What is the mechanism for importing European microchips to Russia, where economic sanctions continue?
In Russia, where imports of products from abroad are restricted due to the invasion of Ukraine, imports of microchips manufactured in the United States and Europe are similarly restricted. However, European microchips are secretly imported into Russia, and the Financial Times, an overseas media outlet, introduces Maxim Ermakov, a person involved in Russian microchip smuggling.
The shadowy network smuggling European microchips into Russia
Microchips manufactured by French semiconductor manufacturing company Ommic and others use special technologies such as high-performance gallium nitride and gallium arsenide integrated circuit boards, and are essential products for Russian military manufacturers such as
On the other hand, the United States and other Western countries have further strengthened economic sanctions against Russia, which began its invasion of Ukraine in 2022, making it difficult for Russia to procure foreign-made microchips. It became more difficult. Therefore, Russia instructed its own intelligence agents to build a network to evade export controls.
Among them, Mr. Ermakov had been building a network for microchip transactions in Ireland, France, Dubai, Germany, etc. since the 1990s. According to the Financial Times, Mr. Ermakov allegedly passed microchips procured from overseas business partners to Istok, a state-run technology company. In addition, Thomas Krueger, former director of the Strategic Trade and Nonproliferation Bureau at the U.S. National Security Council, said, ``Mr. Ermakov and others set up a front company for the microchip trade, and by conducting transactions with overseas manufacturers, It appears that they are delivering microchips to the country.'
Ommic has been doing business with Istok regarding microchips since 2004, but since Russia invaded Crimea in 2014, economic sanctions in Western countries have been tightened, and direct business with Istok has been terminated. Ommic suffered a huge financial loss as it lost a major trading partner in Istok. So Ommic shipped the chip to a company called 'Amideon Systems' based in the United Arab Emirates. Amideon Systems has a contract with ``Fly Bridge'', which is said to be a front company for Istok, and is trading microchips made by Ommic.
By 2018, the microchips flowing from Amideon Systems to Fry Bridge are estimated to be worth $4.6 million (about 700 million yen). Mr. Ermakov is said to have guided these three-way transactions. In fact, Mr. Ermakov served as CEO of Fry Bridge until 2014. According to the Financial Times, the purpose of using front companies to conduct chip transactions is to disguise the final buyer of the product, making it difficult for government authorities in Western countries to trace the transactions.
Since 2018, when economic sanctions against Russia became stricter, Ommic microchips have been smuggled into Russia through more complicated routes, with some Ommic chips being sent to Russia via China and India. It is said that
However, as a result of an investigation by French police, Ommic was shut down in March 2023 after its shares were seized by the French government. As a result, transactions with Amideon Systems were also suspended, making it impossible for Fry Bridge to obtain Ommic microchips. The Financial Times reports, ``In 2021 alone, more than 13,500 microchips are said to have been sent to Russia using forged customs documents.''
Mr. Ermakov has become unable to obtain microchips made by Ommic, but according to the Financial Times, Mr. Ermakov is still active behind the scenes at the time of writing the article. Since the invasion of Ukraine began, Istok is said to be producing new equipment for the Russian military, including an entirely new system for managing munitions inventories. For that reason, Mr. Ermakov et al.'s Fry Bridge imports special equipment for manufacturing high-end electronic equipment.
Chris Miller, a professor at Tufts University's Fletcher School, said, ``The smuggling network that Mr. Ermakov and his colleagues are building uses disposable companies called front companies. 'They can be forced out of business and transferred to new front companies. For Western intelligence agencies, this network is a cat-and-mouse game.'
Still, the US and British governments have issued large-scale sanctions against Mr. Ermakov on suspicion of complicity in Russia's war, and are providing information to banks, insurance companies, and transportation companies.
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