Chinese Traders and Moroccan Ports - How
Russia Flouts Global Tech Bans
Using specialized e-commerce sites, secretive shipping
workarounds and a constellation of middlemen, Russia has obtained the tech components
it needs to keep its economy and war in Ukraine going.
·
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.
·
Sanctions
evasion at the Peterson Institute for International Economics, a U.S. think tank.
·
In Morocco,
Russia’s trade office, which looks after the country’s economic interests overseas,
also helped Russian companies regain their footing.
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.
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.