Last week, the US Treasury Department sanctioned 275 individuals and entities across seventeen jurisdictions involved in Russia’s advanced technology and military equipment supply chain. This sweeping action targets illicit procurement networks as well as their financial facilitators around the world, including Russia, China, India, Turkey, Switzerland, Thailand, and the Republic of Benin in West Africa. In concert with Treasury’s action, the US State Department designated an additional 120 individuals and entities enabling Russia’s military industrial complex, and the US Commerce Department added forty foreign entities to its Entity List to prevent the diversion of US-origin or US-branded goods from getting to Russia through third countries.
Over the past year, the Atlantic Council’s GeoEconomics Center has reported on Russia’s widespread use of third countries to evade sanctions to procure military equipment and technology. In March, for example, Maia Nikoladze and I drew attention to the financial connections and methods that Russia and the wider Axis of Evasion leverage to move and use funds outside the US financial system. These funds are used to generate revenue for the Russian regime and its ongoing war in Ukraine. As more of these actions have come to light, my colleagues and I have called on the US government and its partners to target this activity. The US government’s action this past Wednesday further exposed the illicit procurement networks and financial facilitators around the world that underpin this Axis of Evasion.
It is more urgent than ever to confront the Axis of Evasion through sanctions, law enforcement action, and diplomacy.
Whether it is called the Axis of Evasion, Axis of Aggressors, Axis of Anger, or the Axis of Losers, there is wide recognition that Russia, China, Iran, and North Korea are working together to circumvent and evade Western sanctions using actors in third countries. The US departments of treasury, state, and commerce’s coordinated actions are welcome, even if overdue, and reflect the need for urgent measures to cut off the financial connections and disrupt the flow of military equipment and dual-use goods from actors in third countries to Russia.
The US government’s recent actions will likely have an immediate disruptive effect on Russia’s ability to supply its war machine, but the United States and its partners cannot stop here. Winter is coming in Europe, violent war is continuing in Ukraine and escalating in the Middle East, and economic conflict with China is brewing. It is more urgent than ever to confront the Axis of Evasion through sanctions, law enforcement action, and diplomacy to disrupt the financial networks enabling adversarial powers.
As a next step, the United States should encourage its Group of Seven (G7) partners to take similar actions and use their economic statecraft tools to target the procurement networks in third countries that continue to evade and circumvent Western sanctions on Russia. At the same time, the United States and its partners must continue to engage with countries such as Turkey and India to strongly encourage them to restrict their companies from exporting military and dual-use goods to Russia, in compliance with Western sanctions and export controls. Turkey recently prohibited the export to Russia of certain military-linked hardware, such as electronics that can be used in missiles and drones. This is a positive step, and making the action public could send a strong message to actors in Turkey that the government will hold them accountable for sanctions evasion while signaling to Russia that the NATO Alliance is strong.
Policymakers’ attention should next turn to India. While China is Russia’s largest source of restricted technology, India has risen through the ranks to become the country’s second-largest supplier. India’s response, or lack thereof, to the new US sanctions of more than twenty individuals and entities within its technology and shipping sectors could indicate whether India is moving closer or further from the Axis of Evasion.
Kimberly Donovan is the director of the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. Follow her at @KDonovan_AC.
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Image: Russia's President Vladimir Putin, accompanied by Defence Minister Andrei Belousov, Presidential Aide and State Council Secretary Alexei Dyumin, First Deputy Prime Minister Denis Manturov and Deputy Head of the Russian Presidential Administration Maxim Oreshkin, visits a drone production facility of the the Special Technology Centre in Saint Petersburg, Russia September 19, 2024. Sputnik/Gavriil Grigorov/Pool via REUTERS