US, EU and allies rachet up moves to isolate Russia technologically

Russia is to be hit by technology sanctions from the United States, EU and Japan in a bid to grind down its economy capacity and stop it possessing advanced weaponry.

Explaining the restrictions in a briefing 25 February, an EU official said the technology bans would rachet up pressure placed on Moscow since the annexation of Crimea in 2014.

“What the package will do is expand first and foremost the scope of the goods and technologies that have been controlled since 2014,” the official said, in a briefing with journalists. “It will also at the same time impose stricter controls for a number of end users in the civil military sectors of Russia.” 

The EU will step up restrictions on dual use goods and technologies to Russia that could be used for military purposes.

It will also add new bans on goods in electronics, computers, telecommunications, and information security, sensors and lasers, and marine equipment which may enhance Russian military or technological capabilities.

Around four to five billion euros worth of trade will be hit, officials estimate, although they stressed that not all of this will disappear, as there will remain exemptions to the bans.

Tech destined to upgrade Russian oil refineries is also a target of EU sanctions. “It will cover an area of export where the EU has a very clear competitive edge and it will not be easy for Russia to substitute these technologies at least in the short and medium term. Obviously, this will have a significant knock-on effect on Russian capacity of exporting refined oil to the European Union,” an official said.

“We want to cut off Russia's industry from the technologies desperately needed today to build a future,” said Commission president Ursula von der Leyen in a speech on 24 February.

The aim is to “seriously degrade the Russian economy in all areas in the future,” she said.

The measures come a day after the US announced its own tech sanctions on Russia.

There will be “Russia-wide” restrictions on semiconductors, telecommunication, encryption security, lasers, sensors, navigation, avionics and maritime technologies, according to the White House. In a press briefing 24 February, Daleep Singh, the deputy national security advisor, said that “in total, the United States and our partners will effectively be cutting off more than half of all high-tech imports going into Russia.  This includes curbing Russia's access to advanced semiconductors and other foundational technologies that Russia needs to diversify and modernize its economy.”

Russia does have native chip manufacturers, and has tried to build them up after tensions with the West soured following the 2014 annexation of Crimea. But it is still heavily dependent on imports, with no sign of an internationally competitive industry.

Over time, Singh said at the White House briefing, the tech sanctions are “going to atrophy Russia's capacity to diversify outside of just oil and gas, and to modernise the strategic sectors that Putin himself has said he wants to develop: aerospace, defence, IT, lasers, sensors. These sectors all depend on foundational technologies designed and produced by the West.  You will begin to see a chilling effect take hold in Russia as those inputs are denied.”

Western allies in Asia will also try to isolate Russia technologically.  

Taiwan, a crucial player in global technology thanks to its world-leading manufacturer, Taiwan Semiconductor Manufacturing Co, also announced it would be “joining international economic sanctions against Russia”.

Japanese prime minister Fumio Kishida also reportedly said his country would halt exports of “general purpose” goods including semiconductors.

And in a show of support for Ukraine, the Mobile World Congress on Friday cancelled the Russian pavilion and banned a handful of companies from attending the gathering which is set to bring together up to 60,000 people in Barcelona next week.   

The annual trade event is a major networking opportunity for the mobile and tech industry. Russia was among 20-odd of countries and regions that planned to have showcases in the congress but with governments around the world imposing sanctions on the country, the event organiser moved to call off the Russian pavilion just a few days before the kick-off. 

The organiser has not issued a list of companies that will be banned from the event but said it would only be 'a handful' of companies, as it continues monitoring incoming sanctions.