After the Soviet Union collapsed, in 1991, Russia became almost entirely reliant on Western technologies. Western technology vendors—including Google, IBM, Microsoft, and Nokia—were initially eager to operate in the Russian market, which brought them billions of dollars in annual profits. For decades, these companies tried to remain neutral, ignoring Russia’s transformation into a militaristic dictatorship, in order to maintain their business. The Kremlin was happy to cooperate with Western vendors as long as they stayed out of politics and continued to reliably supply the required technologies.
But since Russia’s invasion of Ukraine, in 2022, the landscape has shifted dramatically. “Business as usual” was no longer feasible, and under pressure from Western governments and public opinion, many Western vendors exited the Russian market. Left with few options, Moscow turned to its geopolitical ally, China, for technologies.
But Russia’s attempt to switch from Western to Chinese businesses revealed the impossibility of such an immediate transition. China is not capable of replacing many of the Western advanced technologies that Russia relies on, including semiconductors, graphics processing units, and cybersecurity systems. The Kremlin is also wary of becoming overly dependent on Chinese vendors, who are closely tied to the government and pursue its political objectives, potentially threatening Russia’s national security.
Although diplomatic relations between Russia and the West are currently limited, the Kremlin remains heavily dependent on Western technology, now supplied through an intricate network of intermediaries. Western governments must work closely with Western companies to ensure that their technologies do not help the Kremlin conduct expansionist wars or suppress domestic opposition.
OPEN FOR BUSINESS
In the wake of the Soviet Union’s collapse, Russia had no choice but to turn to the West for technology. At that time, Chinese technologies simply could not compete with their Western counterparts, and Moscow had few domestic options. Although the Soviet Union had been capable of producing various advanced technologies, it never succeeded in developing digital products, and its industries atrophied. Russia began to buy, adopt, and then assimilate systems and knowledge from the West, especially under President Dmitry Medvedev, whose tenure lasted from 2008 to 2012. During that period, Medvedev visited Silicon Valley and met with Apple CEO Steve Jobs. Since Russian President Vladimir Putin has returned to office, he, too, has met with the heads of Western technology companies, who were regular guests at the annual St. Petersburg International Economic Forum.
Western technology firms proved willing, even enthusiastic, partners for the Kremlin. Major multinational companies became key vendors to the Russian state, opening large offices in Moscow and winning billions of dollars in lucrative government contracts. In 2013 alone, Microsoft, IBM, SAP, Oracle, HP, and Cisco made more than $6 billion in revenue from Russian government contracts. Western technologies came to dominate many Russian industrial and knowledge-intensive sectors. In 2012, the Windows operating system was installed on 76.9 percent of new Russian servers, and in 2013, Cisco held a 75 percent market share in the Russian router market. Some top managers of Western technology companies working in Russia even transitioned to roles in state-owned companies or in the Russian government.
Crucially, Western vendors were apolitical and seemed unconcerned that their technologies were being used to undermine civil liberties. The U.S. technology company Nvidia, for example, supplied the Russian government with products that enabled the Kremlin to create a surveillance state. In 2021, after an opposition rally in Moscow, the security services used a facial recognition system that relies on Nvidia’s equipment to identify 363 protestors whom the Russian police later detained. In October 2022, when the Kremlin announced a mobilization to send hundreds of thousands of Russians to war, Russian law enforcement agencies used this system to locate draft dodgers.
European companies have been equally complicit. Nokia, the Finnish telecommunications company, has assisted Russia’s security services in intercepting and analyzing the communications of ordinary Russians. From 2012 to 2017, Nokia supplied equipment and software to Russia’s largest telecom service provider, MTS. The Russian security services then used Nokia’s products to conduct digital surveillance. They have also used this system to track supporters of Russian opposition leaders and, in the past year, to silence antiwar voices inside Russia by intercepting telephone and Internet communications.
Not even global Internet giants have refused to cooperate with the Russian regime. For at least a decade, Google has complied with requests from the Russian government to provide user data and to censor content, in the same way it has responded to requests from Western governments. In 2019, Google restricted access in Russia to news about anti-Russian protests in Ukraine. During the second half of 2021, Russian authorities approached Google with 14,808 content removal requests, and the company honored 81 percent of them. It also received 412 requests from Moscow demanding data on 693 accounts. In response to 28 percent of these requests, some form of data was handed over.
THE SKY DARKENS
In 2014, Moscow annexed Crimea, provoked a war in the Donbas, and began transforming Russia into a militaristic dictatorship. In response, the EU and the United States imposed sanctions against Russia. Western technology companies, reluctant to lose the Russian market, continued to operate there. The Kremlin, satisfied that Western companies would stay away from politics, made no attempt to switch to alternative technologies. Life continued as before. Technology companies still prospered, signing government contracts and participating in Russia’s political and economic life.
By 2021, Apple was reporting annual Russian profits of $5.1 billion, Google $1.8 billion, and SAP $0.5 billion. The share of Russian desktop computers using the Microsoft Windows operating system was 94.8 percent, with Mac OS accounting for another 3.7 percent. Intel and AMD completely controlled the Russian chip market. And the dominance of Western technologies was evident across a wide array of Russian industries. Although Russia has its own passenger aircraft industry, the overwhelming volume of passenger air travel in Russia in 2021 was carried out on aircraft purchased from Airbus and Boeing.
Moscow maintained close ties with Western technology vendors until the onset of the Russian military intervention in Ukraine, when Western governments enforced unprecedented sanctions that severely hindered the operations of Western companies in Russia. Facing public criticism and backlash from customers, the largest Western tech companies bowed to the inevitable and ceased official operations in the Russian market.
CUT OFF
At a stroke, Russia lost direct access to its Western vendors. Moscow began seeking an alternative. Putin would have been happy to fully transition to Russian-made products. But despite Moscow’s efforts, Russia had failed to develop its own technologies as substitutes in many fields; domestically produced semiconductors, for example, made up less than three percent of the market in 2022. The market share of Russia’s leading operating system, Astra Linux, is less than one percent. And many of the technologies the Kremlin tries to represent as Russian are in fact Chinese goods with Russian labels. For example, in late 2022, the Russian state-owned military enterprise Almaz-Antey unveiled a new drone named “Dobrynya.” It turned out to be a replica of a Chinese drone that was already on the market.
The Kremlin has tried to compel state agencies and companies to use Russian alternatives, but they have periodically refused to do so because of the low quality of these technologies. Moscow cannot create competitive technologies because it lacks the necessary financial and human resources.
The Kremlin has no option but to turn to China. And Chinese technologies are rapidly increasing their Russian market share: in 2022, the share of Chinese smartphone sales in the Russian market was 55 percent; this year it is 70 percent. The share of Chinese laptop sales has also significantly increased, and the Chinese company Hikvision continues to dominate Russia’s video surveillance market. Chinese car brands now represent almost half the new car offerings on the Russian market.
A WARY PARTNERSHIP
But the transition from Western to Chinese technologies is not proceeding smoothly for the Kremlin. Numerous obstacles have arisen that prevent a complete shift.
The main stumbling block arises from the globalized nature of complex technological systems and their supply chains. Chinese companies themselves rely on Western technologies and are therefore vulnerable to Western sanctions. Fearful of being a Western target, some Chinese companies have felt compelled to place restrictions on their exports. For example, the telecom giant Huawei limited its operations in Russia in 2022, and the drone giant DJI said it will temporarily suspend business in Russia to ensure that its products are not used in combat. Beijing also continues to be wary of sharing sensitive technologies with other countries. Despite its supposed “no limits” partnership with Russia, China nonetheless refused to send its advanced Loongson chips there in 2022 because of their strategic importance and military sensitivity. Russia is similarly concerned that Chinese technologies might pose a threat to national security since Chinese companies are closely tied to the Chinese government.
Although the Kremlin needs the latest advanced technologies, China struggles to produce them. The imposition of U.S. sanctions in 2020 has left China’s top chipmaker, SMIC, struggling to make state-of-the-art chips because it is cut off from the necessary Western equipment. Moreover, Chinese technology is sometimes defective or otherwise of unsatisfactory quality and inferior to Western equivalents. For example, Russian communications operators, who are in dire need of base stations for their networks, tested the equipment of some Chinese manufacturers and concluded that it does not meet their basic criteria. China is still far from being able to compete with Western technologies on an equal footing.
The Kremlin is, therefore, working hard to ensure that vast amounts of Western technologies are still being shipped to Russia through a sprawling network of global intermediaries. In the first seven months of the Ukraine war, goods worth at least $777 million from Western chip manufacturers were imported into Russia via intermediary companies in countries including China, Kazakhstan, and Turkey. The Kremlin is ready to accept significantly higher prices and longer delivery times for Western technologies in order to maintain supplies.
The more the confrontation between Russia and the West intensifies, the closer Moscow will draw to Beijing and the more reliant it will become on Chinese technologies. This transition will occur gradually, however. For now, China aids Russia more by acting as a middleman for supplying Western technology than by supplying its own. In the coming years, Russia will remain heavily dependent on Western technology imports and will be willing to pay a high price for them. But this situation may not last forever. China is making swift progress in technological development. By 2030–35, its technological offerings are likely to be close in quality to the West’s, although this timeline could vary depending on the degree to which the West hinders China’s technological advancement.
STOPPING THE FLOW
Western countries occupy a unique position in technological leadership. At present, no nation aspiring even to regional dominance can manage without the West’s advanced technologies. To prevail in the great-power competition against China, the West must retain its lead in the technological race. Beijing is working to develop more advanced technologies and has already experienced success in areas including 5G network technologies. If it outstrips the West and persuades other countries to forgo Western technologies, that would deal a significant blow to the West’s standing in the great-power competition.
But merely maintaining leadership in the technological race is not enough. The complete dependence of a country on technologies supplied by the West does not necessarily mean that it will be an ally of the West, share the West’s values, or refrain from using these technologies against the West. Russia’s actions demonstrate that Western technologies can be used to build a militaristic dictatorship that can initiate imperialistic wars against other countries and their Western supporters.
Western governments should never repeat the mistakes made with Russia. Western technologies should not be used to establish and reinforce authoritarian regimes, to violate human rights, to conduct wars of conquest, or to enable confrontations with the West itself. The indifference of Western technology companies to how their technologies are used is a weak point in the West’s great-power competition with China.
Merely maintaining leadership in the technological race is not enough.
Washington and its allies must respond by better tracking not just the volume and type of technology exported from the West but also how they are used. Western technologies should be linked directly to values and use cases, so that, for example, a facial recognition system operating on Western technologies cannot be used by a dictatorship to detain opposition leaders and activists. Western governments and human rights organizations must assist technology companies in establishing clear ethical boundaries for their business.
Transparency and accountability are key. Technology companies are often aware that authoritarian regimes misuse their technologies, but they prefer to conceal it. To end this practice, companies should be mandated to disclose information regarding their products’ use for human rights violations or military purposes. The U.S. Securities and Exchange Commission could oversee adherence to these provisions and ensure the public is informed about these businesses’ actions. Public opinion can be an especially effective means of putting pressure on companies to change. Furthermore, Western governments must open communications with private companies and hold ongoing discussions about the consequences of autocracies’ use of their technologies. Ultimately, the spread of democracy and the protection of human rights aligns with the long-term business interests of Western private companies. These companies must be reminded of that fact.
Private companies whose technologies continue to be supplied to Russia in circumvention of sanctions should also actively participate in government efforts to identify and disrupt such supply chains. While Western countries are trying to stop supplying Russia’s war machine with technologies, private companies must not ignore violations of export controls. If they continue to do so, Western governments should withhold privileges from these companies, including the chance to participate in government procurement or receive diplomatic support when operating abroad. There can be no more “business as usual.”
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