US-made tech is flowing to Russian airlines, despite sanctions

Last August, Oleg Patsulya, a Russian citizen living near Miami, emailed a Russian airline that had been cut off from Western technology and materials with a tempting offer.

It could help circumvent global sanctions imposed on Rossiya Airlines after Russia invaded Ukraine by shuffling desperately needed aircraft parts and electronics through a network of companies based in Florida, Turkey and in Russia.

In light of the sanctions imposed on the Russian Federation, we have successfully resolved the challenges that arose, Mr. Patsulya wrote, according to a criminal complaint filed Friday in the U.S. District Court in Arizona.

Mr. Patsulya and his business partner were arrested on Thursday for violating US export controls and international money laundering in a case that illustrates the global networks trying to help Russia circumvent the most extensive technological controls of the story.

Since Russia’s invasion of Ukraine, the United States has acted in partnership with nearly 40 other governments to impose sanctions on Russia, including limits on Moscow’s access to weapons, computer chips, parts of aircraft and other products needed to fuel its economy and war. The sanctions also applied to Russian airlines, including Aeroflot, its subsidiary Rossiya and others.

But despite these far-reaching sanctions, thousands of shipments of aircraft parts were successfully sent to Russia last year, according to a wealth of Russian customs data obtained by The New York Times.

The data, which was compiled and analyzed by Import Genius, a US-based trade data aggregator, shows that tens of millions of dollars worth of aircraft parts were sent to Russian airlines explicitly subject to sanctions from the Biden administration, including on Rossiya Airlines, Aeroflot, Ural Airlines, S7 Airlines, Utair Aviation and Pobeda Airlines.

These shipments have been made possible by illicit networks like Mr. Patsulyas, who have sprung up to try to circumvent the restrictions by passing the goods through a series of straw buyers, often in the Middle East and Asia.

For example, dozens of shipments of copper wire, bolts, graphite and other parts marked as made in the United States by Boeing slipped through Aeroflot’s warehouses last year. They passed through obscure trading companies, free trade zones and industrial parks in the United Arab Emirates and China, then traveled to Russia to help repair Aeroflots’ dilapidated fleet.

The data captures more than 5,000 individual shipments of aircraft parts to Russia over an eight-month period in 2022, ranging from simple screws to a $290,000 Honeywell-branded aircraft engine starter.

In total, it shows that $14.4 million in U.S.-made aircraft parts were sent to Russia over the eight months, including $8.9 million in parts described as being made or trademarked by the US. American aircraft manufacturer Boeing and sold in Russia via third parties.

Boeing said it has fully complied with US sanctions and suspended the supply of parts, maintenance and technical support to customers in Russia in early 2022. Aviation supply chain experts said the parts likely came from a variety of sources, such as airlines’ existing overseas inventory and repair centers or dealers who sell scrapped parts.

Most of the products were routed through countries including the United Arab Emirates, Turkey, China and the Maldives, according to the data. But a handful of shipments, including to Rossiya, were sent directly from the United States or Europe.

Shipments have also increased over the past year as Russia recruited global companies to help circumvent sanctions. The trend suggests sanctions evasion networks were slow to establish themselves during the immediate export control rush, but are now able to help Russian airlines source some key items, a said William George, director of research at Import Genius.

The Russian nationals arrested on Thursday began their scheme last May to send aircraft parts from the United States to Russia in violation of export regulations, according to the criminal complaint.

The men are accused of responding to requests for parts, including expensive braking systems for a Boeing 737, from at least three Russian airlines, including two that had been strictly banned from buying state-made products States through a so-called temporary denial order issued by the Department of Commerce. On Thursday, FBI agents raided a condo owned by the men’s society in the Trump Towers in Sunny Isles Beach, Florida.

Lawyers for the men did not immediately respond to a request for comment.

Despite the level of sanctions evasion, aircraft shipments to Russia remain significantly lower than before the war. US officials say Russian airlines have been forced to cannibalize planes, break them down into spare parts to keep others in service, as well as look to Iran for maintenance and parts.

Russian imports of planes and plane parts fell from $3.45 billion a year before the invasion to just about $286 million after, according to the Observatory of Economic Complexity, a platform for data visualization that explores global trade dynamics.

According to Silverado Policy Accelerator, a Washington-based nonprofit, China has been the top global exporter of aircraft, spacecraft, and drone parts to Russia since the invasion, accounting for about half of all shipments, followed by l ‘India.

The number of single-aisle planes used in Russia fell by about 16% between summer 2021 and summer 2022, after the invasion, according to Cirium, an aeronautical data provider. The number of larger twin-aisle aircraft, often used on international routes, has fallen by around 40%.

Aviation experts say it will become more difficult for Russian airlines to continue flying planes without access to Western suppliers and help from Boeing and Airbus. Manufacturers regularly consult airlines to assess possible damage and strictly control access to technical documentation used by mechanics.

But for now, Russian airlines have been kept alive through international shipping and the use of hundreds of foreign planes that were stuck there after the war began.

Tens of thousands of flights are expected to criss-cross Russia this month, according to schedules published by Cirium. More than 21,000 flights, half of them operated by Russian airlines, are expected to carry passengers to and from countries in Central Asia, as well as Turkey, the United Arab Emirates, Egypt, China and Thailand.

Half a dozen export control lawyers and former government officials consulted by The New York Times said many of the shipments in the Import Genius data likely violated sanctions, but aircraft manufacturers like Boeing or Airbus were not necessarily at fault. The aviation supply chain is complex and global, and parts can come from a variety of sources.

There’s pretty clearly a violation, said William Reinsch, a trade expert at the Center for Strategic and International Studies who oversaw export controls during the Clinton administration. Less clear is the culprit.

Aircraft parts originating in the European Union, including those marked as manufactured or trademarked by Airbus, were also shipped to Russia last year, the data shows.

Justin Dubon, an Airbus spokesman, said the company keeps track of original parts and documentation supplied to its customers and performs due diligence on all parties requesting replacement parts. Restrictions in the United States and Europe mean there is no legal way for original aircraft parts, documentation and services to reach Russian carriers, he said.

U.S. restrictions technically allow companies to apply for a special license to continue sending products to Russian carriers for flight safety reasons, but Boeing and Airbus said they have neither applied for nor received such a license. In addition, Airbus said EU laws prevent it from shipping such goods to Russia, regardless of US licenses.

Current and former US officials say some shipments to Russia are to be expected. Kevin Wolf, a partner at the Akin Gump law firm that oversaw export controls during the Obama administration, said the restrictions could never block everything, but the rules still significantly degrade Russia’s capabilities.

He added that the scope of the new rules still goes beyond current methods of monitoring and enforcement in other allied countries. Until the invasion of Ukraine, the trade in aircraft parts was mostly unrestricted by the United States and other countries, with the exception of Iran, Cuba, South Korea North and Syria.

It’s getting better, Mr. Wolf says, but it’s still far, far behind.

Compared to other countries that primarily limit their surveillance to goods crossing their own borders, the United States is unprecedented in its attempt to control trade around the world.

Over the past three years, the United States has imposed new technological restrictions on Russia, China and Iran that apply extraterritorially: products made in the United States, or in foreign countries using US components or technology, are subject to US rules even when changing hands halfway around the world.

Both the United States and the European Union have tightened sanctions on companies violating sanctions and sent officials to countries like Kazakhstan to try to persuade them to crack down on shipments to Russia through their territory. The US government has nine export control officers stationed in Istanbul, Beijing and other places to track shipments of sensitive products, and it is setting up three more offices.

But supplying parts can be a lucrative business. James Disalvatore, associate director of Kharon, a data and analytics firm that monitors Russia’s efforts to evade sanctions, said the value of some aircraft parts imported by Russian airlines since the invasion had risen. quadrupled or more.

I don’t think there’s a secret about what’s going on, said Gary Stanley, a trade compliance expert who advises companies in aerospace and other industries. How long have we had Cuban sanctions? How long have we had North Korean sanctions? How long have we had Iranian sanctions? It never seems to put these people out of business.

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