Tag: Export Controls
Benjamin Hilgenstock on Closing Sanctions Gaps Against Russia
Despite several rounds of Western sanctions, Russian drones and missiles still include Western-made parts. In Deutsche Welle’s report, “Western parts in Russian drones: Are sanctions working?”, Benjamin Hilgenstock, a senior economist at the Kyiv School of Economics (KSE), explains why export controls have not fully closed the sanctions gaps against Russia.
Export Controls and the Rise of Complex Trade Networks
“Export controls on many of these goods were imposed right at the beginning of the major Russian offensive in the spring of 2022. Yet, many of these sanctioned components still reach Russia through complex trade networks involving intermediaries in countries like China, the United Arab Emirates, Turkey, and Kazakhstan,” Benjamin Hilgenstock, Senior Economist at KSE
According to Hilgenstock, many indirect trade networks operate beyond EU or U.S. jurisdiction. As a result, restricted technologies continue entering Russian markets. These supply chains often involve intermediaries and shell companies, which makes enforcement difficult. Moreover, they reveal weaknesses in global export control systems.
Closing Sanctions Gaps Through Stronger Oversight
Hilgenstock notes that sanctions have raised costs and slowed Russia’s access to advanced technologies. However, there are still gaps that could be closed. Hilgenstock believes manufacturers of restricted goods should face tougher due diligence obligations. In addition, he suggests the financial sector’s compliance model could guide improvements in export enforcement.
How Indirect Trade Enables Sanctions Evasion
The Deutsche Welle report shows that re-export routes through countries such as Turkey, Kazakhstan, and the UAE allow restricted components to return to Russia. Consequently, these sanctions evasion networks weaken the impact of Western policies. To counter this, Hilgenstock emphasizes the need for international coordination, real-time trade monitoring, and greater transparency in global supply chains.
Read the full article on Deutsche Welle for Benjamin Hilgenstock’s analysis of sanctions enforcement and export control challenges.
Learn More About Sanctions
Visit the KSE Institute Sanctions Hub to explore in-depth monitoring of international sanctions against Russia. The Hub maintains a consolidated sanctions database and provides detailed reports on the impact of sanctions on Russia’s economy. It also features analyses of sanctions effectiveness, revealing patterns of enforcement and circumvention, as well as position papers and sectoral reports offering expert insights into key industries and policy recommendations from KSE researchers.
Visit the SITE Sanctions Portal to gain insights into sanctions on Russia and its economic retaliation measures. This resource provides a detailed timeline and comprehensive evidence base that brings together data, analysis, and expert commentary. It helps researchers, journalists, and policymakers navigate the evolving sanctions landscape. The SITE Sanctions Portal explores the economic consequences of Western sanctions and Russia’s strategic responses.
Using the Financial System to Enforce Export Controls
A new Bruegel working paper shows how Russia’s export controls could work better if banks and firms play a larger role. Despite sweeping sanctions, Russia’s imports of “battlefield goods” bounced back close to pre-invasion levels in 2023. To close loopholes, the authors suggest bank-style due diligence for lenders and manufacturers. This approach could choke off illicit tech flows more effectively.
Why Export Controls Matter Now
Russia still gets critical microelectronics and navigation gear through complex routes. In 2023, it imported $12.5 billion of high-priority items, just 2% below pre-war levels. Import patterns shifted. Mainland China accounted for 56.3% and Hong Kong for 19.3%. Meanwhile, Turkey rose to 5.7% and the UAE to 4.2%.
In addition, 40% of these goods are produced for companies headquartered in sanctioning countries. Even more striking, 95% of identifiable foreign parts in Russian weapons still come from Western producers. These figures show why tighter export controls remain urgent.
What the Study Set Out to Do
The authors asked why current export controls underperform. As a solution, they outline a practical plan. First, banks should identify and block suspicious trade payments. Second, non-financial firms should adopt “know your customer” checks across their distributor networks. Together, these steps would help reduce illicit flows.
Key Research Findings
- Russia’s battlefield goods imports rebounded quickly after spring 2022 and are again near pre-invasion levels.
- Third-country hubs, especially China and Hong Kong, now dominate shipment routes, as shown in the report’s charts.
- Western technology remains embedded. Forty percent of the import value is tied to coalition producers. Moreover, 95% of foreign parts in Russian weapons are Western.
- Leveraging banks’ AML/CFT systems and tightening disclosure, such as item descriptions and HS codes, would make export controls stronger.
What This Means
In practice, turning banks into frontline enforcers could flag risky payments before goods move. For example, trade finance documents often reveal items and counterparties. Furthermore, extending similar diligence to manufacturers, backed by penalties for negligence, would close loopholes. As a result, sensitive parts would find it harder to reach Russia. Finally, stronger guidance and wider data sharing are essential to make export controls credible.
Read the Full Report
Learn more about the role of export controls, the challenges of implementation, and the financial system’s contribution in the latest working paper from KSE Institute and Bruegel.
Meet the Researchers
- Benjamin Hilgenstock: KSE Institute.
- Elina Ribakova: Bruegel.
- Anna Vlasyuk: KSE Institute.
- Guntram Wolff: Bruegel.