How Tech Sanctions Can Help Counter the Russian Threat – European Council on Foreign Relations

Russia’s full-scale invasion of Ukraine on February 24 caused a sea change in the international order. The resulting flip-flops in European security and defense policy are truly remarkable. The long-term geopolitical consequences of the war are still unclear, but one thing is certain: much will depend on the political choices that European leaders will make from now on.

European countries are not only expanding their defense capabilities and arming Ukrainian forces, but also working with their allies to “arm” Russia’s economic and technological dependencies. The financial and technological sanctions that the European Union and the United States imposed on Russia shortly after President Vladimir Putin launched a full-scale war in Ukraine are unprecedented in their scale, direction and speed. . Their exclusion of many Russian banks from the SWIFT payment system and in particular their sanctions against Russia’s central bank have already caused serious damage to the Russian economy – and will continue to do so in the long term.

However, these powerful financial measures have somewhat overshadowed the far-reaching tech sanctions imposed by the West on Russia, which aim to “cut off Russian industry from the technologies it desperately needs today to build a future”, according to Commission President Ursula von der Leyen. In a concerted manner and less than a day after the invasion, the EU and US deployed strict, comprehensive and nearly equivalent export controls to, as the White House explained, “stifle the import by Russia of technological goods essential to a diversified economy and Putin’s ability to project power”.

The long list of advanced technologies subject to de facto bans on exports to Russia include semiconductors, telecommunications equipment, software (including encryption), lasers, aeronautical and space systems and petroleum refining machinery. While EU sanctions are limited to sales and exports to Russia from within the Union, the US now bans exports to Russia and Belarus from anywhere in the world from any product created using US software or equipment. With other big tech players such as South Korea, Japan and Taiwan having joined the blockade, Russia is largely cut off from the global high-tech industry.

However, unlike some major financial sanctions, many technology export controls will only have a major impact over time. Although some multinational companies have halted services on their own terms, sanctions regimes deployed by the West have generally excluded consumer products – such as smartphones, computers and cars – to spare ordinary Russian citizens for the instant.

In the medium and long term, the measures will have disastrous consequences for Russian industry. Cloud computing centers, high-performance computers, aviation and defense technology, and petroleum refining machinery all require regular replacements and upgrades of microprocessors, controllers, sensors, and mechanical parts . A lack of access to these technologies will not only set back the Russian economy, but will also significantly weaken Russia’s military capabilities in the long term. Modern military systems depend on advanced chips, sensors and materials. And, currently, Russia has little capacity to produce many of these advanced technologies domestically.

Greater technological sovereignty has been on Russia’s agenda for more than a decade — especially since 2014, when its annexation of Crimea prompted the West to target it with much weaker sanctions. But Russia did not fulfill its ambitions. Indeed, Moscow’s strategy has often focused on maintaining authoritarian rule rather than stimulating economic and technological development. The Kremlin has sacrificed the economic freedom essential to innovation for greater control of the digital sphere. Today, Putin’s ability to monitor and censor online content, and to coerce Western tech companies, is greater than ever. But so is Russia’s reliance on foreign technology. Between 2014 and 2019, Russian imports of semiconductor devices and integrated circuits increased by 60% and 25% respectively. Likewise, since 2014 there has been a dramatic increase in Russian imports of other electronic equipment – ​​including telecommunications and data storage systems – and advanced machinery such as gas turbines and engine parts. plane.

It is the common technological sovereignty of the West and the technological dependence of Russia that makes these controls on technology exports so important. To achieve its foreign policy goals, the West has coordinated moves that leverage American, Taiwanese, Japanese, and South Korean dominance in semiconductors and data processing with European market power in advanced technologies. engineering and telecommunications. These unprecedented sanctions will show how much technological sovereignty matters in international affairs. They underline the fact that technological differentiation and interdependencies between allies are not necessarily a weakness but a form of shared technological sovereignty. And Russia’s vulnerability to these sanctions illustrates the dangers of an approach to technological sovereignty narrowly focused on security concerns.

The debate over technological sovereignty in the West, particularly in Europe, has often been overly defensive. Following revelations about US intelligence practices made by former NSA employee Edward Snowden, many Europeans saw technology dependencies primarily in light of vulnerability to foreign espionage and coercion. This trend has only accelerated with subsequent discussions of Huawei’s role in the 5G market and its ties to the Chinese state. The EU is right to be cautious about weaponizing tech dependencies – but it’s also right to have done so in response to Russia’s war on Ukraine if there was any chance it might help Putin to change course.

The pressure on the Kremlin from technological sanctions will only increase. There is a widespread belief that Chinese tech companies will simply fill in the gaps left by their Western counterparts. But things are not so simple.

First, in many important areas, Chinese technology is nowhere near as advanced as that of the West and its allies. This is especially true for semiconductors. Chinese semiconductor leader SMIC is currently years away from making chips as advanced as those from Samsung (South Korea) and TSMC (Taiwan). Second, Russian security services are deeply concerned about the overreliance on China for critical technologies, despite the recent rapprochement between the two countries. Third, Chinese companies may be reluctant to risk their access to Western markets and technology just to do business in the relatively small Russian market. These companies are already suffering from US extraterritorial sanctions. And the White House would likely reinforce these measures if Chinese companies increased their exports of advanced technologies to Russia. So, technologically, Russia could be left to fend for itself.

It is difficult to say whether these concerted financial and technological sanctions will change Putin’s mind. It is generally difficult to predict the economic impact of such measures, which often have unforeseen effects. There will be flaws. Black markets will appear. Application in complex technology supply chains is inherently difficult. And, more importantly, it is the private actors who actually apply the sanctions. Western multinationals like Apple and Mercedes-Benz have already stopped sales in Russia of their own accord.

The longer the West’s tech sanctions have been in place, the greater their impact. These measures are unlikely to end as long as the Ukrainians are forced to defend themselves against the Russian invasion. The threat of sanctions has not deterred Putin from starting this war, but in negotiations between Ukraine and Russia he will find it difficult to ignore the damage they are inflicting on the Russian economy.

The EU and its partners did well to quickly impose significant sanctions on Russia in response to the war. It appears the union spent weeks preparing the measures in detail as Russia built up its forces on the Ukrainian border. But the EU would do well to put in place the necessary structures and processes to discourage a sharp escalation and react quickly when it happens.

The EU needs to better understand its technological capabilities and dependencies, as well as those of its partners. And he must identify how best to use those abilities against potential attackers. To this end, the EU can rely on its 2021 assessment of its strategic dependencies. The union should extend this process to actors other than the United States and China, while drawing on the lessons provided by the Critical Technologies Observatory that it plans to set up.

To guarantee peace in Europe, the Union must not only expand its defense capabilities, but also improve its technological sovereignty and use it effectively as an instrument of foreign policy.

The world may have entered an age of turmoil in which economic and technological connectivity enables new forms of warfare. Yet it is also a time when interdependence can be essential to ending military conflict.