Russia buys machine tools from Taiwan’s for its military production, bypassing sanctions

Despite Taiwan’s restrictions, the Russian military sector receives advanced machine tools from Taiwan.

The Taiwanese edition of The Reporter and the Russian edition of The Insider conducted a collaborative investigation that revealed the Russia-Taiwan sanctions evasion schemes.

How machine tools are imported from Taiwan to Russia?

Taiwan, one of the world’s top electronics and semiconductor producers, backed many of the Western sanctions imposed on Russia following the full-scale invasion of Ukraine.

However, the joint inquiry found that Taiwan continues to supply Russia with metalworking machines utilized in the military industry. Despite the fact that the island’s authorities prohibit such shipments, the devices are entering Russia via third nations, primarily Turkey.

According to the documents, resale generates significant revenues for manufacturers and intermediaries. The Reporter’s editorial team discovered that third-party intermediaries sold a machine, which cost between $60,000 and $180,000, to Russia’s Kometa Corporation, a cruise missile and space technology manufacturer in Moscow, for a million dollars.

Germany, Japan, and Switzerland have left the market, and Chinese machine tools are of insufficient quality, so Taiwanese machining centers, lathes, and EDM machines meet the needs of the Russian military-industrial complex.

Turkey as a gate for Taiwan’s trade with Russia

Machine tools are indispensable in the production of fuses, high-precision weapons, and other military products. Taiwan’s sanctions are ineffective as machine tools are sent to Russia via Turkey and other countries.

In January 2023, Taiwan’s Ministry of Economic Affairs finally added high-tech metalworking machine tools to the list of authorized goods. Exports of complex metalworking machines and high-end lathes directly to Russia have practically diminished to zero. Legal exports are now limited to electric discharge machines.

Now, almost 80% of Taiwanese-made complex metalworking machine tools coming into Russia are shipped via third countries, with Turkey and China leading the way.

According to Russian customs data obtained from NBD (a platform specializing in international trade data collection), from March to September 2023, Russia imported at least 193 Taiwanese-made machining centers with a total value of nearly $29 million.

If we look only at the data on transit through Turkey, the situation is even more alarming: as of September 2023, almost half of the machine tools imported by Russia from Turkey were manufactured in Taiwan.

Taiwan’s customs statistics also reflect the fact that Turkey acts as a transit point for Taiwanese machine tools. From January to October 2023, the total value of Taiwanese machining centers exported to Turkey increased 45% year-on-year, allowing Turkey to overtake China and become the largest export market for Taiwanese metalworking centers.

Taiwan’s customs statistics also reflect the fact that Turkey acts as a transit point for Taiwanese machine tools. From January to October 2023, the total value of Taiwanese machining centers exported to Turkey increased 45% year-on-year, allowing Turkey to overtake China and become the largest export market for Taiwanese metalworking centers.

“I Machine”-made tools for Russian missiles production

“I Machine Technology” has an almost exclusive relationship with a Taiwanese exporter with a similar name, “I Machine”. It is a trading company founded in 2008. It mainly represents Taiwanese export machine tool brands. Its director is Ming-Jie Yu. Ming-Jie Yu held a 30% stake in the Russian company I Machine Technology LLC from its establishment in February 2011 until November 2015, according to SPARK-Interfax data.

From March through October 2023, the company imported at least $17 million worth of Taiwanese machine tools—28 through Turkey, 37 through China, and 16 directly from Taiwan.

The Turkish trader “SSGCTM” supplied the Taiwanese machine tools shipped from Turkey to Russia. “SSGCTM” exports to only one country, Russia; all the machine tools supplied by the trader belonged to Taiwanese brands that “I Machine” exported in 2022. The legal address of SSGCTM is the same as that of a well-known machine tool trader, AYTT.

The magazine claims an anonymous Taiwan Industrial Association employee visited an equipment display in mainland China in 2023. Despite little demand from China, the expo was dominated by Russian buyers eager to purchase machines on the spot and for cash.

How to penalize middlemen for helping Russia’s war?

With these revelations, the EU and the US should continue to monitor the middlemen who supply equipment to Russia and impose secondary sanctions against them. Taiwanese manufacturers who knowingly and intentionally participate in circumventing sanctions should also face punishment.

Thus, the supply of sensitive technology for military industry to Russia fuels Putin’s war against Ukraine, undermines the West’s efforts to help Kyiv, and increases the threat that the conflict will spill further to Europe.

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