International sanctions and the breakdown of cooperation with the Ukrainian military industry as a result of the war have posed a ‘serious challenge’ for the OPK. It has been unable to regenerate and maintain stocks of critical components, as well as remaining dependent on imported Western components and industrial equipment. Indeed, a general rule of thumb is that the more advanced a Russian weapons system is, the more dependent its production is on foreign imports.
Russia has continued to have access to sanctioned Western dual-use and military-grade components and technology, especially after the imposition of sanctions in 2014. There are also many examples of alternative procurement structures, third-party imports and networks aimed at bypassing current restrictions.
The OPK – and the Russian government more generally – have learned to adapt to these challenges in many ways, including through domestic changes (such as internal production, import substitution programs), with external partners (such as third-party imports, co-production and foreign partnerships), as well as through other methods (including black-market acquisitions and other illegal procurement networks). The Kremlin still benefits from insufficient enforcement of international sanctions, loose secondary sanctions regimes and gaps in export control regulations.
Domestic adaptations
Stockpile (mis)management
Since 2014, the OPK has had to find a balance between depleting existing stocks of components and hardware to prosecute the war, procuring ammunition and platforms from already stretched production chains, and retrofitting and cannibalizing Soviet legacy platforms.
Depleting existing stocks of materials, components and ammunition became the default, short-term solution at the onset of the 2022 invasion of Ukraine. But depletion of existing stockpiles without proper replacement strategies quickly led to shortages of components, especially for expensive parts such as precision-guided munitions.
This situation affected successive equipment deliveries in the following years as part of GOZ. Furthermore, attempts to stockpile certain components did not meet the requirements of the war, as stocks quickly depleted. Moreover, when stocks were available, they did not always meet quality requirements – especially for ammunition – and were unusable as a result.
As part of its stockpile management, the OPK was forced to reuse and retrofit Soviet legacy equipment. Outdated and lower-quality hardware therefore increasingly entered the battlefield in Ukraine – going back as far as T-54 and T-55 main battle tanks, for instance. The OPK also learned to cannibalize civilian equipment for military purposes, from household appliances to passenger aircraft. The industry also chose to limit exports of military equipment to meet domestic requirements for the war effort.
Using existing stockpiles in different shapes and forms is not a panacea for the OPK’s problems, but remains a valuable adaptation in the short term.
Using existing stockpiles in different shapes and forms is not a panacea for the OPK’s problems, but remains a valuable adaptation in the short term. Indeed, low-quality equipment and ammunition have not prevented Russia from prosecuting its war on Ukraine – especially since attritional, mass warfare strategies do not necessarily require advanced systems and high-end technology.
Domestic production and import substitution
Attempts to ramp up domestic production have had varying results, as surge production capabilities are affected by the chronic weaknesses in the OPK discussed above. Some manufacturing facilities and production chains have been adapted to increase the output, but various attempts at reverse engineering have proved unsuccessful.
A key feature of Russian attempts to adapt to the war and sanctions was the creation of import-substitution programmes. Two such programmes (one for supplies sourced from Western countries and one for Ukraine) were set up in 2014. The initial target required 85 per cent of imported military components to be replaced with local production by 2025 – an ambitious goal that even the Kremlin recognized would be impossible to meet.
Unsurprisingly, import substitution has so far been a failure in most of the sectors impacted by the war – except for a small number of areas, including uncrewed aerial vehicles (UAVs) and certain artillery munitions. Many issues are yet to be addressed. These include, among others: inefficient state regulations; an inability to adapt production lines and cope with demand; an absence of facilitated loans or capital investment by OPK companies to implement the programmes; a lack of skilled workers; and increased component costs.
The main issue, however, is linked to cost controls for substituted production. Import substitution is simply not a cost-effective solution for OPK producers, as it creates a ‘securitization of the economy’ without actual economic rationality.
Attempts at adapting to sanctions have also been largely inefficient. The OPK simply cannot cope with demand and rising production costs – a situation that is even more critical in the more technologically advanced sectors of the industry.
With time, the OPK will be forced to simplify its offer and limit production cycles both in terms of quantity and quality. Indeed, the OPK will rely on less advanced military-grade components and more on dual-use (and sometimes purely civilian) technology. It also means that, in the short term at least, Russia must adapt with and through partners abroad.
Adaptation with and through external partners
In light of the OPK’s inability to adapt internally, Russia was forced to quickly replace its critical dependency on Western-made dual-use and military components by another dependency on alternative foreign suppliers. Moscow has been evading sanctions for over a decade by directly importing Western and non-Western military and dual-use components and hardware from regional partners that have not joined the international sanctions regime.
To do so, Russia is using two distinct strategies:
- Parallel imports of sanctioned Western dual-use and military technology through third countries and other sanctions evasion schemes; and
- Assistance from partners such as Iran and North Korea to directly import finished systems, spare parts and components, in addition to joint projects and co-production.
Parallel imports
Parallel imports allow the OPK to keep acquiring sanctioned Western-made items through countries that are not following the sanctions regime – mainly from Belarus, China, Iran, North Korea, South Caucasus and Central Asian countries or the United Arab Emirates (UAE). Despite the problems described previously, these partnerships allow the OPK to bypass international sanctions in many sectors.
To do so, Russia relies on several semi-legal and illegal procurement and re-export tracks, including:
- Black market acquisitions and smuggling networks;
- Networks of non-sanctioned, non-Western intermediaries, suppliers and individual agents; and
- Shell and front companies, and falsification of names, manifests and certificates in countries under sanction.
Complex, and often untraceable, schemes now cover the globe. Several transshipment hubs exist, such as China and Hong Kong (for microelectronic components), the UAE, Iran, India, Central Asia (mostly Kazakhstan and Kyrgyzstan) plus the Russia-led Eurasian Economic Union, Türkiye, Vietnam and Balkan states.
Direct external assistance
Non-Western third-party imports of off-the-shelf military hardware have increased exponentially since 2022. This increase is particularly pronounced the cases of Iran (for instance, attack drones and missiles), North Korea (ammunition and artillery rounds via the so-called ‘Orient Express’ rail and maritime supply routes), and Belarus (armored vehicles).
China is providing non-lethal assistance to Russia and facilitates exports of dual-use technology and components. China has become the largest supplier of high-tech imports (such as semiconductors and microelectronic components), machine-building tools (see above), telecommunications equipment, military-grade and dual-use spare parts, and vehicles. Although Chinese components are generally of lesser quality than the Western-made components they replace, the war and associated sanctions have created a form of overreliance on Chinese imports.
In addition to direct and indirect military assistance from non-Western partners, Russia has been able to create and consolidate parallel import schemes, black market ventures, smuggling networks and complex semi-legal supplier deals.
However, all these adaptations together do not amount to a complete solution for the OPK. There are clear limits to third-party imports and sanctions evasion schemes such as additional costs, lower-quality components and substitutes, unpredictable deliveries, and delays in supplies.
The situation is therefore not fully sustainable in the long term. The OPK will need to address domestic production challenges as a priority, as third-party imports can only ever be a stop-gap measure. Furthermore, import gaps will likely force Russian companies to compete for access to components, which may lead to gradual production stagnation in several sectors (notably advanced weaponry) as critical components become harder to source.
