Executive Summary 

Russia’s invasion of Ukraine has confirmed the critical role of Unmanned Aerial Vehicles (UAVs) in modern warfare. UAVs are serving multiple functions in this war, including reconnaissance, offensive maneuvers, and kamikaze missions. The spectrum of capabilities extends from specialized military UAVs to repurposed commercial variants. The classification of drones includes strategic, operational, and tactical UAVs, with each contributing to distinct aspects of warfare. The production of these drones involves a high share of components that are produced by the countries in the sanctions coalition.  Companies located in democratic countries are helping Russia’s military in Ukraine. Since these weapons are often used to attack civilians, these companies are also supporting Russian terrorist acts inside Ukraine.  This support for Russia’s war efforts and terrorist acts in Ukraine must stop.  We urge countries to strengthen export controls and enforcement procedures in order to limit Russia’s access to such components.

Shahed-136/131, Lancet, and Orlan-10 UAVs

Since February 24th, 2022, Russia has deployed the Iranian-made Shahed-136/131 UAVs and Russian-made Lancet drones or loitering munitions in order to attack Ukrainian civilians and infrastructure. These drones offer a cost-effective alternative to Russian-made missiles, enabling Russia’s armed forces to target energy infrastructure, overwhelm air defenses, erode Ukrainian morale through civilian casualties, and reveal Ukrainian air defense system placements. Russia has also deployed the Russian-made Orlan-10 UAV – a cost-effective reconnaissance and surveillance tool that plays a pivotal role for Russian forces in Ukraine. The Orlan-10 is integrated into the Unified Tactical Control System, coordinating different troop actions. It aids in reconnaissance, target guidance, and can disrupt communications via electronic warfare. 

Foreign critical components in Russian military UAVs

We analyzed 174 foreign components retrieved from Shahed 136/131, Lancet, and Orlan-10 drones in Ukraine. Despite import substitution efforts, the Russian military still heavily relies on foreign-made components, particularly microelectronics. Notably, 69% of these components originate from U.S.-owned companies. Our investigation identified essential electronic components that are challenging to replace. The accessibility of these components, often obtained through publicly accessible marketplaces, presents a complex issue with regulatory oversight of critical technological transactions. Among these components, microelectronics are crucial. Components such as processors, microprocessors, voltage regulators, microchips, and transistors are prevalent in drones like Orlan-10, Lancet-3, and Shahed-136/131. GLONASS-enabled modules for navigation and electric engines are also vital components for the production of these UAVs.

Russian import of critical components

We focused on Harmonized System (HS) codes associated with components found in Russian UAVs. Using trade data, we analyzed trade patterns associated with these components.

Our investigation revealed an increase in trade volumes after a sharp downturn at the beginning of the full-scale invasion during the third quarter of 2022. These transactions amounted to $7.2 billion for the period from January to May 2023, which is 19% higher than the corresponding period in 2022 ($6.1 billion). In 2022, the total amount was $15.8 billion.

China stands out as a crucial supplier of critical components for Russia, responsible for a significant share of deliveries. Since the start of the full-scale invasion, China has contributed 67% of these components, with 17% routed through Hong Kong. Turkey and the United Arab Emirates also play notable roles, contributing 5% and 2%, respectively. Despite changes, the European Union maintains a 14% trade share with Russia, while the Eurasian Customs Union serves as a major trade route. Many US and EU companies operate production facilities in China, further influencing component transfer. 

The top producers for the first five months of 2023 were Intel, Analog Devices, Samsung, Texas Instruments, and Xilinx (AMD), with components from these manufacturers found in Russian UAVs and other military equipment. 

Sanctions evasion

Electronic components from sanctions coalition countries used in producing Russia’s UAVs predominantly enter Russia through intermediary countries unaffected by sanctions. In response to escalating restrictions, Russia employs tactics to obscure its procurement efforts. These tactics involve illegal networks, disguising customs data, one-day shell companies, expanding intermediary entities, diversifying suppliers, and orchestrating fake transit operations. These strategies exemplify Russia’s adaptive response to sanctions, utilizing multifaceted channels and actors to evade sanctions frameworks. 

This evasion is amplified by factors like offshore production, the intricate definition of sanctioned goods, insufficient compliance procedures, and sluggish reactions to violations. These dynamics highlight the challenge in maintaining effective sanctions against Russia’s acquisition of critical components for UAVs, necessitating robust countermeasures and oversight.

Policy recommendations

To prevent the provision of crucial components to Russian military manufacturing, the following measures could be implemented:

Alignment of sanctions across the sanction coalition: Aligning sanctions lists across coalition countries to encompass a broader scope of companies involved in the military complex is essential, as even some major producers of military equipment remain unsanctioned. Alignment includes adopting a centralized approach to dual-use goods lists with standardized criteria and classification based on Harmonized System codes. Improving information exchange and cooperation among coalition nations is also crucial, including the sharing of transaction data and collaborating on investigations to prevent violations and circumvention.

Broader export controls: Expanding sanctioned product categories by utilizing broader goods classifications based on 6-digit Harmonized System (HS) codes can prevent misclassification and simplify export controls enforcement. Strengthening control over dual-use goods available on open marketplaces and ceasing production of GLONASS-enabled microelectronics by Western firms are also crucial steps. 

Improve company compliance: Enhancing collaboration between critical component producers and authorities is key to improving sanctions compliance and implementing effective measures. Sharing information and experience can strengthen both sides in their efforts. Clear compliance guidance should be established, particularly for smaller enterprises lacking resources. A comprehensive database of potential business partners, including sanctions coverage and past violations, can facilitate compliance. 

Increase responsibility: Companies must take responsibility for preventing their products from reaching Russian military applications. Governments should investigate well-known companies to demonstrate their commitment to enforcing sanctions. Explicit procedures and documentation requirements can establish responsibility for compliance. Equally important is applying the same regulatory oversight to products manufactured outside the sanctions coalition countries to counter on-production tactics.

Using existing institutions and frameworks more effectively: Leveraging the Anti-Money Laundering (AML) framework could fortify export control measures, as sanctions evasion often has similar patterns to money laundering. Coalition authorities can adopt this framework to trace opaque ownership structures and dynamic actor changes involved in circumventing sanctions. Applying AML practices to export controls is valuable for identifying structures in third countries vital for military input production and exports to Russia, especially if production occurs outside the sanctions coalition. Additionally, utilizing financial sector sanctions, such as targeting Russian banks and monitoring transaction patterns that facilitate these technology transfers, can enhance enforcement efforts by restricting payment channels for imports and mandating companies to disclose payment-related information to banks.