How is Russia keeping its industry and financial system afloat? By using the tools that terrorists, organized crime, and drug traffickers have perfected over decades to evade the surveillance of authorities in Europe and North America.
Russia’s Dirty Little Secret
A recent report from the Royal United Services Institute (RUSI) detailed the foreign contributions to the production of the Russian Orlan 10 unmanned aerial vehicle (UAV).
The Orlan 10 is a basic surveillance UAV, designed to locate Ukrainian forces and relay their position to shooters (missile launchers, artillery, aircraft) who can respond quickly before the Ukrainians relocate.
The Orlan 10 also suppresses enemy air defense (SEAD) missions, using sensors and electronic countermeasures to locate and target surface-to-air missile systems.
While these missions are basic (in ways that would have been intelligible to an artillery officer on the Western Front in World War I), the technology that allows the aircraft to function is quite advanced.
Analysis of downed examples of the Orlan 10 revealed that it is chock full (a technical term) of Western microelectronics, most of which are subject to strict export controls.
Russia can produce some of those components on its own, but not nearly enough to fill demand. Smuggling closes the gap.
How Russia’s War Machine Keeps Going
Over the years, Russia has developed a vast network of shell companies with sufficient legal and financial heft to handle the acquisition of foreign technology.
This effort is spearheaded by Russia’s Special Technology Centre (STC), which develops, acquires, and integrates technology into Russia’s most sophisticated military systems.
STC is tightly linked to the Russian government and defense industrial base and as such has been heavily sanctioned by the West.
However, STC is also connected with unsanctioned firms that are themselves connected to a wide range of international suppliers. This has enabled an important cog in the Russian defense industrial base to buy foreign technology from a variety of suppliers that operate in China, Central Asia, and elsewhere.
The problem is exacerbated because many Western companies continue to operate in Russia, albeit not generally in industries subject to export controls. This muddies the water concerning flows of goods and money, making it possible for Russia to continue to import illicit goods.
However, the same mechanisms and technologies that allow the United States to hunt terrorists and drug cartels can also be used to hunt Russian smugglers.
The RUSI report identified companies in several countries that have acted as a conduit for technology, and those firms are now subject to US sanctions. Similarly, financial investigators in the Department of the Treasury and elsewhere can identify illicit financial flows and close off certain avenues of supply.
Neither side has magic weapons; both sides must modify their tactics as the war evolves.
What To Make Of This
We can take two lessons from this story. The first is that the tools and techniques used by non-state organizations to survive and prosper can also work for great powers. Russian authorities aren’t doing anything that terrorists and organized crime haven’t done before.
The issue isn’t so much a question of the resolve of the West but instead of the ingenuity of those who seek to evade the surveillance of trade and financial flows.
The returns to smuggling and money laundering are such that someone somewhere will always find it worthwhile to break the law. The paths that drugs and drug money have carved are well-known to authorities in America, Europe, and Russia and yet remain robust nevertheless.
However, as the report indicates, clever detective work can find and target these networks, leaving them open to sanction and potential destruction.
The second lesson is that a modern defense industrial base is necessarily a transnational defense industrial base. To some degree, this has been the case since the Industrial Revolution or even before; very few countries historically have had the capacity to sole-source military components within their borders.
In World War II, even the mighty American defense industrial base sourced designs and components from allies like the United Kingdom and neutrals like Sweden. The production of modern military equipment requires specialized techniques and components that make international trade a necessity, not a luxury; if Russia had been completely cut off from global trade networks, this war would already be over.
We don’t know what will happen next, in no small part because the focus of the US intelligence community on the Ukraine-Russia War, along with its associates across the English speaking world and the US Departments of Justice and Treasury, is now under considerable question.
T-90M. Image Credit: Vitaly M. Kuzmin.
However, the Wars of Weaponized Interdependence are like any other wars; they involve hard work and innovation on both sides, with successes and setbacks along the way.
That Russia has been able to keep its war machine alive is a problem for the West, but that the West has been able to make the job difficult for Russia is a problem for Moscow.
The extent to which systems of sanction and surveillance remain in the post-war will significantly influence Russia’s future growth and prosperity.
About the Author: Dr. Robert Farley
Dr. Robert Farley has taught security and diplomacy courses at the Patterson School since 2005. He received his BS from the University of Oregon in 1997, and his Ph. D. from the University of Washington in 2004. Dr. Farley is the author of Grounded: The Case for Abolishing the United States Air Force (University Press of Kentucky, 2014), the Battleship Book (Wildside, 2016), Patents for Power: Intellectual Property Law and the Diffusion of Military Technology (University of Chicago, 2020), and most recently Waging War with Gold: National Security and the Finance Domain Across the Ages (Lynne Rienner, 2023). He has contributed extensively to a number of journals and magazines, including the National Interest, the Diplomat: APAC, World Politics Review, and the American Prospect. Dr. Farley is also a founder and senior editor of Lawyers, Guns and Money.
