Since the Russian-Ukrainian conflict began in February 2022, the European Union has ratified 10 packages of sanctions aimed at undermining Russia’s ability to wage war in Ukraine. Kitchen appliances are now in the crosshairs of the EU.
Britain’s The Telegraph newspaper, which claims to have seen a confidential EU report, says Brussels is considering trade restrictions “for countries helping Russia to acquire [microchips] in washing machines and used cars to repair his battle-hardened fleet of tanks.”
The EU is therefore threatening secondary sanctions – i.e. penalties against persons and organizations outside EU jurisdiction – against countries in Central Asia and the Caucasus.
In considering the imposition of secondary sanctions, EU policy should be guided by realpolitik and strategic thinking, based on common sense, and not by ideology and moral outrage, whether feigned or genuine.
When the EU imposes trade restrictions on other countries suspected of reselling significant quantities of household appliances to Russia, which then strips them of their microchips, it is potentially destructive to Western strategic interests throughout central Eurasia.
The evidence suggests that the removal of microchips contained in household appliances originating from “secondary” countries, usually for military use, is an extremely rare occurrence. It’s cost-inefficient, and unnecessary on top of that because EU countries haven’t seriously restricted the export of processors from the EU used in refrigerators, washing machines and other similar appliances.
EU (and G7) leaders should think twice before insisting that other countries – mainly in Central Asia and the Caucasus – mobilize energy and resources for such a dubious endeavor with potentially negative political consequences for themselves spend.
Sanctioning—and possibly penalizing—consumers and retailers of home appliances is inappropriate and impractical given the ready availability of military-grade microchips already on the market.
In addition, it is almost impossible to trace these chips around the world after delivery to distributors or resellers in third countries. In addition, by the end of 2022, Qingdao Haier Ltd, a Chinese company, was the largest manufacturer of washing machines and refrigerators in Russia.
(By the way, General Electric sold its 100-year-old home appliance business to Haier in 2016.)
Common sense
Then there’s this thought that should occur to anyone with common sense: why would the Russian military – or any military for that matter – go to all the trouble and expense of finding large numbers of washing machines and refrigerators to import or to buy when it’s easier and cheaper to order large quantities of microchips from the many companies and resellers who sell them around the world, including chips compatible with Russia’s own GLONASS global positioning system?
A Forbes magazine article titled “Is Russia Really Buying Appliances to Harvest Computer Chips for Weapons Systems for Ukraine?” explains that “those types of chips [for drones] have long been widely available for civilian users in the global market, and Ukrainian authorities say at least six US companies are producing GLONASS-compatible chips.”
And these components are “not under embargo,” says Sven Etzold, senior director of business marketing at U-Blox: “They are usually for civilian use and can be officially purchased through a dealer.”
Chris Miller, a fellow at the American Enterprise Institute and a semiconductor specialist, said recently, “My feeling is that most of the chips that Russia is accessing today for integration into military systems don’t come through this route [home appliances].
“We should probably assume that Russia will find ways to gain access to low-tech chips simply because they are widely available,” he said.
chip suppliers
According to a January investigative report summarized in the Netherlands Times, “Several million microchips produced by Dutch manufacturers, including NXP and Nexperia, ended up in Russia last year in shipments handled by resellers after sanctions imposed as a result of Russia invasion of Ukraine”.
One can only guess that Russia installed some of these Dutch microchips in military hardware.
“Key Technology [used in drones for satellite navigation] is European and American,” reports CBS Evening News, and “the chips are still flowing” to Russia and are available on the world market. The Columbia Broadcasting System selected U-Blox, a Swiss company, and Maxim and Microchip, two US microprocessor makers, whose chips could well have ended up in Russia.
Given all of this, it doesn’t seem sensible to threaten, for example, Armenia, Kazakhstan or Turkey with sanctions of one kind or another when the availability of new low-tech chips is widespread. Secondary sanctions for household appliances seem inappropriate.
Trade EU-Russia
Al Jazeera reported last month that “from March 2022 to the end of January 2023, the EU imported a total of 171 billion euros ($186 billion) worth of goods from Russia.”
According to Eurostat, the EU’s statistical office, the European Union has reported a billion-dollar net trade deficit with Russia every month since January 2021. This means that despite all the rumours, significant deals between Russia and the EU are still going on.
Europe’s double standards are visible to everyone. While Brussels wants to ask non-EU countries to limit their trade with Russia, the EU continues to trade with Moscow.
Start with western companies
According to Simon J. Evenett, Professor of International Trade and Economic Development at the University of St. Gallen, and Niccolò Pisani, Professor of Strategy and International Business, almost 9% of western companies have split from Russia since the beginning of the Russian-Ukrainian conflict from the IMD Business School in Switzerland: “Of the total of 1,404 EU and G7 companies with commercially active holdings in Russia before the invasion of Ukraine … a total of 120 (8.5%) by the end of November 2022 [had] actually gone.”
EU Commission President Ursula von der Leyen should be careful before publicly boasting about the devastating effects of her sanctions:
“We have sanctions. We have banned any export of semiconductors. The impact of these sanctions is now very real and palpable on the ground in Russia. The Russian military, for example, is cannibalizing refrigerators and washing machines to take out the semiconductors and trying to get the semiconductors for their military hardware.”
The EU does not seem to understand that the imposition of secondary sanctions counteracts its efforts in Central Asia and the Caucasus – as described in a recent official document – to “mitigate the socio-economic dislocation, facilitate trade in and outside the region and transport to diversify routes, [and] boost investment.”
Brussels could go after EU and G7 companies with active businesses in Russia and prevent its own microchip makers from making thousands of microprocessors available on world markets before making life difficult for Central Asian and Caucasus countries with refrigerators and washing machines.
For EU ambassadors based abroad, it would be more diplomatically productive to engage their hosts as partners rather than pawns on the global chessboard.
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https://asiatimes.com/2023/04/eu-to-sanction-home-appliance-exports-to-russia/
