As Kremlin continues to strike civilian targets in Ukraine, the U.S. and allies are stepping up efforts to restrict Russia’s access to Western technology.
Matthew S. Axelrod, Assistant Secretary for Export Enforcement at the U.S. Department of Commerce spoke with VOA’s Oksana Bedratenko to describe the whole-of-government approach to enforce export controls on Russia, cooperation with other like-minded countries and the private sector.
One indication that international efforts to make is more difficult for Kremlin to power its war machine is that "the Russian government is paying twice as much for microelectronics and semiconductors as they were before the war started," Axelrod says. He, however, admits that it would be unrealistic to completely cut off Russia's access to Western semiconductors, as these components are so widely traded in many parts of the world.
The following transcript has been edited for brevity and clarity.
VOA: The U.S. and its allies have introduced a lot of sanctions following the Russia's full-scale invasion against Ukraine. What role export controls play in this effort?
Matthew S. Axelrod, Assistant Secretary for Export Enforcement at the U.S. Department of Commerce: Right after Russia's full scale invasion the United States and a number of other countries around the world came together in an unprecedented way to impose parallel restrictions on the items that were leaving their countries and going to Russia. The idea there was to degrade Russia's ability to continue to wage war against Ukraine. Through the leadership efforts of folks in the United States and other countries, this broad coalition was able to assemble.
VOA: Do think that export controls on trade of dual use goods with Russia have been successful enough in degrading Russia's war machine?
Axelrod: I think there has been some success. But of course, there's more work to be done. I traveled to Kyiv back in October ... When I was there, my counterparts took us to a forensic lab in Kyiv where they showed us recovered missiles and drones and when you look inside them, there are Western parts. That's unacceptable to us.
We've been trying to attack this problem from all angles. We've been working with the Department of Justice and other law enforcement partners to bring criminal charges against the procurement networks that are sourcing these Western components into Russia. We brought over a dozen of those indictments so far.
We also have been putting parties on the entity list. Since the start of the war over 900 companies have been added to the entity list including nearly 250 outside of Russia.
We worked very closely with U.S. industry to educate them about this problem. Our senior leaders have had very high-level calls with CEOs and other leaders of the manufacturers and distributors of these semiconductors and microelectronics to alert them to the problem and red flags to watch out for. We have even provided them with a list of over 600 companies in these third countries that have continued to ship into Russia, and we've asked the U.S. companies to stop shipping.
We've also worked with financial institutions and express shipping companies because you know, anytime an item gets sold, there's a financial side.
It's a really hard problem. We're doing everything we can and will continue to try to stop it. But these semiconductors are fairly widely available, and they are in lots of different places in the world.
We have had some success so far.
The Russian government is paying twice as much for microelectronics and semiconductors as they were before the war started. So if the goal is to make it harder for Russia to wage war, one of the ways to do that is to increase the costs. They've had to continually re-establish their procurement networks. They've turned to pariah states like Iran and North Korea whose products are both more expensive and less reliable. So we'll continue to do everything we can, but we definitely need to do even more, and we need folks around the world to do even more in order to further restrict the flow of these items.
VOA: What are the main avenues that Russia uses to bypass export controls?
Axelrod: There's a variety. Russian government has a history of setting up procurement networks in order to evade sanctions. They've tapped some of those same procurement networks. Since everyone knows you can't ship straight to Russia, particularly when it comes to the microelectronics and semiconductors, they turn to lower level semiconductors. They're fairly common. They're not restricted to go most places in the world. For example, they're not restricted from the U.S. to China but then once they're in China, Chinese law does not prohibit those semiconductors being sold from China to Russia. That's one of the challenges.
VOA: Do you get support from European countries when you take steps against Chinese companies?
Axelrod: It's been both unprecedented and very fortunate that there is a coalition of like-minded countries that have come together to put parallel controls in place.
Prior to the full-scale invasion of Ukraine there hadn't really been any international coordination mechanisms when it comes to export enforcement. So we've been working very hard with partners in G7, the EU, the Five Eyes countries, with South Korea and Japan to set up enforcement coordination. I think we have had good success with coordinating with foreign partners and sharing information and best practices, and even coordinating on a couple of cases.
VOA: When it comes to tracing the microchips from third countries. Is this something you're looking at?
Axelrod: When our counterparts recover the missiles and the drones and open them up and find U.S. parts inside, we can take that information and go back to U.S. companies. That can help the U.S. companies figure out how the chip got from their manufacturing facility into a Russian missile or drone, depending on the lot number the other marking on the chips.
VOA: How do you assess Russia's effort to create microchip production on their territory?
Axelrod: My sense is that has not been overly successful so far. Domestic manufacturing of course would be something we would be concerned about, if it started to take off, but my sense that it's still mostly items coming from outside into the country.
