US-made technology flows to sanctioned

Usman Deen

Global Courant 2023-05-15 14:00:40

Last August, Oleg Patsulya, a Russian citizen living near Miami, emailed a Russian airline cut off from Western technology and materials with a tempting offer.

He could help circumvent the global sanctions imposed on Rossiya Airlines after the Russian invasion of Ukraine by mixing up the plane parts and electronics it so desperately needed through a network of companies in Florida, Turkey and Russia.

“In light of the sanctions imposed against the Russian Federation, we have successfully resolved the current challenges,” wrote Mr. Patsulya, according to an indictment filed Friday in U.S. District Court in Arizona.

- Advertisement -

Mr Patsulya and his business partner were arrested Thursday on charges of violating US export controls and laundering international money in a case that illustrates the global networks trying to help Russia evade the most extensive technological controls in history.

Since Russia’s invasion of Ukraine, the United States has acted in conjunction with nearly 40 other governments to impose sanctions on Russia, including restrictions on Moscow’s access to weapons, computer chips, aircraft parts and other products needed to sustain its economy and war. to provide fuel. The sanctions also applied to Russian airlines, including Aeroflot, its subsidiary Rossiya and others.

But despite these far-reaching sanctions, thousands of shipments of aircraft parts were successfully shipped to Russia last year, according to a wealth of Russian customs data obtained by The New York Times.

The data, which was collected and analyzed by Import geniusa US-based trade data aggregator shows tens of millions of dollars worth of aircraft parts shipped to Russian airlines explicitly approved by the Biden administration, including Rossiya Airlines, Aeroflot, Ural Airlines, S7 Airlines, Utair Aviation and Pobeda Airlines .

Those shipments have been made possible by illegal networks like Mr Patsulya’s, which have sprung up to try to get around the restrictions by shoving goods through a series of straw buyers, often in the Middle East and Asia.

- Advertisement -

For example, last year dozens of shipments of copper wires, bolts, graphite and other parts marked as made in the United States by Boeing slipped into Aeroflot’s warehouses. They traversed obscure trading companies, free trade zones and industrial estates in the United Arab Emirates and China, then traveled to Russia to help patch up Aeroflot’s decrepit fleet.

The data includes more than 5,000 individual shipments of aircraft parts to Russia over an eight-month period in 2022, from simple propellers to a starter for a $290,000 Honeywell brand aircraft engine.

In total, it shows that $14.4 million in US-made aircraft parts were shipped to Russia during the eight months, including $8.9 million in parts described as being manufactured or registered by US aircraft maker Boeing and through third parties to Russia have been sold.

- Advertisement -

Boeing said it had fully complied with US sanctions and suspended supplies of parts, maintenance and technical support to customers in Russia in early 2022. Aviation supply chain experts said the parts likely came from a variety of sources, such as existing airline stocks overseas and repair facilities or resellers who trade end-of-life parts.

According to the data, most products were shipped through countries such as the United Arab Emirates, Turkey, China and the Maldives. But a handful of shipments — including to Rossiya — were shipped directly from the United States or Europe.

Shipments also increased over the course of last year as Russia recruited international companies to help it evade sanctions. The trend suggests that “sanctions circumvention networks took time to establish during the immediate post-export control battle, but are now able to help Russian airlines obtain some key parts,” says William George, the director of research at Import Genius.

The Russian nationals detained on Thursday began setting up their plan last May to send aircraft parts from the United States to Russia in violation of export regulations, according to the indictment.

The men are accused of processing requests for parts, including expensive braking systems for a Boeing 737, from at least three Russian airlines, including two that were strictly prohibited from purchasing US-made products through a so-called temporary refusal order issued by the Trade Department. FBI agents raided an apartment belonging to the men’s company in Trump Towers in Sunny Isles Beach, Fla., on Thursday. That reports the Miami Herald.

Lawyers for the men did not immediately respond to a request for comment.

Despite the level of sanctions evasion, air shipments to Russia remain significantly lower than before the war. US officials say Russian airlines have been forced to cannibalize planes, breaking them down for spare parts to keep others running, as well as return to Iran for maintenance and parts.

Russian imports of aircraft and aircraft parts fell from $3.45 billion a year before the invasion to only about $286 million afterward, according to The Observatory of Economic Complexitya data visualization platform that examines global trade dynamics.

According to Silverado Policy Accelerator, a Washington-based nonprofit, China has been the top exporter of aircraft, spacecraft and drone parts to Russia since the invasion, accounting for about half of all shipments, followed by India.

The number of single-aisle aircraft in service in Russia dropped about 16 percent between the summer of 2021 and the summer of 2022, after the invasion, according to Cirium, an aeronautical data provider. The number of larger two-aisle aircraft, which are often used on international routes, fell by about 40 percent.

Aviation experts say it will become more challenging for Russian airlines to continue flying planes without access to Western suppliers and help from Boeing and Airbus. The manufacturers regularly consult with airlines to assess any damage and strictly control access to technical documentation used by mechanics.

But for now, Russian airlines have been kept alive through international shipments and the use of hundreds of foreign planes stranded there after the start of the war.

According to timetables published by Cirium, tens of thousands of flights are expected to cross Russia this month. More than 21,000 flights — more than half operated by Russian airlines — are expected to carry passengers to and from countries in Central Asia, as well as Turkey, the United Arab Emirates, Egypt, China and Thailand.

Half a dozen export control lawyers and former government officials consulted by The New York Times said many of the shipments in the Import Genius data likely violated sanctions, but that aircraft manufacturers such as Boeing or Airbus were not necessarily at fault. The aviation supply chain is complex and global, and components can come from a variety of sources.

“There’s been a pretty obvious violation,” said William Reinsch, a trade expert at the Center for Strategic and International Studies who oversaw export controls during the Clinton administration. “It is less clear who is to blame.”

Aircraft parts originating in the European Union, including those marked as manufactured or registered by Airbus, were also shipped to Russia last year, according to the data.

Justin Dubon, an Airbus spokesperson, said the company maintains original parts and documentation provided to its customers and conducts due diligence on all parties requesting spare parts. Restrictions in the United States and Europe mean that “there is no legal way for genuine aircraft parts, documentation and services to get to Russian airlines,” he said.

US restrictions technically allow companies to apply for a special license to continue shipping products to Russian airlines for “flight safety” reasons, but both Boeing and Airbus said they had not applied for or been granted such a license. In addition, Airbus said EU law prohibits shipping such goods to Russia, regardless of the US license.

Current and former US officials say some shipments to Russia are to be expected. Kevin Wolf, a partner at the law firm Akin Gump who oversaw export controls during the Obama administration, said the restrictions “can never block everything,” but the rules still significantly impair Russia’s capabilities.

He added that the scope of the new rules still exceeds current methods of detection and enforcement in other allied countries. Until the invasion of Ukraine, trade in aircraft parts was largely unrestricted by the United States and other countries, with the exception of Iran, Cuba, North Korea, and Syria.

“It’s getting better,” said Mr. Wolf, “but it’s still way, way behind.”

Compared to other countries that tend to limit their surveillance to goods crossing their own borders, the United States is unparalleled in its effort to control trade around the world.

Over the past three years, the United States has imposed new technology restrictions on Russia, China, and Iran that extend extraterritorially: Products made in the United States or abroad using U.S. components or technology are subject to U.S. rules, even when changing ownership on the other side of the world.

Both the United States And the European Union have increased fines for companies that violate sanctions, and temporary workers to countries like Kazakhstan to try and persuade them to restrict shipments to Russia through their territory. The US government has stationed nine export control officers in Istanbul, Beijing and other locations to track shipments of sensitive products, and is setting up three more offices.

But supplying parts can be a lucrative business. James Disalvatore, an associate director at Kharon, a data and analytics firm that tracks Russia’s efforts to evade sanctions, said the value of some aircraft parts imported by Russian airlines has quadrupled or more since the invasion.

“I don’t think there’s any secret to what’s going on,” said Gary Stanley, a trade compliance expert who advises companies in the aerospace and other industries. “How long have we had Cuban sanctions? How long have we had North Korean sanctions? How long have we had Iranian sanctions? It never seems to put these people out of business.”

US-made technology flows to sanctioned

Asia Region News ,Next Big Thing in Public Knowledg

Share This Article
slot ilk21 ilk21 ilk21