions should be considered not only since the start of the full-scale invasion but also since 2014, when the most severe sanctions against Russia's military-industrial complex were imposed in response to Russia's annexation of Crimea. They were related to the fact that, first, any cooperation in this matter is sanctionable, and second, the export of military and space-class chips was banned.
  • There are four classes of electronics: the highest class of electronics is "Space class," which is designed for spacecraft to withstand the rigours of space, such as radiation, extreme conditions, and temperature fluctuations. "Military class" follows, which is designed for military equipment that carries heavy loads, such as missiles and tanks. The "Industrial class" serves various industries and must ensure continuous operation, whereas the "Civil class" is the lowest category with no export restrictions; these chips are widely available for purchase, even on platforms such as AliExpress.
  • All cooperation agreements with the Western defense industry were suspended. For example: the purchase of Mistral helicopter carriers from France, the purchase of warships for expeditionary landing operations, a proposed contract for the production of Italian IVECO armoured vehicles, and the Armata tank project, were all cancelled because Western companies withdrew from them.

2. On Russia's gradual adaptation to sanction regimes

  • Since 2014, all projects aimed at the full rearmament of the Russian Armed Forces have not been implemented. Instead, Russia has prioritised modernising its tank fleet, including the T-72B3, T90-M Proryv, and T80BVM, which used Western components such as the Sosna-U tank sights previously obtained through Belarus to avoid sanctions. These efforts, however, were stopped by Russia's recent full-scale invasion.
  • Russia has also started to use civilian electronics in weapon production, indicating that sanctions are not having the desired effect, so that Russia will not be sent back to the Stone Age in a matter of weeks. Given the current situation, one can only speculate on the potential impact if there were no sanctions at all, allowing Russia to access a consistent supply of components across multiple classes, given its available funds for this.
  • As sanctions are expected to continue and widen, they will widen Russia's technological gap, impeding its ability to carry out defense projects. The consequences are already being felt, such as the decommissioning of T-54 tanks instead of the planned upgrade to T-72B3.

The critical consequences for Russian defense programmes might be felt in 2025, when stockpiles are depleted, component production ceases, and deadlines for projects planned in 2010 aren’t met.

3. On how to perceive sanctions correctly

  • The issue is that we should not expect sanctions to prevent Russia from importing civilian electronics. There was a case of sniper ammunition purchased from an American manufacturer by a Slovenian hunting shop, which sold it to Kyrgyzstan, and the ammunition eventually ended up in the Russian Federation.
  • Another bright example is the defense order during the Army 2023 exhibition. This is the central arms exhibition in Russia, which usually ends with the signing of multibillion-dollar contracts. In 2020, contracts for more than 1.16 trillion RUB worth were signed during the event. In 2023, the contract's pricing is 4 times less in USD equivalent.
  • The story of the PD-14 series aircraft engine is a great example. Russia began developing it in 2006, at a cost of 150-180 billion RUB (3-6 billion USD, depending on the exchange rate at the time). They struggled to create a smaller version of the PD-8 for the Superjet. They needed it so that the Superjet could fly on an engine jointly produced in collaboration with European manufacturers and comprising 70% of foreign components. Currently, Russia does not possess engines for a Superjet. It has officially admitted that the VK-2500 only meets 50% of the demand for helicopter engines. All Russian army and transport aircraft, including the Mi-8, Mi-17, Mi-24, Mi-35, MI-28, and K-52, use these engines with each helicopter requiring two engines.

This shows a negative trend for Russia, with no solution in sight, leading to reduction of helicopters in the long run.

Daria Synhaievska, Analyst at UkraineWorld
Oleh Katkov, Editor-in-Chief of Defense Express