New export controls on semiconductors to Russia, in combination with sanctions impacting the Russian economy. Some estimates put the trade of semiconductors to Russia at $50 billion.[1] But these impressive number bely the fact that Russia buys end products with chips and integrated circuits and does not have a strong industrial base to produce cutting edge semiconductors themselves despite attempts by the Kremlin to build a domestic production capacity.[2]
Russia
Russia’s civil aviation sector is already in a deep crisis due to the growing package of export control and sanctions leveled against the country. The sanctions and export controls are affecting the country’s civil air fleet on multiple levels and exacerbating decades of neglect in key sectors of the country’s industrial base. The U.S. and EU sanctions, in particular, have led companies to freeze technical support, spare parts, supply of aircraft, leasing of aircraft, and maintenance to Russia. Around 700 of Russia approximately 900 aircraft designed for civil aviation will be affected in one way or another.
Russia’s civil air fleet is overwhelmingly reliant on Western manufactured engines. Previous rounds of sanctions have stimulated Russia’s domestic development of composite materials and avionics, but full commercial engines will be a difficult transition in conditions of near autarky. Aviation data acquired by the Wall Street Journal shows that of commercial aircraft serving of in storage in Russia, there are 370 Boeing aircraft and 345 Airbus. The third most-popular planes are produced by Sukhoi, but these airframes are reliant on joint Russian-Western partnerships. According to the analysis of the Wall Street Journal, only 17% of Russia’s domestic air fleet is domestically produced.
Although the economic sanctions wielded by the West against Russia do not target its pharmaceutical industry or medical supply chain, the resulting ripple effects may adversely impact both. Since the early 2000s, Russia has had a keen interest in developing its biotech industry. This included both the agricultural and the pharmaceutical sector. While the agricultural sector was relatively successful and Russia rose to become the world’s largest provider of wheat, the pharmaceutical sector did not achieve the same level of growth. Russia relies heavily on the international market, mainly from its European trade partners, to cover the quantity and diversity of medical drugs its citizens consume. In 2019, Russia was importing 70% of the drugs the nation was consuming. Russia’s pharmaceutical industry struggles to domestically produce an adequate amount of medical drugs and is therefore reliant upon imports.
Since the Russian Federation’s invasion of Ukraine that began in late February, the US has spearheaded sanctions efforts targeting key entities in strategic sectors and individuals in Russia. While media coverage frequently focuses on those impacted by the sanctions, little attention is often given to the process through which the sanctions are authorized. In the instance of Ukraine, one of the authorities the United States can leverage is a lesser-known law: the Countering American Adversaries Through Sanctions Act (CAATSA).
