Welcome to The Dekleptocracy Report! The Dekleptocracy Project (TDP) is a 501(c)(3) based in Virginia. We’re on a mission to show how existing levers of accountability can protect democracy and prevent authoritarians, their networks, and enablers from exploiting or circumventing the US system.
Welcome to The Dekleptocracy Report! The Dekleptocracy Project (TDP) is a 501(c)(3) based in Virginia. We’re on a mission to show how existing levers of accountability can protect democracy and prevent authoritarians, their networks, and enablers from exploiting or circumventing the US system. |
This newsletter provides news and analysis from TDP’s global network about Russia’s war machine and how governments and civil society can use existing levers of influence to weaken it to help bring about a decisive end to this aggression. Please forward this newsletter or our signup page to interested colleagues |
THE BLUF (Bottom Line Up Front) First, welcome to TDP’s debut newsletter. We founded this non-profit in 2020. Since Russia’s full-scale invasion of Ukraine in February 2022, we have been working with civil society partners and the OSINT community to shine a spotlight on how Russia is reliant on Western technology to continue its aggression against Ukraine and threaten its neighbors. We see this newsletter as a platform for sharing the incredible investigative work of our international partners. In this first newsletter, we look at one of the most critical but arguably least understood tools of the Russian defense industry – machine tools. Let’s face it. It’s hard to write a compelling lede about machine tools, particularly Computer Numerical Control (CNC) tools. Yet, these machines – specifically their proliferation and upkeep – are foundational to modern arms control regimes. CNC tools are essential to making many highly destructive conventional weapons, including missiles used to attack Ukrainian cities, causing horrific civilian casualties. Recent investigative reporting (see below) by German, Russian and US media outlets has shown that significant volumes of Western CNCs and spare parts may still be making their way to Russian arms makers. The good news is that the high-precision CNC tools required to make these weapons are almost exclusively made in the US, Western Europe and by US allies in Asia. Russia cannot make them for its own arms industry and cannot buy them in meaningful quantities from China or other countries that do not enforce Western sanctions. They are also very fussy machines that require regular calibration and software updates. The bad news is that Russia succeeded in equipping its arms industry with hundreds of these high-end machines before the full-scale invasion of Ukraine in 2022. How do we know this? To start with, we have the shipping records. Helpfully, the Russians have also published dozens of propaganda videos where they show off their advanced equipment. The bad news for Russia is that we and our civil society partners have been watching as Russia’s industry continues to obtain spare parts and software updates to keep the Russian war machine operational in the face of sanctions. In this newsletter, we take a journey into the world of one of the more important examples of how Western technology and enablers fuel Russia’s war crimes. We will look at how Western companies and governments can take steps using existing resources, some as simple as throwing a switch, to disrupt and shut down Russia’s access to these critical tools. Concerted action can rapidly degrade the quality of weapons and slow production, saving lives. In our view, no other single step using the existing legal powers of Western governments can have as much near-term impact on Russia’s military production. In the Digest, we look at reporting by Germany’s Die Zeit and exiled Russian investigative site Agenstvo that allege that the Russian subsidiary of one of the world’s largest CNC makers – DMG Mori – continues to supply Russian weapons makers. We also follow exclusive investigative reporting by PBS on potential violations by two US CNC makers. In addition, we look at the unfolding story of Ukraine attempting to stop a German CNC machine from reaching Russia from Turkey. We examine the designation of four Russian businessmen who sought to lobby their way out of sanctions for 18 months. Further down we cover the sanctioning of five Turkish companies for supplying Russia with drones and other equipment, a first during this war and one that is likely to make cooperation with Turkey even more complicated. We review reports that the US is targeting Swiss bank UBS for past lax controls on Russian clients. We also see how Japan is trying to balance its energy needs with fresh US sanctions on a large LNG project in which Japan is a participant. We also look at the US decision to apply fresh sanctions on Iran while releasing frozen assets, talks with Venezuela over exemptions for its oil industry and the targeting of a Russian military company for equipping paramilitaries in Sudan. For more information or to provide feedback about the issues raised in this newsletter, contact [email protected] |
What are CNC tools?
Simply put, CNCs are robotic machine tools that can perform precision operations according to a computer program without direct human intervention. They are an essential part of modern automation, making it possible to drill and lathe parts in multiple axes to a degree of accuracy no human can replicate.
CNCs are just tools and have myriad benign uses. However, once they reach a certain level of precision, they are labeled as dual use, meaning they have military applications. These can range from making missile parts to the precise manufacturing needed for a nuclear warhead. Their proliferation caused enough worries in the international community to bring about the Wassenaar Arrangement in 1996, committing more than 40 countries to work together to monitor the spread of dual-use goods.
Importantly, Russia cannot make its weapons without CNCs, and, for the next two years, neither Russia nor China will have the technological know-how to manufacture the precision CNCs required for modern weapons. 100% of precision CNC technology comes from the U.S. and our allies. Continue reading…
|
Investigations claim DMG Mori continues to supply Russia with CNCs In late September and early October, Germany’s top circulation newspaper Die Zeit (paywall) reported allegations that DMG Mori’s Russian subsidiary delivered machine tools and parts to an unknown buyer while the same parts were reportedly acquired by an EU-sanctioned “military end user”. For its part, the paper cites DMG Mori as denying the allegations, while in a statement issued on September 29, the company said it was “highly likely” that machines “were shipped from our facilities in Russia without the knowledge or consent of our properly empowered management.” Russian-language investigative site Agentsvo, based outside of the country, ran a story (covered in English by Yahoo) in late September that also detailed alleged purchasing of spare parts and equipment sales by the Russian subsidiary after the invasion. Continue reading… |
|
|
|
|
|
Alfa Principals Sanctioned In mid-August, the US Treasury Department sanctioned four prominent Russian businessmen: Peter Aven, Mikhail Fridman, German Khan, and Alexey Kuzmichev. The four are the key figures behind Alfa Group and Alfa Bank, giant conglomerates with their primary assets in Russia. As Politico chronicled in a recent article, Aven and Fridman – regular figures on the Washington think-tank and social circuits until recently – hired a major US lobbying firm to try and keep their names off the list. Continue reading… |
|
|
|
|
|
Ukraine Calls on Germany to Halt CNC Shipment On September 18, Bloomberg reported that Ukraine’s National Agency on Corruption Prevention (NACP) called upon the German authorities to intervene to stop a German-made CNC machine from reaching Russia. Spinner Werkzeugmaschinenfabrik GmbH reportedly sent the machine to Turkey, where it was then prepared for transshipment to Russia through the Black Sea. According to Bloomberg, which was able to confirm the further shipping plans, there is no suggestion that the German company was aware the machine was going to be shipped to Russia. Continue reading… |
US sanctions Turkish companies The US designated five Turkish trade and shipping companies on September 14, a move that appears to send a clear signal to the country’s business community that Turkey’s status as a NATO member would not protect companies that aid Russia’s sanctions violations. Among other things, the designation noted that some of the companies shipped electronics, including drones. If the designation has a chilling effect on Turkish shippers, this will complicate (if not actually shut down) a key logistics route. The designations have, unsurprisingly, created tensions with Turkey, amid claims of a double standard amid reported Greek shipments of chips to Armenia for alleged further shipment to Russia. USG reportedly focused on Ukrainian corruption On October 2, Politico reported on the contents of a “sensitive but unclassified” version of the US administration’s long-term plan for Ukraine. The takeaway from the story is not unfamiliar – real and perceived corruption in Ukraine is the “real threat” and could undermine Western determination to help the country. Bilateral and multilateral aid has long been tied to specific structural and anti-graft measures, although this message has been deprioritized since the invasion. On the Ukrainian side, President Zelensky has made some high-level changes – including the sacking of the defense minister amid corruption allegations – and limited the power of several oligarchic business figures. Many would like him to go further, and he appears to be asking for help from the West in combating it. Strategic corruption has long been an essential part of Russia’s toolkit in meddling with its neighbors, keeping them weak and their elites tied to Moscow. Tying aid to anti-corruption measures and supporting the rule of law hardens and protects Ukraine’s institutions against Kremlin influence. At the same time, the US and EU need to remain vigilant about Kremlin efforts to weaken institutions closer to home and diminish Western resolve to support Ukraine until it achieves victory. US reportedly probing UBS over Russia ties Media reported in late September about a US Department of Justice (DOJ) probe of Switzerland’s UBS and Credit Suisse – the smaller rival it acquired earlier this year – over alleged compliance failures that allowed Russian clients to violate sanctions. Bloomberg broke the story, while the US government has not released public details of its investigation. The bank reportedly has significant litigation provisions, but the deal will nonetheless complicate UBS’ reported plans to expand in the US. The apparent robustness of the US government’s enforcement and investigation of a major bank stands in stark contrast to the apparent lack of enforcement measures or active investigations against CNC and other industrial companies that may also have violated sanctions. US targets energy, mining, and arms In the same September 14 Treasury announcement that targeted Turkish companies, the US authorities targeted a total of 37 other entities. Besides the Turkish shippers, the US went after participants in the Arctic LNG2 project, including a support company in the UAE. As noted below, the designation of the operating companies may complicate dealings for the French and Japanese members of the consortium. At the same time, most newly designated companies operate in Russia’s mining and metals sectors, some related to larger entities that are already sanctioned. But the moves appear aimed at making it harder for Russia to sell these products abroad and these minerals are a crucial source of Russia’s export earnings. The new set of sanctions also named 11 Russian military repair and maintenance facilities. US sanctions Russian military company over Sudan On September 28, the US designated a former Sudanese government official and a local company for exacerbating instability in Sudan following fighting this year that has killed hundreds and displaced many thousands. Most notably, the first round of sanctions involving Sudan since June also targeted a Russian military company, Aviatrade LCC for supplying equipment, including drones, to a company linked to the Rapid Support Forces, a key player in the violence. The designation of a Russian company underlines the country’s active role in destabilizing Sudan, whether through Wagner or some of the other mercenary forces it uses to exert force and extract resources throughout Sub-Saharan Africa. |
Japan balances sanctions and Russian energy
In mid-September, the Japanese government signaled it would ensure energy security even as the US tightened sanctions on the Arctic LNG2 project (see above), in which Japan’s Mitsui is a participant, but said it was committed to adhering to international sanctions. The US move against LNG2 puts pressure on the Japanese government as the country is overwhelmingly dependent on energy imports.
Iran releases Americans
In mid-September, Iran released five US nationals in exchange for the release of nearly $6 billion in frozen Iranian assets owed by a third country, South Korea. The move raised the ire of many US politicians after the militant group Hamas, backed by Iran, launched terror raids and rocket strikes against Israel on October 7. Meanwhile, while announcing the asset release, the US designated 25 Iranian individuals, three Iranian state-backed media outlets, and one Iranian internet research firm for their role in suppressing protests. The timing of the announcement coincided with the anniversary of the death of Mahsa “Zhina” Amini who was arrested for failing to wear her hijab in the prescribed manner. The decades-long back-and-forth between Washington and Tehran is a likely preview of the future political and legal wrangling over frozen Russian and Belarusian state-owned assets in the US and EU that should logically go toward Ukrainian reparations.
European countries ban Russian cars
Throughout September, EU countries, especially those with borders or ferry links to Russia, began to implement a ban on Russian passenger cars entering the block. The ban – which does not extend to minivans, buses or diplomatic vehicles – covers any cars with Russian number plates. The country’s erratic former president and deputy’s head of the country’s Security Councill dubbed the move “racist”. Norway, which is not an EU member but does have a 120-mile border with Russia also began implementing the measure on its own accord. The move is important because it has an immediate and significant impact on thousands of wealthy and middle-class Russians with long-term visas or dual nationality who have been able to move freely in Europe since the full-scale war began.
US and Venezuela negotiate oil deal
In the second week of October, Reuters reported on talks between US and Venezuelan officials over sanctions relief that would allow an additional foreign oil company to buy Venezuelan crude. In exchange, Caracas would resume talks with exiled opposition figures in Mexico. US sanctions have been in place since President Nicolas Maduro’s reelection in 2018, widely denounced by the US and its partners as a sham. As with Iran, the talks reflect how sanctions and seized assets can be a leverage point for the US to achieve interim goals. The contrast with Russia since 2014 is striking, as US and EU exemptions have rarely come from substantive talks but from Western interests in avoiding disrupting trade flows – such as the EU’s December 2022 decision to offer the real or de facto owners of Russian fertilizer companies temporary sanctions relief to avert global shortages that could impact food security.
