How US Companies Get Away with Fueling Russia’s Military

How US Companies Get Away with Fueling Russia’s Military

– Vladimir Putin said moments ago that Russia will increase its airstrikes on Ukraine in the coming days, weeks, and months. – Hey, I need to show you this missile really quick, ’cause it teaches us a lot. This is a Russian missile. It’s got wings on it, it can travel a very far distance, and Russia has been using these types of missiles in their war in Ukraine since the very beginning of the war.

They fire them at railway stations and electric grids, and whenever something like this happens, investigators rush to the scene. Not only to recover the casualties, to rush people to the hospital, but also to sift through this debris. All this mangled metal and material. This missile debris contains important clues. If you zoom in, you’re gonna see something crazy. This little component inside of this missile has the logo of a company called Vicor, which is an American company. Over the course of this war, investigators have been looking into this debris

To try to understand how Russia is making their missiles, what ingredients they’re using, and where those ingredients come from. – So without Western technology, Russia wouldn’t be able to build missiles. – [Johnny] And it’s not just one power converter from Vicor. This missile is packed with microelectronics, the key, most sophisticated parts of the missile that come from the West, like the communication controller, which is made by Zilog another American company, the guidance system, which runs on three microprocessors,

All three made by the American company, Texas Instruments, and then of course the brains of the whole thing, the microchips, they’re made by Intel, the American chip giant that is currently being subsidized by the US government to make more chips. – The future of the chip industry

Is going to be made in America. Made in America. – All in all investigators from the Ukrainian government, from the Royal United Services Institute or RUSI and others found that Russia needs 450 Western made components for their weapons, the majority of which come from the United States. This is stuff they can’t make on their own. They need it from the outside. – [James] We know that the Russian systems, from their most basic systems to their most sophisticated systems are critically dependent on Western microelectronics. – Ukraine is making an effort to gather Western air defense, which then shoot down missiles that are made possible by the West, by western microchips. – That’s Oleksiy Sorokin, the Deputy Chief Editor of the Kyiv Independent, which is the largest English language newspaper in Ukraine. They’ve been covering the war.

We’ve been working with them to investigate how technology is affecting this war. For this story, we looked into how this Western tech is making it into Russian killing machines. The Kyiv Independent received this leaked report from the Ukrainian government that gives us more clues

As to how this technology is making it into Russia. Illegally flowing through a shadowy network of shell companies, fake aliases, circuitous shipping routes, all to evade sanctions and arrive to front companies for the Russian military. Many of them eventually ending up in missiles or drones or other vital weapons being used to invade Ukraine and kill its people. This is a quintessential case of modern warfare, how microtechnology used for computers is being weaponized and flowing through the complicated global economy. I wanna show you how this is happening

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And now we are going to unpack this thing that has been like deep on our minds for several months now, which is the shadowy smuggling market that is getting American and western tech into Russia. Get ready. Since the beginning of the full scale invasion of Ukraine in February of 2022, Vladimir Putin’s army has launched over 5,000 cruise missiles into Ukraine. – What happened is Russia wasn’t able to conquer Ukraine in the first month or two. In October 2022, Russia came up with this new tactic. It will use missiles

To destroy Ukraine’s energy infrastructure and kill Ukraine’s economy and force people to negotiate. – These missiles have killed thousands of civilians. They’ve leveled homes and communities, and they’ve destroyed the economy and daily life of many Ukrainians. So in response to this invasion, the West responded not only by giving weapons and money

To Ukraine to fight this war, but also trying to cut Russia off from the global economy, including being cut off from these vital microelectronics that they need to build their missiles to build their weapon systems. This is what sanctions do. It makes it illegal for a company like Texas Instrument

Or Intel to sell their microchips to Russia. Again, Russia can’t make this stuff on their own. So the idea was that if you could cut Putin off of the chips, then he would eventually run out of the ingredients he needed to continue to make missiles

And other weapon systems that he was using in Ukraine. At least that’s what they thought would happen. – Russia has been able to produce more missiles in 2023 than was able to produce in 2022. – [Johnny] Russia didn’t run out, the missiles kept flying and the drones kept coming. – [Reporter] Well, tonight, a third of Ukraine is without power after Russia destroyed power stations in the last eight days. – [Johnny] And to find out how this is happening, Ukrainian investigators have been gathering remnants of Russian weapons,

Bringing them to these missile graveyards. Like this one that the Kyiv Independent team helped us get access to. – [Johnny] At these missile graveyards, investigators dissect the wreckage and look inside to understand how these Russian weapons work to try to gain an advantage in this war. But what they found was surprising. – They were finding that these components were coming from American companies, like Texas Instruments and Analog Devices. Investigators have looked into dozens of missiles and they keep finding the same thing; US and Western technology that is somehow making it into Russian missiles and drones, long after economic sanctions

Should have cut off the flow. These are the chips they need for their guidance systems, their wireless communication, for their targeting. Critical components that Russia can’t make on their own. How exactly is the Russian military getting their hands on Western microelectronics, even after sanctions went into place that made it illegal

For Western companies to send microelectronics to Russia? And the answer is this map. This map shows at least a part of a shadowy network, a market that Russia uses to keep vital technology secretly flowing into Russian weapons. This tech travels through the veins of the global economy, using loopholes, shell companies and convoluted shipping routes to escape these sanctions. Now, let’s be clear, this is not the whole network. This is a shadowy black market. It’s very hard to see and to report on. But thanks to some amazing reporting by Reuters, by RUSI, by the Kyiv Independent, the Financial Times and others, we’ve been able to piece together what this looks like.

How Russia gets its hands on these microchips. Let’s start here in New York City, where we know that two companies were registered in Brooklyn as electronic components distributors. Both of them were owned by the same three guys who used aliases like Nick Stevens or Geo Ross. These companies have been shipping millions of dollars

Worth of electronics from various locations in New York to several middleman countries, countries that have no rules about sending stuff to Russia. From there, this technology was then shipped into Russia to a company that makes weapons for the Russian military. When these guys got busted, investigators found that the specific microchips

That they were shipping into Russia were the specific chips that Russia uses for various weapon platforms that they’re using in their war in Ukraine. In another case, this one company based in Singapore starts buying American microchips from the US and selling $250,000 worth of chips to a company inside of Russia who seemingly has nothing to do with the Russian government. That company then sold them to another Russian company called Robin Trade.

But it turns out that Robin Trade is just one of many fake companies that sells to yet another fake company, called Serniya Engineering that we now know is actually just a front for the Russian Spy agency, the FSB. This convoluted daisy chain of like fake companies is used to hide the fact that the FSB, the Russian Intelligence Agency, is procuring chips through this network. To make it look like this was some civilian tech company importing these chips. One of the greatest tools in this network

Is the shell company, the fact that in our global economy you can make a company by signing a few papers and paying a fee and then you can start doing business under the name of that company. Like there was this one computer parts company in Germany

That before the war was selling technology to Russia, but after Putin’s invasion, EU sanctions banned that company from doing this. So the German company starts selling chips to this shell company in Turkey, which immediately turns around and sells them right to Russia. Custom records show that in just seven months,

This new Turkish company sent $20 million worth of computer parts to Russia, including US made microchips and the missiles just kept on flying. – [Reporter] Ukraine says Russia has fired at least 80 missiles at targets across the country as part of an overnight bombardment. – So you can see

That it’s like a lot of these middlemen countries that the chips are being sort of trafficked through to evade sanctions. And this has given a lot of attention to a bunch of random countries that were never a part of this technology trade before. Like the Maldives, this island nation

That is much more known for like Instagrammable vacation photos. They had no real semiconductor, microchip industry before this. And yet, right after Putin’s invasion, the Maldives started seeing ships arrive with hundreds of thousands of microchips arriving at their ports only to immediately turn around and head for Russia. But when they pull into the port, they do have to register with the customs agents, and so we have customs records, which shows us where this stuff is coming from. These records show us that a lot of these chips are coming from a company registered in Hong Kong,

But who is owned by a company in Singapore, which is in turn owned by a company registered in the Seychelles Islands? Oh, and this company, which a Reuters journalist found was just an empty office in Hong Kong full of boxes, has only one officer, a Spanish citizen

Who owns an airplane club in Catalonia. And yet somehow this company is responsible for over $200 million of electronics being sent to Russia, including $50,000 of Intel and AMD microchips, and as we saw much of it flowing through the Maldives. I mean, do you see how this works? Like yes, it is illegal for someone to send microchips from the United States of America to Russia, but when you have shell companies in middlemen countries that are not a part of the sanctions, you can kind of get around that pretty easily.

There’s this one company in China called King-Pai technology, they do the same thing. They buy western chips from companies in like India, and then they sell them to Russian companies that are known to do business with the Russian military. The United States government found out about this

And cracked down, they put King-Pai Technology on the list, the sanctions list that says that American companies are not allowed to send them microchips. But lucky for them, they’ve got a bunch of other companies that do the exact same thing that aren’t on the list.

They have a whole network of these shell companies owned by these two guys, that confusingly have the same last name. So these guys just keep sending Western microchips to the Russian military now just under another name. The US caught on again and they cracked down on that company. But this will not stop them because they’ll just operate out of another one of their shell companies. One day, you’re King-Pai technology, the next day, you’re 3HC semiconductor. This is the game of whack-a-mole that enforcers are stuck in.

Shell companies are disposable, they’re pieces of paper. So it’s really hard, really slow, really complicated and difficult to enforce. And in many cases, the middleman countries like the Maldives have no real incentive to crack down on this. All it means for them is just more traffic through their ports.

Like you’ve got Russia’s neighbor Kazakhstan, where imports of microchips mysteriously doubled after Russia’s full scale invasion because now you’ve got smugglers using it as a middleman like this Dutch guy who started chipping microchips to Russia via Kazakhstan to disguise the real destination. Some of this stuff is so obvious like Kyrgyzstan,

A country that almost no one on earth has ever heard of, but who saw a huge increase in their imports from Germany after all these sanctions went into place. Almost a 1000% increase, which like they’re not complaining. This just means more activity of imports from other countries,

Even though we all kind of know that they’re just a middleman for smuggling stuff into Russia now. So that’s the answer. That’s how Russia is getting Western made microchips into their country despite all of these sanctions that should make it illegal. This is how they’re fueling their war machine. That leaked report that we saw from the Ukrainian government was a plea for help.

It was a sounding of the alarm bells. It was given to Western diplomats at a summit to basically say, “Hey guys, thanks for all the money that you’re giving to us, the weapons, the anti-missile and anti-air defenses, but you’re also giving technology to our enemy. Those drones and missiles

That we’re shooting down with your defenses, they also have your technology in them.” – But if we stop this chain, Ukraine needs less from the United States. So basically what happens now is that the United States is providing weapons that defend Ukraine from weapons produced

With the help of companies from the United States. – [James] There isn’t any immediate solution, but what we can do is we can just gut up their supply chains, we can arrest their intelligence officers, we can introduce crap into their supply chains. We can just make it longer, more difficult, more expensive.

– This story is useful for us to understand because it’s one of the best examples of how war is changing, how large scale war works in our modern world, how these little silicon chips are vital for any modern army and that those who produce them think that they’re the gatekeepers,

That they can stop the world from getting their hands on this tech. And what we’re seeing is they really can’t, at least not fully. No matter what the US and its allies do to try to control who gets microchips and who doesn’t. The complexity of the global economy

Makes it nearly impossible to do so, and yet that doesn’t mean they shouldn’t keep trying. – But here we’re talking about protecting the lives of civilians, right? It’s a solvable issue. It’s a complicated issue, but it’s a solvable issue. And that’s what gets me, is that if I knew personally

That some kind of action from myself can help save an innocent person, I’d definitely do it. And I hope that people in the states or people in Europe would also feel this way about protecting Ukrainians. – Thank you for watching this video. I know the world is having a bit of a lapse in interest and attention towards the very real existential war in Ukraine, and I still think it’s very important and we have to keep an eye on it because the security of Ukraine

Is actually the security of the West and we have to keep paying attention to it. So that’s why we made this story. I want to just briefly thank the sponsor one more time. Like, we can’t make these videos, these deep dive videos that require a lot of resources without sponsors.

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How the US is Supporting Russia’s War

Use code JOHNNYHARRIS at the link below to get an exclusive 60% off an annual Incogni plan: https://incogni.com/johnnyharris

This video was a collaboration with the Kyiv Independent, the largest English language news outlet in Ukraine. They’ve been covering the war in detail. Check out their video on American Microchips in Russian missiles here: https://www.youtube.com/watch?v=Pa9n71tS2iw&t=305s

A Russian cruise missile is shot down in Ukraine by American provided air defenses. Investigators look inside the wreckage of the missile and what do they find? American components- microelectronics and microchips. How is this happening? A shadowy network of shell companies and middlemen that are smuggling Western electronics into Russia.

My videos go live early on Nebula. Sign up now and get my next video before everyone else: https://nebula.tv/johnnyharris

Check out all my sources for this video here: https://docs.google.com/document/d/1xxyAIxd8CaEobm79swHFHuz8AUVP42CIB2l08wOhqRQ/edit?usp=sharing

— VIDEO CHAPTERS —
0:00 Intro
5:15 Ch.1 Putin’s Missiles
6:39 Ch.2 They Should Run Out
8:47 Ch.3 Shadow Market
15:15 Conclusion
17:52 Outro

Check out my new channel with Sam Ellis – Search Party: https://youtube.com/@Search-Party

Get access to behind-the-scenes vlogs, my scripts, and extended interviews over at https://www.patreon.com/johnnyharris

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The music for this video, created by our in house composer Tom Fox, is available on our music channel, The Music Room! Follow the link to hear this soundtrack and many more: https://youtu.be/3PptWzsrHYw

About:
Johnny Harris is an Emmy-winning independent journalist and contributor to the New York Times. Based in Washington, DC, Harris reports on interesting trends and stories domestically and around the globe, publishing to his audience of over 3.5 million on Youtube. Harris produced and hosted the twice Emmy-nominated series Borders for Vox Media. His visual style blends motion graphics with cinematic videography to create content that explains complex issues in relatable ways.

– press –
NYTimes: https://www.nytimes.com/2021/11/09/opinion/democrats-blue-states-legislation.html
NYTimes: https://www.nytimes.com/video/opinion/100000007358968/covid-pandemic-us-response.html
Vox Borders: https://www.youtube.com/watch?v=hLrFyjGZ9NU
NPR Planet Money: https://www.npr.org/transcripts/1072164745

– where to find me –
Instagram: https://www.instagram.com/johnny.harris/
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Iz’s (my wife’s) channel: https://www.youtube.com/iz-harris

– how i make my videos –
Tom Fox makes my music, work with him here: https://tfbeats.com/
I make maps using this AE Plugin: https://aescripts.com/geolayers/?aff=77
All the gear I use: https://www.izharris.com/gear-guide

– my courses –
Learn a language: https://brighttrip.com/course/language/
Visual storytelling: https://www.brighttrip.com/courses/visual-storytelling