Presented by Benjamin Hilgenstock, Senior Economist at Kyiv School of Economics Institute, during SITE 2023 Development Day conference.

1. How to Undermine the Russian
War Effort and Support Ukraine
Reducing the Russian Economic Capacity
Benjamin Hilgenstock — Senior Economist, KSE Institute

2. How to Undermine the Russian War Effort and Support Ukraine
Reducing the Russian Economic Capacity
Benjamin Hilgenstock — Senior Economist, KSE Institute
Quarterly real GDP dynamics, in %
High-frequency activity indicators, % change vs. Q4 2021
Russian imports of “high-priority battlefield items”, in $ million
Flows of “high-priority battlefield items” to Russia in Q1-Q3 2023
Economic Capacity Military Industry
-7.5
7.2
-4.8
-0.2
0.8 0.7
1.5
0.6 0.9
0.3
1.0 1.0 0.7 0.9
1.5
-7.3
-3.3
-1.3
0.5
11.2
5.0
5.8
3.0
-4.5
-3.5
-2.7
-1.8
4.9 5.5
-8
-6
-4
-2
0
2
4
6
8
10
12
20Q1 20Q3 21Q1 21Q3 22Q1 22Q3 23Q1 23Q3
quarter-over-quarter (seasonally adjusted)
year-over-year (not seasonally adjusted)
-12
-10
-8
-6
-4
-2
0
2
4
6
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Total output Industrial production Retail sales volume
645
771
943
1,122
891
980
1,004
1,037
1,142
1,441
1,748
2,175
1,008
994
543
677
708
546
623
784
917
1,009
1,126
1,627
948
861
1,144
940
1,038
920
715
815
855
0
500
1,000
1,500
2,000
2,500
3,000
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Source: Russian authorities, KSE Institute

3. The Context: Foreign Parts in Russian Weapons
How to Undermine the Russian War Effort and Support Ukraine
Reducing the Russian Economic Capacity
Benjamin Hilgenstock — Senior Economist, KSE Institute
Source: KSE Institute
Dismantled Russian military equipment
Foreign components by country Foreign components by producer
Foreign components by type
705
75
72
52
42
29
28
54
United States
Japan
Netherlands
Taiwan
Switzerland
Germany
China
Other
22
11
10
10
3
2
Helicopters
Electronic warfare equip. Small electronic devices
Drones
Armored vehicles & artillery
Missiles
58 Pieces of
Russian Military
Equipment
1,057 Foreign
Components
336
146
48
47
38
34
28
27
24
23
23
19
14
12
0 50 100 150 200 250 300 350
Microchips
(Micro-)processors
Transistors
Memory devices
Voltage regulators
Capacitors
Transceivers
DC-to-DC converters
Analog-digital converters
FPGAs
Drivers/receivers
Amplifiers
Relays
Video codecs
186
145
96
63
62
60
28
23
23
21
19
18
16
11
0 20 40 60 80 100 120 140 160 180 200
Analog Devices (US)
Texas Instruments (US)
Microchip Technology (US)
Intel Corporation (US)
AMD (US)
Infineon Technologies (DE)
STMicroelectronics (CH)
Renesas Electronics (JP)
Vishay Intertechnology (US)
NXP Semiconductors (NL)
Yageo (TW)
Onsemi (US)
Micron Technology (US)
Murata Manufacturing (JP)

4. How Russia Imports “High-Priority Battlefield Items”: Flows in Q1-Q3 2023
How to Undermine the Russian War Effort and Support Ukraine
Reducing the Russian Economic Capacity
Benjamin Hilgenstock — Senior Economist, KSE Institute
Source: Russian authorities, KSE Institute
US
TW
DE
CH
JP
Other
CN
HK
MY
Other
N/A
Coalition countries
$3.6 billion (43.6%)
Other countries
$3.8 billion (46.4%)
TW
US
DE
KR
Other
CN
MY
VN
HK
THPH
Other
N/A
Coalition countries
$1.6 billion (19.1%)
Other countries
$6.2 billion (75.1%)
TW
KR
Other
CN
HK
AE
TR
TH
IN
MV
MY
Other Coalition countries
$0.4 billion (5.1%)
Other countries
$7.8 billion (94.3%)
CH SK
TW
Other
CN
HK
TR
AE
RS IN
KG Other N/A Coalition countries
$0.8 billion (9.8%)
Other countries
$7.2 billion (87.8%)
Location of
shipment
Location
of seller
Location of
manufacturing
Headquarter
of producer

5. Enforcement Gap: Producers from Export Coalition Countries
How to Undermine the Russian War Effort and Support Ukraine
Reducing the Russian Economic Capacity
Benjamin Hilgenstock — Senior Economist, KSE Institute
Source: Russian authorities, KSE Institute
Imports in Q1-Q3 2023 by company, in $ million
331
254
166
127
114
94
80
77
65
61
53
42
36
34
87
58
49
39
38
38
30
30
30
28
28
28
255
99
85
82
76
57
56
47
44
42
40
32
32
29
29
28
28
28
27
27
27
26
26
29
0
50
100
150
200
250
300
350
Intel
Corp.
(US)
Huawei
Tech.
(CN)
Analog
Dev.
(US)
AMD
(US)
Texas
Instr.
(US)
IBM
(US)
Lenovo
Group
(CN)
Dell
(US)
STMicroelectr.
(CH)
Inspur
Group
(CN)
Hikvision
Tech.
(CN)
Supermicro
(US)
Microchip
Tech.
(US)
Fenda
Tech.
(CN)
Apple
(US)
Broadcom
(US)
Infineon
(DE)
TP-Link
(CN)
LuLi
Inform.
Tech.
(CN)
Hewlett
Packard
(US)
Mean
Well
(TW)
IRay
Technology
(CN)
xFusion
Digital
(CN)
Tianyu
Inf.
(CN)
Cisco
Systems
(US)
Mindray
Global
(CN)
Gigabyte
Tech.
(TW)
D-Link
Systems
(TW)
Palit
Microsys.
(TW)
Nvidia
(US)
Juniper
Networks
(US)
TPV
Technology
(CN)
Haier
Group
(CN)
NXP
Semicond.
(NL)
Siemens
(DE)
Jusung
Engineer.
(KR)
SIMCom
Wireless
(CN)
Global
Sensor
Tech.
(CN)
Cloudic
Industries
(MY)
Guide
Infrared
(CN)
MicroBT
(CN)
Yistorm
Tech.
(CN)
Accton
Tech.
(TW)
Keenetic
(DE)
Micro-Star
Int.
(TW)
Kirisun
(CN)
Ruijie
Networks
(CN)
3nod
Digital
(CN)
Wafangdian
Group
(CN)
Hytera
(CN)
Other countries
China
Other coalition countries
United States
Change Q3 vs. Q1 2023, in %
88% 95%
50%
91%
12%
64% 57%
23% 25%
74%
25%
48%
-45%-38%
-22%-14%-12%
-81%
-60%
-40%
-24%
-44%
-21%
-41%
-23%
-46%-43%
-9%
-48%
-19%
-3%
-32%
-97%
-39%
-100%
-34%
-91%
-41%
-100%
-39%
-59%
-26%
-65%
-100%
-64%
-96% -88%
-100
-50
0
50
100
150
145%
~1,200%

∞


6. Key Take Aways
1. Russia continues to have access to “high-priority battlefield items,” which are critical for its military production
2. Third-country intermediaries are a challenge but focus also needs to be on producers from coalition countries.
3. Companies are currently not sufficiently incentivized to undertake proper due diligence regarding supply chains.
4. Export controls can have a meaningful impact since Russia has not been able to find substitutes for many goods.
5. Better enforcement is urgently needed to ensure effectiveness and credibility of the sanctions regime.
How to Undermine the Russian War Effort and Support Ukraine
Reducing the Russian Economic Capacity
Benjamin Hilgenstock — Senior Economist, KSE Institute