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The investigation was prepared by the Economic Security Council of Ukraine together with the InformNapalm international intelligence community.
Instead of a Foreword
This is Berenne Alinovi. She has her own business in Barcelona, Spain. She sews cocktail and wedding dresses and creates jewelry with Swarovski crystals.
And this is Inna Soloshenko from Lebedyn, Sumy Oblast, in a wedding dress. She married Mykhailo in 2019. In 2020, the woman gave birth to their son Yefrem.
Recently, the life of the Soloshenko family was suddenly cut short. On March 12, 2022, a Russian tank fired point-blank at the car they were in.
But this might not have happened, in particular, if some foreign companies had not helped the Russian Federation to produce weapons circumventing the sanctions imposed back in 2014.
One of these companies, still working for the Russian military-industrial complex, is headed by Berenne’s husband, Roger Alinovi. Despite the sanctions, the Swiss company CODERE he manages continued to supply equipment to the sanctioned Elektromashina plant in Russia, which produces components for Russian tanks.
Unfortunately, this company is not alone. Dozens of Swiss, Italian, and German firms make deals with Russian defense companies through shell companies and circumvent sanctions. They are doing that to earn billions of dollars while Russian missiles and tanks are killing innocent Ukrainians.
Who Supplies the Equipment and to Whom
The Elektromashina plant, which Alinovi cooperates with, is located in Russian Chelyabinsk and is part of the Uralvagonzavod Corporation. The Uralvagonzavod, in its turn, is a daughter company of Rostekh, a giant Russian state conglomerate operating in the civil and military industry.
Now Uralvagonzavod is the only tank manufacturer in the Russian Federation. Elektromashina produces components for these tanks.
In 2014, after Russia’s war against Ukraine started, Uralvagonzavod fell under EU sanctions, like many other companies. European companies would have to withdraw from joint projects and break any business ties with these enterprises. However, many companies did not do so.
That’s why, back in 2016, Elektromashina bought new equipment – a thermal treatment line manufactured by the Swiss company CODERE SA. It was purchased for RUB 155.5 million through an intermediary, Galika-CTS company.
At first glance, it might seem that the Swiss company might not be aware of the end clients for their equipment because they entered into a contract with another company rather than the Russian defense enterprise.
However, this impression is wrong. The Swiss CODERE knew everything. The company announced cooperation with Elektromashina in 2013. It even held a conference with representatives of the State Duma of the Russian Federation, the Ministry of Industry and Trade, Oboronprom Holding, the Russian embassy, and the business community of Switzerland.
In addition to CODERE, numerous other firms cooperate with the Russian defense industry. One of them is the Swiss GF Machining Solutions.
In 2018, the JSC Konstruktorskoe Buro Priborostroeniya (Instrument Design Bureau) in Tula received equipment worth more than RUB 722 million from the Swiss company GF Machining Solutions. In particular, the Russian company purchased 23 MIKRON HPM 600HD milling machines, 12 MIKRON HEM 500U milling machines, 1 AgieCharmilles FORM 20 die-sinking machine, and MIKRON HRM 1150U milling machine.
This Russian company designs weapons. For instance, the Bureau produced the Pantsir surface-to-air missile and gun systems, which Russia uses in the war against Ukraine. Also, the Bureau develops systems of high-precision weapons of surface-to-surface, surface-to-air, and air-to-surface classes and designs grenade launchers, sniper rifles, machine guns, submachine guns, pistols, and revolvers.
In 2017, Izhevsk Mechanical Plant in Udmurtia got an AgieCharmilles CUT 20 P wire-cutting EDM machine from the Swiss GF Machining Solutions for EUR 169,648.
This equipment also helped strengthen the aggressive Russian army because the Izhmekh plant produces 86% of all small arms in the Russian Federation, including the Makarov and Yarygin pistols. By the way, they were found in the town of Dymer, Vyshgorodsky district, Kyiv Oblast, after the withdrawal of Russian troops. The locals of the village spent 35 days under Russian occupation. People are still scouring the neighboring forests, looking for their missing relatives tortured by the Russian military.
Also, in 2018, the largest manufacturer of aircraft engines in the Russian Federation, PJSC ODK-UMPO (Ufa, Bashkortostan), received a universal grinding machine WALTER HELITRONIC MINI POWER for more than RUB 81 million from Walter, a German company.
By the way, in 2018, ODK-UMPO began developing an engine for the SU-57 fighter. In May 2022, Russian propagandists boasted of testing the fifth-generation Su-57 fighters in the war against Ukraine.
The Swiss manufacturer Fritz Studer AG also cooperates with Russia. In 2018, the company supplied two universal cylindrical grinding machines, Studer S21 CNC, to the largest aircraft and space engine building enterprise of the Russian Federation PJSC Kuznetsov in Samara. It cost more than RUB 316 million.
By order of the Ministry of Defense of the Russian Federation, Kuznetsov produces engines for the Tu-160 White Swan strategic bombers, deeply modernized Tu-160M, Tu-95MS, and long-range Tu-22M3 aircraft. Now the Russians are actively using all these aircraft in the war in Ukraine.
And in 2019, the Swiss manufacturer fulfilled the order of the only company that produces missiles for the C-300 and C-400 anti-aircraft systems – JSC MMZ Avangard (Moscow). Russian troops near Kharkiv used those weapons – the S-400 and S-300 anti-aircraft missile divisions – in April 2022.
The Russian client got a precision CNC cylindrical grinding machine with the function of processing external and internal threads S30 worth over EUR 382,000 from the Swiss company.
In 2019, JSC NPP Kaluga Instrument-Making Plant Typhoon got a TNA 400 lathe worth EUR 260,000 from Index Traub, a German manufacturer. The Russian enterprise produces radar stations for surface ships of the Russian Navy and coastal missile systems. The Bal coastal missile system equipped with anti-ship cruise missiles is produced here. It is used for shelling Ukraine from Crimea.
The Russian JSC “Chepetsky Mechanical Plant” (Glazov, Udmurtia) received a Planomat HP 412 CNC profile grinding machine for more than RUB 41 million from the German manufacturer Blohm Jung GmbH in the same year.
The Chepetsk Mechanical Plant is part of Rosatom, whose employees took part in seizing the occupied Zaporizhia Nuclear Power Plant. The enterprise also occupies one of the critical positions in the process cycle for producing nuclear fuel based on natural uranium.
In the same year, the Italian manufacturer Hexagon Metrology S.p.A. sold a Micra Hexagon Metrology coordinate measuring machine worth over EUR 171,000 to the Russian JSC Izhevsk Electromechanical Plant KUPOL. KUPOL supplies the Russian Ministry of Defense with Tor air defense systems, which the Russians actively use in the war against Ukraine.
In 2018, the Swiss manufacturer Sylvac SA sold an optical measuring system, the Scan 52 model, worth almost RUB 3 million to the Russians. The customer is JSC Novosibirsk Ammunition Plant, which produces cartridges for small arms, including caliber 7.62×51.
The Tochnost (Precision) sniper rifles, which the Russian National Guard was armed with in 2017, have this caliber. According to Reuters, Vityaz, a special unit of the Russian National Guard, operated in Bucha. So, this Swiss company also contributed to the tragedy.
How Companies Circumvent Sanctions
Most of the aforementioned Russian enterprises are under sanctions. In particular, the sanctions lists include the Uralvagonzavod Corporation (which includes Elektromashina), JSC Instrument Design Bureau, Izhevsk Mechanical Plant (part of the Kalashnikov Concern), JSC Izhevsk Electromechanical Plant KUPOL, Ufa Motor-Building Production Association (ODK-UMPO, owned by United Engine-Construction Corporation JSC), Avangard MMZ JSC.
Despite this, Italian, Swiss and German companies keep cooperating with the Russian defense industry. But, of course, they do it through the Swiss shell company, Galika AG, rather than directly. This company’s director is Lino Derungs, a Swiss citizen. However, he has been doing business in Russia since the early 1990s.
Switzerland allegedly joined the sanctions against defense enterprises of the Russian Federation, which the US and the EU imposed due to the annexation of Crimea.
“But we do not want to be perceived as a country taking sides. Therefore, we usually introduce monitoring to ensure that Russia or Russian companies do not use Switzerland to circumvent EU sanctions. Conversely, we ensure that European companies or other entities do not use Switzerland to circumvent them,” Yves Rossier, the then Swiss Ambassador to the Russian Federation, explained the situation in 2018.
That same year, he promoted cooperation with representatives of Galika AG in the Perm Krai.
Galika AG sells equipment in the Russian Federation through numerous branches. One of them is Galika CTS. Until 2020, Evgeny Georgievich Polkanov was the director of Galika CTS. In 2014-15, he was the deputy director of Stankoprom Holding, a part of Rostekh. Thus, it becomes clear why the Swiss company cooperates with the Russian defense industry.
According to tender data, from 2016 to 2021, Galika CTS signed contracts worth RUB 1.4 billion with Russian clients. However, there may be many more of them because, after the sanctions were imposed in 2014-2015, most orders for defense enterprises of Rostekh were classified as secret.
You can, of course, assume that European equipment manufacturers did not know to whom they supplied their products. However, they definitely did.
For example, the Swiss manufacturer GF Machining Solutions became a member of the Russian-Swiss Competence Center in the field of micromachining technologies in June 2014.
Walter Maschinenbau (Germany), which supplied machine tools worth EUR 2.37 million to the ODK-UMPO enterprise for producing engines for SU-57 fighters, also knew about the final recipient of its products. Here, we offer several arguments to prove this.
Firstly, this expensive equipment must be installed, commissioned, and maintained by the manufacturer. Without it, such equipment is just a lump of iron.
Secondly, considering the message on Facebook, in November 2020, Galika AG’s service manager Ivan Semenskoy flew from Sheremetyevo Airport (Moscow) to Ufa (Bashkortostan). ODK-UMPO, which ordered the expensive machine tools, is located right there. Marek Belzak from Poland liked Semenskoy’s post about this trip. This person is Walter Maschinenbau’s Sales Director for Russia, Belarus, and Ukraine.
Fritz Studer AG, a German company, also agreed to supply equipment. In 2015, the Russian Federal Accreditation Service audited the company that certified equipment imported to the Russian Federation. It turned out that the German company authorized Galika AG to sell its machines there. It means that one firm in Switzerland produces machine tools, and another, which does not produce anything but only resells, represents the manufacturer in the Russian Federation.
Index Traub, also a German company, not only supplies equipment to Russians but also opened an office in the Russian city of Tolyatti, Samara Oblast, in 2016. The company explained that this decision was made due to the “political situation.”
“The current political situation requires us to localize our production in Russia so that we can participate in tenders of state-owned companies on an equal footing with other market participants,” the company said.
Blohm Jung GmbH of Germany expressly states on its website that it is part of the UNITED GRINDING Group with dedicated subsidiaries for international markets in India, China, Russia, and the USA.
All these companies help Russia produce weapons used in the war against Ukraine. They know about it but do not leave the Russian market anyway.
Scandals Involving Galika AG
Switzerland has long known that Galika AG is closely linked to Russia. In 2019, journalists discovered that the company had supplied equipment for producing Kalashnikov assault rifles in Venezuela. However, the Swiss officials turned a blind eye to this fact.
“In 2012, Galika AG from Volketswil in the canton of Zürich supplied machines for producing AK-103 assault rifles worth several million Swiss francs. The plant in the city of Maracay is due to start up by late 2019 and will produce 25,000 Kalashnikovs per year.
The export ban did not apply to the equipment sold by Galika AG. It is because the equipment did not fall under the category of military materiel and was not considered so-called dual-use goods. We are talking about those machines that can be used for military purposes,” the media wrote.
And last year, Galika AG applied to SECO, the State Secretariat for Economic Affairs, to obtain two permits to export to Russia: a Swiss-made milling machine and a lathe. It was claimed to be intended to make parts for medical devices.
However, the Swiss intelligence service suspects that the documents are fake and the devices are intended for the military sector – the production of sensors for the SU-57 stealth multirole fighters. So far, the Russians have problems manufacturing parts for new jet fighters.
After the permits had been denied, the company tried again to deliver the same machines to Russia. This time, it indicated that they were intended for a foil balloon toy company. Permits were denied again.
In March 2022, after the start of the war in Ukraine, Handelszeitung reported that Galika AG was again trying to supply equipment to Russia.
What Happened after February 24, 2022?
The Federal Tax Service of the Russian Federation counted at least eight companies affiliated with the Swiss Galika AG in Russia.
One of them is Galika-Met, registered in the city of Elektrostal near Moscow. According to public procurement data, by May 1, 2022, the company must supply, assemble, and put into operation a suite of process equipment from the Swiss GF Machining Solutions.
It costs RUB 407 million. The customer is the aircraft engine-building company JSC Kuznetsov, a part of Rostekh.
The GF Machining Solutions website reports that the Swiss company is represented in Russia by Galika AG. That is, the Swiss company GF Machining Solutions, through its representative Galika, sold and installed equipment at the defense enterprise of the aggressor country in May 2022.
Earlier, in May 2020, Galika-Met supplied a coordinate measuring machine to the ODK. And in October of the same year, the defense enterprise produced the first batch of new engines for the upgraded Tu-160M strategic bombers, which Russia uses actively against the Ukrainians.
Making Money on Ukrainians’ Blood
Following the start of Russia’s war against Ukraine and the annexation of Crimea, on July 31, 2014, the European Union imposed an embargo on imports and exports of arms to Russia, as well as banned exports of dual-use goods and technologies for military use to Russia or Russian military end-users. The EU also banned exports of goods and technologies that can be used for both military and civilian purposes. In addition, the EU has required exporters to obtain prior permission from member states’ competent authorities to export certain types of energy equipment and technologies to Russia.
It means that the activities of all the Swiss, Italian, and German companies mentioned above are nothing more than the circumvention of EU sanctions to make a profit from the lives of Ukrainians.
Of course, the Soloshenko family shot dead by a Russian tank cannot be brought back to life, but it is possible to block access to Western equipment for the Russian military industry. Thus, the competent authorities in the EU should pay attention to the activities of these companies, introduce new sanctions against them, and close the gaps in the sanctions policy.
Russia’s war in Ukraine is upending the global arms industry.
As the U.S. and its allies pour significant sums of money into arming Ukraine and Russia bleeds tanks and personnel, countries across the world are rethinking defense budgets, materiel needs and military relationships. Countries that historically have had low levels of defense spending such as Japan and Germany are bulking up, while nations that purchase most of their weapons from Russia are questioning their reliability and future delivery.
My research in this area suggests that, however this war eventually ends, the repercussions for the global defense industry, and for the countries whose companies dominate this sector, will be enormous. Here are four takeaways.
1. Russia will be the biggest loser
Russia’s general sales pitch for its weapons has been they’re “cheaper and easier to maintain than Western alternatives.” This is why Russia accounted for 19% of the world’s arms exports from 2017 to 2021, second only to the U.S., which had 39% of the market.
However, this pitch may no longer be effective for many countries that have seen Russian equipment losses and failures in Ukraine.
To date, the U.S. estimates Russia has lost almost a thousand tanks, at least 50 helicopters, 36 fighter-bombers and 350 artillery pieces, according to Business Insider. Thousands of Russian soldiers have been killed, with estimates ranging from about 15,000 to as high as 30,000, and Russia is still unable to control Ukraine’s airspace.
The situation has become so dire that there are reports that commanders are trying to preserve equipment by forbidding troops from using them to evacuate wounded soldiers or to support units that have advanced too far.
Russia’s offensive weapons have also proved disappointing. Its missile failure rate – the share that either failed to launch, malfunctioned mid-flight or missed their target – may be as high as 50% to 60% due to design flaws and outdated or inferior equipment.
These problems, along with the Russian military’s slow progress achieving any of President Vladimir Putin’s stated objectives, have raised serious doubts among the country’s traditional customers for weapons exports. Russia sells almost 90% of its weapons to just 10 countries, including India, Egypt and China.
What’s more, Russia’s ability to replace these equipment losses has been hampered by economic sanctions, which bars key foreign components like circuit boards. And Russia will almost certainly need to replace its own military hardware before it exports anything abroad.
That means that even countries that want to keep buying Russian tanks and fighter jets will have to wait in line or turn elsewhere to fulfill their defense needs.
2. Russia’s loss is China’s gain
The country that will likely see the greatest gains from Russia’s displacement as a major arms supplier is China.
In recent years, the country has taken a 4.6% share of the global arms trade, putting it in fourth place behind France’s 11%. At the same time, seven of the top 20 global defense companies in terms of revenues earned from defense sales are Chinese, signaling the sector’s big ambitions.
Currently, the Chinese government buys most of its weapons and vehicles from these domestic arms makers, but China has the capacity to export more military products abroad.
For example, China is already the world’s largest shipbuilder, so exporting more naval ships is a natural next step. The country is expanding its niche role in drone technology and attempting to leverage modernizing its air force with domestically built aircraft to increase exports.
At the moment, only three of the world’s 40 biggest arms importers – Pakistan, Bangladesh and Myanmar – buy a majority of their weapons from China. That could change if China takes advantage of Russian weakness to position itself as a reliable national security, economic and political partner – a core feature of its Belt and Road Initiative.
China is not capable of supplanting U.S. and European weapons, which are considered “top shelf” because of their high quality and price. But China may well fill the market niche that Russian arms makers dominated, thereby increasing Beijing’s role as a major weapons exporter – and gaining the political and economic benefits that accompany that.
One of China’s biggest challenges will involve proving that its weapons work well in live combat situations.
3. American arms makers will also be big winners
U.S. weapons manufactures dominate the global arms industry. The Ukraine war will likely ensure this stays that way for some time.
The world’s five largest arms companies are all American: Lockheed Martin, Raytheon, Boeing, Northrop Grumman and General Dynamics. In fact, half of the top 100 producers of arms are based in the U.S. Twenty are European. Only two are Russian – despite the country being the world’s second-largest source of arms.
The massive amounts of weapons being transferred from the U.S. to Ukraine will keep American arms makers busy for some time to come. For example, the U.S. has transferred about one-third of its stock of Javelin anti-tank missiles to Ukraine, and it will take three to four years for the Raytheon-Lockheed Martin joint venture to replace them. The US$40 billion aid package recently signed by President Joe Biden includes $8.7 billion to replenish U.S. weapons stocks.
The companies’ soaring stock prices are a sign investors believe profitable days are ahead. Lockheed Martin’s stock price is up over 12% since the invasion began – with most of the gains occurring in its immediate aftermath. Northrop Grumman has jumped 20%. At the same time, the broader stock market as measured by the S&P 500 has slumped about 4%.
4. More countries will become arms makers
The flipside to this is that some countries that relied on others for their defense needs may seek to become more self-sufficient.
India, which relied on Russia for almost half of its weapons imports in recent years, is realizing that Russia will need most or all of its production capacity to replace tanks, missiles, aircraft and other weapons used or lost in Ukraine, with less leftover for export.
That means India will need to either source spare parts for vehicles and weapons from other former Russia arms customers such as Bulgaria, Georgia and Poland, or build up its own defense industry. In April, India announced it would ramp up production of helicopters, tank engines, missiles and early airborne warning systems to offset any potential reduction in Russian exports.
Concerns about Russian reliability are also growing. In May, India canceled a $520 million helicopter deal with Russia. While there are reports U.S. pressure played a role, it also seems to be part of the government’s strategy over the past few years to build its own domestic defense industrial base.
Brazil, Turkey and other emerging market countries have also been developing their own defense industries over the past two decades to reduce their reliance on arms imports. The Ukraine war will accelerate this process.
Putin likely didn’t expect to shake up the global arms market with his effort to annex Ukraine – or cause the decline of his country’s weapons sector. But that’s just one more way his war is causing a geopolitical earthquake.
This article has been updated to correct the size of the canceled Indian helicopter deal.
Despite the embargo imposed in 2014, at least ten EU countries sold military equipment and weapons to the Russian Federation. According to the Working Party on Conventional Arms Exports (COARM) and all EU-27 arms export registers, between 2015 and 2020, France, Germany, Italy, Austria, Bulgaria, the Czech Republic, Croatia, Finland, Slovakia and Spain sold weapons worth a total of €346 million to Russia.
For the most part, the countries used a loophole in EU rules to continue trade. The Working Party explained that the EU arms embargo contained the following exception: “Contracts signed before August 1, 2014, or ancillary contracts required to perform such agreements. Those contained in the database must be subject to this exception. The member states are responsible for ensuring compliance with the arms embargo and the EU’s common position.”
However, the conclusion is not so simple. Siemon Wezeman, senior researcher at the Stockholm International Peace Research Institute (SIPRI), points to a difference between regular economic trade and arms exports, “Weapons are part of our foreign policy, not economic policy. Political reasons are the main thing.”
France made the most significant contribution to Russia’s military arsenal by supplying it with infrared guidance systems. According to Disclose, France sold equipment worth €152 million to Russia.
Since 2015, France has supplied bombs, missiles, rockets, torpedoes, explosives, direct lethal weapons, day and night fire control cameras for fighters and missile systems, and thermal imagers. The number of licenses issued by France jumped in 2015, immediately after the embargo was imposed.
In 2014, French authorities gave permission to send chemical, biological and radioactive materials as well as related equipment. In 2016, France’s General Secretariat for Defense and National Security approved eight applications for warranty repair and replacement of equipment. However, the French government claims that only equipment left from the previously concluded contracts was supplied.
French President Emmanuel Macron’s behavior could be explained by the fact that after the defeat of Russia many “unpleasant” facts might be revealed.
Germany ranks second. According to Investigate Europe, it exported military equipment worth €121.8 million to Russia. The major volume of weapons was exported in 2015. The report says then Germany sold two rescue icebreakers for €119 million. The website of the manufacturer, Nordic Yards, indicates the icebreakers Bering Strait and Murman are intended for search and rescue operations, towing, and environmental protection efforts in case of emergency oil spills. In 2017, Germany sold hydrazine – fuel for rocket engines and spacecraft – for €2.5 million to Russia.
In addition, Germany delivered dual-purpose goods worth €366 million. That’s why the German politicians who slammed arms exports do not consider these supplies a violation of the embargo. According to the Welt am Sonntag newspaper, the deliveries included a variety of high-tech electronics, sensors and lasers that can be used in the manufacture of weapons. The export of these goods was finally banned in the fourth sanctions package.
Italy comes third. From 2015 to 2020, it sold military equipment for a total of €22.5 million. The first major contract was concluded in 2015. The government headed by Matteo Renzi allowed the Italian company Iveco to sell vehicles worth €25 million to Russia. Lynce armored vehicles manufactured by Iveco were spotted by a journalist of LA7 TV channel at the front in Ukraine in early March. According to Istat, Italy’s National Institute of Statistics, in January-November 2021 Italy supplied weapons and ammunition worth €21.9 million.
In 2015-2019, the Czech Republic exported aircraft, drones, aircraft engines and equipment. Every year, Austria sold Russia smoothbore weapons with calibers under 20mm, 12.7mm automatic weapons, ammunition installation devices, detonators and their components. Bulgaria, under two contracts in 2016 and 2018, exported military ships and other vessels, special naval equipment, accessories and components, and technology for the development, production or use of products included in the EU Common Military List to the tune of €16.5 million.
Finland, Spain, Slovakia and Croatia each made one export delivery to Russia, though much smaller than in previous years.
However, according to SIPRI data on arms exports, there is an even more interesting fact: not only EU countries have sold weapons to Russia since the 2014 embargo. It is about not about weapons but licenses for their manufacture. According to SIPRI senior researcher Siemon Wezeman, these were 15 Antonov-148 transport aircraft manufactured at the Voronezh Aircraft Manufacturing Plant in Russia.
In mid-April 2022, the European Commission approved the fifth sanctions package, closing the legal loophole in the 2014 embargo that had allowed deliveries of arms and dual-purpose goods to Russia.
Ukraine calls out Italian metal company for “supporting Russia’s military complex” Credit: Creative Commons
The Defence of Ukraine called out an Italian steel-plant company for its collaboration with Russia, in supplying equipment allegedly destined to produce nuclear submarines and tank armour.
Taking to Twitter to publicly call out the Italian company and its support of Russia, the Defence of Ukraine posted:
“After four months of the large-scale war, Italian-based #Danieli still collaborates with russian plants, supplying equipment to produce nuclear submarines and tank armor. Supporting russian military complex goes against lawful and moral considerations. #BoycottRussia”
After four months of the large-scale war, Italian-based #Danieli still collaborates with russian plants, supplying equipment to produce nuclear submarines and tank armor. Supporting russian military complex goes against lawful and moral considerations. #BoycottRussia pic.twitter.com/yxV2x7nk9l
— Defence of Ukraine (@DefenceU) June 20, 2022
Credit: Twitter @DefenceU
Twitter users responded quickly to the Defence of Ukraine’s tweet on the Italian company , with one user posting: “Don’t EU sanction prevent this sort of crap?”
Another user posted: “It’s in the bl**dy logo right there, just have a look”
Another user said: “What a horror story, this. The 🇮🇹s, as @mraz1313 often & rightly says, should be made to feel shame. Capital can be the dirty bedfellow of#AnAilingConscience”
“Some people’s greed amazes me,” stated another Twitter user.
The Italian company, Danieli Group, is an Italian supplier of equipment and physical plants in the metal industry. Based in the north-eastern Italian territory of Butrrio, the company is reportedly a world leader in its field.
The news of Ukraine calling out the Italian company follows various European countries issuing further sanctions on Russia, with Norway stating:
“We support the European Union in imposing sanctions against Russia in order to put pressure on the government of that country and its leadership. Now we are banning the import of oil from Russia to Norway via sea routes.”
Since the invasion of Ukraine began, we have been tracking the responses of well over 1,200 companies, and counting. Over 1,000 companies have publicly announced they are voluntarily curtailing operations in Russia to some degree beyond the bare minimum legally required by international sanctions — but some companies have continued to operate in Russia undeterred.
Originally a simple “withdraw” vs. “remain” list, our list of companies now consists of five categories—graded on a school-style letter grade scale of A-F for the completeness of withdrawal.
The list below is updated continuously by Jeffrey Sonnenfeld and his team of experts, research fellows, and students at the Yale Chief Executive Leadership Institute to reflect new announcements from companies in as close to real time as possible.
Our list has already garnered extensive coverage for its role in helping catalyze the mass corporate exodus from Russia.
When this list was first published the week of February 28, only several dozen companies had announced their departure. We are humbled that our list helped galvanize nearly 1,000 companies to withdraw in the two months since.
Although we are pleased that our list has been widely circulated across company boardrooms, government officials, and media outlets as the most authoritative and comprehensive record of this powerful, historic movement, we are most inspired by the thousands of messages we have received from readers across the globe, especially those from Ukraine, and we continue to welcome your tips – preferably with documentation – as well as your insights, and feedback, at jeffrey.sonnenfeld.celi@yale.edu.
For a sortable, detailed version of the list below, please visit our enhanced database where you can filter companies by letter grade, country, sector, and much more.
Click here to watch President Zelenskyy’s interactive Q&A, hosted by Jeffrey Sonnenfeld and live-streamed by CNBC, with over 150 top US CEOs at the Yale CEO Summit in June 2022, and click here to read about President Zelenskyy’s key lessons for business leaders.
Click here to read our recent SSRN working paper on the response across financial markets to our list, in which we demonstrate that investors are penalizing companies that remain in Russia.
If you want to get in touch with the “D”-rated and “F”-rated companies found here, you may locate contact information on this non-Yale affiliated website: www.emailcontactukraine.com. We do not endorse nor certify the accuracy of this list of addresses, but in response to frequent requests, we are aware of this external non-Yale resource.
Companies that are just continuing business-as-usual in Russia…
Name
Action
Industry
Country
Acerinox
still operating in Russia
Materials
Spain
Agrana
continue operating plant in Russia
Consumer Staples
Austria
Agricultural Bank of China
Russian companies open accounts with the bank; decline to comment
Financials
China
Aimbridge | Interstate Hotels
still operating in Russia
Consumer Discretionary
United States
Air China
still flying to Russia
Industrials
China
Air Serbia
still flying to Russia
Industrials
Serbia
Alibaba
still operating in Russia
Consumer Discretionary
China
Align Technology
still operating in Russia
Health Care
United States
Alpina Žiri
distributors in Russia
Consumer Discretionary
Slovenia
Alumil
Not disclosed publicly
Materials
Greece
Anadolu Efes
still operating in Russia
Consumer Staples
Turkey
ANT Group
joint venture with the Russian Sovereign Wealth Fund
Information Technology
China
Anta Sports
still operating and providing online sales to Russia
Consumer Discretionary
China
Antal
still operating and actively hiring in Russia
Industrials
United Kingdom
AnyDesk Software
still providing services to Russia; not disclosed publicly
Information Technology
Germany
Ariston Group
still operating and actively hiring in Russia
Consumer Discretionary
Italy
Asics
still operating in Russia; not disclosed publicly
Consumer Discretionary
Japan
Auchan-Retail
still operating in Russia
Consumer Staples
France
AVL
still operating in Russia
Industrials
Austria
B. Braun
still operating in Russia
Health Care
Germany
Babolat
still operating and selling to Russia
Consumer Discretionary
France
Bajaj Auto
business as usual
Consumer Discretionary
India
Bekaert
still manufacturing for the Russian market
Industrials
Belgium
Benetton
continue operations in Russia
Consumer Discretionary
Italy
Bharat Petroleum (BPCL)
bought 2 million barrels of Russian Urals for May loading
Energy
India
Binbit
Operating in Russia
Communication Services
Mexico
Boggi
still operating in Russia & online sales running
Consumer Discretionary
Italy
Bonduelle
still operating in Russia
Consumer Staples
France
BPW
still cooperating with dealers in Russia; not disclosed publicly
Consumer Discretionary
Germany
Buzzi Unicem
continue operating plants in Russia
Materials
Italy
Cadence
still operating in Russia; not disclosed publicly
Information Technology
United States
Calzedonia
continue sales in Russia
Consumer Discretionary
Italy
Camille Albane
franchised salons continue to operate
Consumer Discretionary
France
CANPACK
still operating in Russia
Materials
Poland
Carl’s Jr. | CLK
still operating in Russia
Consumer Discretionary
United States
Cham Wings
still flying to Russia
Industrials
Syria
Charoen Pokphand Foods
still operating in Russia
Consumer Staples
Thailand
Check Point Software
selling cybersecurity products in Russia
Information Technology
Israel
China Communications Construction Company
planning new infrastructural projects
Industrials
China
China Construction Bank
Russian companies open accounts with the bank; decline to comment
Financials
China
China Life Insurance Company
offices in Russia, actively looks for new Russian employees
Financials
China
China Minmetals
discussing investments with Chinese government to booster stakes in Russian energy and commodity companies
Materials
China
China Mobile
business as usual
Communication Services
China
China National Petroleum Corporation
business as usual
Energy
China
China Railway Construction Corporation
continues to build Vladivostok highway in March 2022
Industrials
China
China Railway Engineering Corporation
business as usual
Industrials
China
China State Construction Engineering
contractor to the Russian state
Industrials
China
China State Railway Group Company
increasing coal shipments from Russia
Industrials
China
China United Network Communications
a subsidiary in Russia: China Unicom (Russia) Operations Limited Liability Company; business as usual
Communication Services
China
Chipita
Not disclosed publicly; still operating in Russia
Consumer Staples
Greece
Clarins
still selling online in Russia
Consumer Discretionary
France
CLINTON
still operating in Russia (Camp David)
Consumer Discretionary
Germany
Cloudflare
continue sales & services in Russia
Information Technology
United States
Coal India
expecting highest import level in 2 years
Energy
India
Cofix Coffee
maintains locations in Russia
Consumer Staples
Israel
Colin’s
still selling online
Consumer Discretionary
Turkey
Corendon Airlines
still flying to Russia
Industrials
Turkey
Covestro
still operating in Russia
Materials
Germany
Cremonini Group
continue sales in Russia
Consumer Staples
Italy
De Cecco
continue sales and operations in Russia
Consumer Staples
Italy
Deep in Russia
still offering trips to Russia
Industrials
Belgium
Dessange International
still operating salons in Russia
Consumer Discretionary
France
Didi
explicitly reversed decision to exit Russia
Industrials
China
Diesel
still operating in Russia; not disclosed
Consumer Discretionary
Italy
Doka
still manufacturing in Russia; not disclosed
Industrials
Austria
Dr Reddys Labs
business as usual; plans new brands in Russia
Health Care
India
Duol
still operating in Russia
Consumer Discretionary
Slovenia
Egger
still operating in Russia
Industrials
Austria
Egyptair
still flying to Russia
Industrials
Egypt
ELA Container
still selling in Russia
Industrials
Germany
ElvalHalcor
Not disclosed publicly
Materials
Greece
Emirates Airlines
still flying to Russia
Industrials
United Arab Emirates
EMS-Chemie
still operating in Russia
Materials
Switzerland
Etam
still selling to Russia
Consumer Discretionary
France
Etihad Airways
still flying to Russia
Industrials
United Arab Emirates
Eutelsat
provide satellite TV services to Russia
Communication Services
France
Faurecia
still operating and advertising in Russia
Consumer Discretionary
France
FAW Group
remains silent on whether they will continue operations
Industrials
China
Fenzi Group
still operating in Russia
Industrials
Italy
Fischer Sports
still selling online
Consumer Discretionary
Austria
Fleetcor
business as usual
Financials
United States
Fluidra
continuing sales in Russia
Industrials
Spain
Fondital
still operating and investing in Russia
Industrials
Italy
Foraco
still operating in Russia
Energy
France
Forever Living Products
still operating in Russia
Consumer Discretionary
United States
Freedom Holding
still operating in Russia
Financials
Kazakhstan
Fresenius
still operating in Russia
Health Care
Germany
Frigoglass
still operating in Russia
Industrials
Greece
Fujifilm
still operating and advertising in Russia
Information Technology
Japan
Gedeon Richter
still operating in Russia
Health Care
Hungary
Geoplin
still purchasing Russian gas from Gazprom
Energy
Slovenia
Giorgio Armani
still operating in Russia
Consumer Discretionary
Italy
Global Fashion Group
still operating in Russia
Consumer Discretionary
Luxembourg
Globus
still operating in Russia
Consumer Staples
Germany
Gorenje
still operating in Russia
Consumer Discretionary
Slovenia
Groupe Le Duff
still operating in Russia
Consumer Discretionary
France
Groupe Savencia
still operates in Russia
Consumer Staples
France
Grupo Borges | ITLV
still operating in Russia
Consumer Staples
Spain
Grupo Fuertes
still operating in Russia
Consumer Staples
Spain
Haier
planning expansion in Russia
Consumer Discretionary
China
Hampidjan
still operating in Russia
Industrials
Iceland
Hard Rock Café
still operating in Russia
Consumer Staples
United States
Heliski Russia
cooperating with sanctioned individuals
Industrials
France
Hengli Group
business as usual
Energy
China
Heraeus
still operating in Russia
Industrials
Germany
Herend
still operating in Russia
Consumer Discretionary
Hungary
Hindalco
business as usual
Materials
India
Hoffmann Group
still operating and advertising in Russia
Industrials
Germany
Honor
business as usual
Information Technology
China
Huntsman Corporation
still operating in Russia
Materials
United States
Ideal Molde
still selling to Russia
Industrials
Portugal
Indian Oil Corporation
signed new deal to import Russian oil
Energy
India
Industrial Bank (China)
offices operating in Moscow, did not answer for Reuters’ calls for commenting on that
Financials
China
International Baccalaureate Organization
still offers professional development services to Russian teachers
NGO
Netherlands
International Paper
still operating in Russia
Materials
United States
IQVIA
still operating and actively hiring
Industrials
United States
Itochu
continues oil & gas exploration partnerships
Consumer Staples
Japan
JD.com
business as usual – the Russian store is still fully operational
Industrials
China
JDE Peet’s
still operating in Russia
Consumer Staples
Netherlands
Jean Cacharel
still selling and advertising in Russia
Consumer Discretionary
France
JSW Steel
business as usual
Materials
India
Kemin
still operating in Russia; declined to commend
Health Care
United States
Kidzania
Operating facility in Russia
Communication Services
Mexico
KION Group
still operating in Russia; not disclosed publicly
Industrials
Germany
Kleemann
Not disclosed publicly
Industrials
Greece
Knarr Maritime
members still operating in Russia
Industrials
Iceland
Koch Industries
considering options for an exit; continuing operations
Industrials
United States
Kotanyi
still exporting to Russia
Consumer Staples
Austria
Koton
still advertising and selling to Russia
Consumer Discretionary
Turkey
Krka
still operating in Russia
Health Care
Slovenia
Kronospan
still operating in Russia
Materials
Austria
Kweichow Moutai
business as usual
Consumer Staples
China
La Redoute
still selling products to Russia
Consumer Discretionary
France
Lacoste
still operating in Russia
Consumer Discretionary
France
LACTALIS
still operating in Russia
Consumer Staples
France
Larsen & Toubro
business as usual
Real Estate
India
Legrand
still operating in Russia
Industrials
France
Lemken
still operating and advertising in Russia
Industrials
Germany
Leptos Estates
continues operations in Russia
Real Estate
Cyprus
Leroy Merlin
still operating in Russia
Consumer Discretionary
France
Letique Cosmetics
maintains stores in Russia
Consumer Staples
Latvia
Liebherr
No action taken; still operating in Russia
Industrials
Switzerland
LiSEC
still operating in Russia
Industrials
Austria
Luka Koper
continuing trans shipments
Industrials
Slovenia
Mahindra & Mahindra
business as usual
Consumer Discretionary
India
Mahle
still operating in Russia
Industrials
Germany
Makita
still working with dealers in Russia
Industrials
Japan
Makrochem SA
still operating in Russia
Industrials
Poland
Match Group
continue to operate in Russia including Tinder
Communication Services
United States
Maxam
still operating in Russia
Materials
Spain
Medtronic
continue operating subsidiary in Russia
Health Care
United States
Micro-Star International Co. (MSi)
still operating in Russia
Information Technology
Taiwan
Mitsubishi Heavy Industries
still operating in Russia
Industrials
Japan
Mitsui
continuing operations within sanctions compliance & shares in Sakhalin-2 project
Materials
Japan
Mizuho Financial Group
still operating in Russia
Financials
Japan
Mod’s Hair
still operates in Russia
Consumer Discretionary
France
MOLGroup
still operating in Russia
Energy
Hungary
MSU S.A.
still operating in Russia
Consumer Discretionary
Poland
New Yorker Marketing & Media GmbH
continue to operate and open new stores
Industrials
Germany
Nippon Telegraph and Telephone Corporation
continues to operate cloud services in Russia
Communication Services
Japan
NIS Serbia
partnership with Gazprom Neft; Gazprom has a 50% stake in NIS
Energy
Serbia
Oasis Logistics Corp
“We are actively exploring opportunities to work with our Russian partners”
Industrials
China
OBO Bettermann
still operating in Russia
Industrials
Germany
OCSiAl
still running research center and branch
Information Technology
Luxembourg
OKI
still operating in Russia; not disclosed
Information Technology
Japan
ONGC
aggressive selling of Russian Sokoil to other Indian Nationalised Energy corps
Energy
India
Oppo
business as usual
Information Technology
China
Orano
still operating in Russia
Energy
France
Paccar
still active in Russia; deny comments
Industrials
United States
Patreon
still providing services to Russia
Financials
United States
Pegasus
still flying to Russia
Industrials
Turkey
Perfetti Van Melle
still operating in Russia; not disclosed publicly
Consumer Staples
Italy
Philips
online sales still available in Russia
Consumer Discretionary
Netherlands
Pidilite Ind
business as usual
Materials
India
Plastika Kritis
Not disclosed publicly
Materials
Greece
Poly Real Estate
a sister company is Poly Technologies, one of China’s largest arms exporters and has been sanctioned by the United States; in Russian tax registry
Real Estate
China
Posco
operating through a Russian subsidiary
Materials
South Korea
PowerChina
cooperating with a Russian bank “Solidarnost” on off-shore projectes
Energy
China
Projahn
still operating in Russia through a subsidiary
Industrials
Germany
Provalliance Group (Jean Louis David)
affiliates still operating in Russia
Consumer Discretionary
France
Qatar Airways
still flying to Russia
Industrials
Qatar
Quicksilver
online sales still running
Consumer Discretionary
United States
Raba
maintain commerical ties with Russian Kamaz
Industrials
Hungary
Rabe Moden
still advertising and selling to Russia via Telegram
Consumer Discretionary
Germany
Raiffeisen Bank International
still operating in Russia
Financials
Austria
Remondis
still operating in Russia; not disclosed publicly
Industrials
Germany
Riko
still operating in Russa
Industrials
Slovenia
Riot Games
still operating in and selling to Russia
Consumer Discretionary
United States
Royal Swinkels Family Brewers
still providing Russia with a license to brew products; intention to terminate the license
Consumer Staples
Netherlands
Russia Fachspedition Dr. Lassmann
still operating in Russia
Industrials
Austria
SAIC Motor
remains operational; plans to increase export
Industrials
China
Sanatmetal
still operating in Russia
Health Care
Hungary
Sany Heavy Industries
business as usual
Industrials
China
Sarantis
still operating in Russia
Consumer Staples
Greece
Sbarro Pizza
still operating in Russia and allowing placing online orders
Consumer Discretionary
United States
Schoeller Bleckmann
still operating in Russia
Industrials
Austria
Semiconductor Manufacturing International Corporation
defies US sanctions by continuting to export to Russia
Information Technology
China
SGS
still operating and actively advertising in Russia
Industrials
Switzerland
Shanghai Fosun Pharmaceutical
business as usual
Health Care
China
Siemens Healthineers
continue to support healthcare providers
Health Care
Germany
Signet Armorite
operating in Russia through a subsidiary
Consumer Discretionary
United States
Sika
still operating in Russia
Industrials
Switzerland
Sisecam
still operating in Russia through subsidiaries
Materials
Turkey
SMC
still operating in Russia
Industrials
Japan
Société Bic
still operating and actively hiring in Russia
Consumer Discretionary
France
Stada Arzneimittel
still operating in Russia
Health Care
Germany
State Grid Corporation of China
business as usual
Utilities
China
Storck
continue candy sales in Russia
Consumer Staples
Germany
Stryker
continue sales and imports to Russia
Health Care
United States
Sun Pharma
business as usual
Health Care
India
SWISS KRONO
still operating plant in Russia
Industrials
Switzerland
Syngenta
still operating in Russia
Health Care
China
Synopsys
still operating in Russia; not disclosed publicly
Information Technology
United States
Sæplast
not publically disclosed
Materials
Iceland
Talgo
still operating in Russia
Industrials
Spain
Tencent
major investment in VK
Communication Services
China
Tenneco
still operating in Russia; deny comments
Consumer Discretionary
United States
TEPCO
continues purchases of Russian gas
Utilities
Japan
Teva
no action taken; still operating Russia
Health Care
Israel
TGI Friday’s
still operating in Russia
Consumer Discretionary
United States
The China Coal Transportation and Distribution Association
big power plants and about 20 Russian coal companies discussed plans to increase bilateral trade
Energy
China
Titan International
still operating in Russia
Industrials
United States
Tom Ford
still operating in Russia; not disclosed publicly
Consumer Discretionary
United States
Tupperware
still operating and actively hiring in Russia
Consumer Discretionary
United States
Turkish Airlines
still flying to Russia
Industrials
Turkey
UniCredit
Still operating in Russia
Financials
Italy
Uzbekistan Airways
still flying to Russia
Industrials
Uzbekistan
Valeo
still operating in Russia
Consumer Discretionary
France
Valve
still providing services to Russia
Consumer Discretionary
United States
Vanke
business as usual
Real Estate
China
Veolia
still operating in Russia
Utilities
France
Vinci SA
still operating in Russia
Industrials
France
Vivo
still operating in Russia
Industrials
China
Wanhua Chemical Group
still operating in Russia
Materials
China
Wienerberger
still operating in Russia
Industrials
Austria
WIKA
still operating in Russia
Industrials
Germany
Wolffkran
still operating in Russia
Industrials
Switzerland
Xibao Metallurgy Materials Group
building a refractory material plant in Lipetsk, Russia
Industrials
China
Yazaki
operating in Russia through a subsidiary
Consumer Discretionary
Japan
Yokogawa
still operating in Russia; not disclosed publicly
Information Technology
Japan
Zepter
still advertising and selling to Russia
Consumer Discretionary
Switzerland
Zimmer Biomet
continues sales in Russia
Health Care
United States
ZTE
business as usual
Information Technology
China
Zwack
Not disclosed publicly
Consumer Staples
Hungary
Buying Time
Holding Off New Investments/Development (160 Companies) (Grade: D)
Companies postponing future planned investment/development/marketing while continuing substantive business…
Name
Action
Industry
Country
Aalberts
continue operations on an unspecified “lower” level & postpone investments
Industrials
Netherlands
Abbott Laboratories
suspend non-essential business activity
Health Care
United States
Abbvie
suspend aesthetics operations, pause new clinical trials
Health Care
United States
Accor
suspend new investments/development
Consumer Discretionary
France
Accumalux
still operating plant in Togliatti, Russia
Consumer Discretionary
Luxembourg
Aegon
ending new investments where has control over fund
Financials
Netherlands
Air Liquide
Some clients no longer supplied, others scaled down; all Russian investments on hold
Materials
France
Airbus
suspend supply of parts and deliveries/servicing, t but continue substantial titanium purchases from Russia
Industrials
Netherlands
Akrapovič
still operating in Russia
Consumer Discretionary
Slovenia
Alcon
suspend new investments and new clinical trial enrollment in Russia
Health Care
Switzerland
AmerisourceBergen
cease new business initiatives but continue existing clinical trials, and distributing health products
Health Care
United States
Andbank
investigate if Russian customers are subject to European sanctions
Financials
Andorra
Andritz
suspend unspecified new business in Russia for time being
Industrials
Austria
Anecoop
diverting sales away from Russia
Consumer Staples
Spain
Archer Daniels Midland (ADM)
unspecified scaling down of non-essential operations
Consumer Staples
United States
Arconic
pause new contracts but continue existing
Materials
United States
AstraZeneca
halt new investments/new clinical trials
Health Care
United Kingdom
Aurubis AG
monitor situation and review structures of Russian business partners
Industrials
Germany
Aviva
suspend new Russian investments
Financials
United Kingdom
Bang & Bonsomer
suspend new investments but still operating in Russia
Materials
Finland
Barilla
all new investments and advertising activities on hold; limit Russia production to pasta and bread
Consumer Staples
Italy
Barry Callebaut
suspend capital investment
Consumer Staples
Switzerland
Bayer
stopping unspecified non-essential business activity
Health Care
Germany
Binance
restrict Russian accounts with over €10,000
Financials
China
BlaBlaCar
Stopped new investment but stays in Russia
Information Technology
France
Boiron
suspend new investments & stop clinical trials
Health Care
France
Bolt
remove all Russia-manufactured and Russian-branded goods
Information Technology
Estonia
Bristol-Myers Squibb
pause new trials & stop enrollment of new participants; still actively hiring in Russia
Health Care
United States
Calfrac Well Services
suspension of new investments in Russia
Energy
Canada
Campari
continue sales in Russia but suspend new investments
Consumer Staples
Italy
CAPRI Holdings (Versace, Michael Kors, Jimmy Cho)
online orders unavailable but still advertising; no information about on-site sales
Consumer Discretionary
United States
Cargill
unspecified scaling down of non-essential operations
Consumer Staples
United States
Carmim
suspend some orders in backlog
Consumer Staples
Portugal
Citadele Banka
still allows transactions to Russia but introduced more thorough checks
Financials
Latvia
Colgate-Palmolive
continue essential health and hygiene products
Consumer Staples
United States
Corticeira Amorim
commerical activity suspended
Materials
Portugal
Crèdit Andorrà
investigate if Russian customers are subject to European sanctions
Financials
Andorra
Danone
suspend all investment projects but continue dairy products; suspend imports of Evian and Alpro products
Consumer Staples
France
Deceuninck
stop investments & cut links with other establishments
Industrials
Belgium
Delonghi
paused new shipments and investments
Consumer Discretionary
Italy
DMK Group
suspend new investments/advertising but continue sales and plant operations in Russia
Consumer Staples
Germany
Domino’s Pizza
suspend royalty payments & limit investment – restaurants remain open
Consumer Discretionary
United States
dōTERRA
suspend new investment in Russia
Consumer Staples
United States
Dr. Theiss
suspend advertisement
Health Care
Germany
Ecco
suspend new investments still operating in Russia
Consumer Discretionary
Denmark
Eesti Gaas
continues to import Russian gas but is looking for alternatives
Energy
Estonia
Ehrmann
continue sales in Russia but suspend new investments
Consumer Staples
Germany
Ekosem Agrar AG
restructuring finances
Consumer Staples
Germany
Eli Lilly
suspend new investments and clinical trials
Health Care
United States
Engie
no new investments
Utilities
France
ESL
ban people with ties to Russian government
NGO
Germany
FL Smidth
no new business
Industrials
Denmark
FM Global
stopped renewing and underwriting new reinsurance
Financials
United States
Focus Brands – Cinnabon
no new investments and expansion plans on hold
Industrials
United States
Freelancer
still operating in Russia; sanctioned payment menthods disabled
Information Technology
Australia
Freudenberg Group
cease trading operations with Russia & Belarus; running plants in Russia
Industrials
Germany
GEA Group
suspend new investments
Industrials
Germany
Geox
suspend new investments
Consumer Discretionary
Italy
GlaxoSmithKline
stopped advertising/new clinical trials in Russia
Health Care
United Kingdom
Glencore
stop entering into new Russian commodities trading contracts but continue holding substantive Russian equity stakes
Materials
Switzerland
Greif
canceled future investments in Russia
Materials
United States
GROUPE LIMAGRAIN/JACQUET-BROSSARD
continues flows to Russian and Ukrainian producers but suspends its project to build a seed factory in Russia
Industrials
France
Groupe Seb
suspend new investments and “sharply” reduce activities in Russia
Consumer Discretionary
France
Gruma
halt new investments in Russia
Consumer Staples
Mexico
GXO Logistics
suspend new investments
Industrials
United States
HeidelbergCement
suspend all further investments
Materials
Germany
Hellenic Bank
maintain rep offices in Russia; observe all banking sactions
Financials
Cyprus
Hellenic Petroleum
seeks new oil supplier to replace Russian oil
Energy
Greece
HERZ
no new business in Russia
Consumer Discretionary
Austria
Hilton
suspend new investments/close corporate office
Consumer Discretionary
United States
Hines
suspend new investments in Russia
Industrials
United States
HiPP
suspend investments in Russia but continue substantive operations
Consumer Staples
Switzerland
Hochland
suspend investments but continues sales and plant operations in Russia
Consumer Staples
Germany
HSBC
curtail Russian access to capital markets and limit new business
Financials
United Kingdom
Huawei
suspend new orders and furlough some staff
Information Technology
China
Hyatt
suspend investments and new developments
Consumer Discretionary
United States
Icosagen
not start any new projects
Industrials
Estonia
ID Logistics
suspend new investment in Russia
Industrials
France
ING Bank
pause all new business
Financials
Netherlands
Ingram Micro
no new business in Russia
Information Technology
United States
Intercontinental Hotels
ended new investments/closed corporate office
Consumer Discretionary
United Kingdom
Intermedia
move some employees out of Russia and ambiguous reduction of risk exposure to Russia
Communication Services
United States
Intesa Sanpaolo
suspend new investments and curtail new financing
Financials
Italy
J. Neves & Fihos (JNF)
paused distribution
Industrials
Portugal
Japan Tobacco
stopped new investments and marketing activities in Russia
Consumer Staples
Japan
Johnson & Johnson
pause patient enrollment in ongoing trials
Health Care
United States
KCA Deutag
suspend investments
Energy
United Kingdom
KDDI Corp
continue operations with local staff
Communication Services
Japan
Kimberly-Clark
suspend new investments in Russia
Consumer Staples
United States
Knauf
still operating across 14 sites in Russia but suspend new investments
Materials
Germany
Kraft Heinz – JBS
stopped new investments and exports/imports from Russia
Consumer Staples
United States
Kubíček VHS
stop cooperation
Industrials
Czech Republic
Laboratoire Servier
suspending new investments but still operating in Russia
After the start of the full-scale attack of Russia on Ukraine, with tens of thousands killed and multiple war crimes documented, many companies (often under the pressure of their customers and shareholders) have left Russia. Others stayed, continuing to provide goods and services — to Russians and taxes — to the Russian government.
Figure 1 shows that the healthcare industry has the highest share of companies that continue business as usual or have slightly modified it (usually this implies halting advertising, new investment and new clinical trials), followed by energy, consumer staples and utilities. While the EU has introduced a partial energy embargo (which will probably force some energy companies to leave), the situation with healthcare companies and those producing consumer staples is more complicated. Theoretically these companies can justify their stay in russia by humanism, i.e. providing necessary food or medicine to russian consumers. But how many of them actually do this and are their arguments valid?
To answer this question, we looked at companies operating in healthcare and consumer staples that belong to groups D and F (i.e. the companies that remain in russia) by Yale classification (figure 1) and added to them companies identified by Balyuk and Fedyk (2022) that belong to the same industries and decided to stay in Russia. In total, 111 companies were identified (this list is probably not exhaustive but we believe it contains the majority of companies).
The distribution of these companies by industry and country is presented in the following table.
Table 1. Country distribution of companies from consumer staples and healthcare industries that stay in Russia
country
Consumer Staples
Health Care
Austria
3
China
1
2
France
6
3
Germany
8
3
Greece
2
1
Hungary
1
2
Iceland
1
India
2
Israel
1
Italy
3
1
Japan
2
Latvia
1
Mexico
1
Netherlands
1
1
Poland
1
1
Portugal
1
Singapore
1
Slovenia
1
Spain
3
Switzerland
3
3
Thailand
1
United Kingdom
1
3
United States
13
33
Total
55
56
Of these companies, 43 did not make any statement on the Russia-Ukraine war. 22 wrote only about their actions (most often complying with sanctions, stopping advertising and making new investment in Russia, and providing humanitarian support for Ukraine). 42 companies (35%) provided a justification for their stay in Russia based on humanitarian reasons.
Their excuses were:
providing basic food or hygiene products to Russian consumers
providing essential medicine and/or conducting clinical trials that are important for the humanity
providing jobs (arguing that Russian people are not responsible for actions of their government)
Some companies provided a combination of these explanations, e.g. Auchan:
Our job is to do everything we can to ensure that the inhabitants of our countries of operation have access to good quality food at an affordable price and thus meet the essential food needs of the civilian population. Our 30,000 Russian employees are doing the same job to be as close as possible to a population that has no personal responsibility in the outbreak of this war. Abandoning our employees, their families and our customers is not the choice we have made. As French President Emmanuel Macron has said, “we are not at war with the Russian people”. Closing our activities in Russia would be considered as a premeditated bankruptcy leading to an expropriation that would strengthen the Russian economic and financial ecosystem, would put our employees and their families in great precarity and would deprive, in a period of high inflation, the population of the services of a discounter distributor, which has been operating in the country for 20 years. Source: Auchan statement
In this statement we see one additional explanation – that “closing our activities in Russia would be considered as a premeditated bankruptcy leading to an expropriation that would strengthen the Russian economic and financial ecosystem”.
Let’s consider these explanations in more detail. Specifically, I will argue that none of them is substantiated by data or logic. This suggests that the decision for the majority of companies to continue operating in russia must be driven by their own financial considerations, rather than anything else.
First, 70-80% of Russians support Putin and believe that Russia is going in the right direction. Thus, most Russians are not suffering under Putin’s regime, they are highly supportive of it. Moreover, they are supporting the war. They are supporting killing of Ukrainians and raping of Ukrainian women and children (the Security Service of Ukraine published a large collection of recordings of Russian occupants talking between themselves or with their relatives. These recordings very well illustrate that they don’t consider Ukrainians as humans). Thus, no targeted sanctions against Putin himself or his minions will change the course of war. Heavy sectoral sanctions affecting all the Russian citizens should be applied. Ukraine is bearing an enormous cost of the war – tens of thousands of lives, between a third and a half of its economy, thousands of houses, roads and other infrastructural objects have been and are being destroyed. Moreover, at least 3000 Ukrainians died (according to WHO) because they were unable to receive medicines for their chronic diseases or immune diseases such as cancer because the supply chains are broken. On top of that, Russia constantly bombs hospitals and maternity homes.
Other countries are bearing a huge cost as well – supporting Ukrainian refugees, providing weapons, humanitarian and financial aid. David Nabarro from WHO said at the Davos forum that 94 countries are at risk of severe hunger or famine because of the Russian attack on Ukraine. Thus, it is unfair not only to Ukrainians but to millions of people in the world to try to shield Russian citizens from the consequences of war which they support.
As another example, Cargill justifies their continued operations in Russia by stating that “Food is a basic human right and should never be used as a weapon“. But this is exactly what Russia does – it destroys Ukrainian grain storages and agricultural machines, it steals Ukrainian grain and blocks Ukrainian ports depriving not only Ukrainian farmers of their revenues but also many people in African and Asian countries of food. If Cargill believes that food should not be used as a weapon then why is it supporting Russia?
Second, Russia is a large producer and exporter of food. It also has a large domestic retail sector (e.g. Magnit, Lenta, Perekrestok etc). So it is doubtful that without those companies or without foreign supermarkets the Russian population would be deprived of the basic food. Likewise, Russia has several dozens of producers of hygiene products which can substitute for foreign producers who leave. In fact, Russians themselves do not want to see foreign companies in their country – they started the campaign “Zamestim” (meaning “we will replace”, where the first cyrylic letter was deliberately replaced with a half-swastika russia uses as their war symbol). This campaign implies that they plan to replace imported goods with locally produced ones. If foreign companies are so willing to support Russian people, why don’t they support this campaign?
Third, “premediated bankruptcies” of foreign producers or retailers will not strengthen Russian economy because an enterprise is not only premises and goods. An enterprise is primarily technology, management and expertise. Without foreign managers and engineers those plants and supermarkets will not be worth anything. This is acknowledged even by the strongest supporters of Putin’s regime.
Fourth, very often those companies that cite “caring for their Russian employees” as the reason to remain in Russia have at the same time closed their Ukrainian production sites because of the war. E.g. Mondelez states that “We continue to prioritize the safety of our people and our operations remain closed in Ukraine…As a food company, we are scaling back all non-essential activities in Russia while helping maintain continuity of the food supply during the challenging times ahead. We will also continue to support our colleagues in the market who are facing great uncertainty.” Is it fair to deprive Ukrainians of their jobs (and Ukraine of its taxes) while at the same time supporting the jobs and paying taxes in the aggressor state? The same taxes that are then used to purchase weapons to bomb their Ukrainian employees?
Fifth, companies providing pharmaceuticals or medical goods refer to ethics stating that they would continue supplying patients in Russia with essential drugs. However, as explained above, thousands of people in Ukraine are left without medical help. Russian occupants deliberately block humanitarian convoys, destroy medical facilities; in some cases they did not allow pregnant women to go to maternity hospitals. Is this an ethical behaviour? We believe that it is not. We believe that all the pharmaceutical and healthcare companies that consider themselves “ethical” or “socially responsible” should immediately withdraw from Russia. If Russian patients need some medicines, they should ask their government to provide them with those medicines. Or they should turn to the Red Cross to which multinational companies donated huge amounts of money and which tried to help Russia to deport Ukrainians.
Sixth, some companies stated that they would donate their profits from Russian operations to Ukraine, and some already reported donations either to Ukraine or to international charities such as Red Cross, UNICEF, or Save the Children. While this charitable activity can be welcomed, a much more efficient way to help Ukraine would be to donate to local organizations that have much leaner bureaucracy and better understand the needs on the ground. Moreover, while making these donations they are also paying wages to the Russian employees and taxes to the Russian government which are then–directly or indirectly–used to buy weapons and kill more Ukrainians.
Thus any excuses that one may find for remaining in Russia can be easily dismissed. What these companies (and the others, which remain silent) are really doing is protecting their market shares and their profits. Protecting a few thousand lives and jobs in a country that killed tens of thousands since February 24th (and killed hundreds of thousands before that – in Ukraine, Syria, Chechnya, Georgia and other states) and caused millions to lose their jobs, houses, their entire lives is a hypocrisy and an extreme degree of cynicism.
Annex. Analysis of statements of companies that stayed in Russia
We analyzed 60 statements of companies who stay in Russia to see what companies put into them. Figure A1 shows what was mentioned in these statements. It shows that in more than a half of analyzed statements companies mentioned caring for Russian consumers in different forms (e.g. provision of essential goods, ethical issues, “putting patients first” etc). Some companies mentioned their consumers in general, without dividing them into Russian and Ukrainian. One company talked about consumers in CIS countries to whom products of plants based in Russia are delivered.
More than a half of the companies described helping their Ukrainian employees – providing financial support, helping to relocate etc. Almost two times less companies justified their stay in Russia by their responsibility to support Russian employees; some companies specified that these employees “face challenges”, “have no impact on the situation” and even “face threats of imprisonment, unsafe conditions, and countersanctions.” There were a few “exotic” statements, such as “donating seeds to Russian farmers to avoid global food crisis” or “caring for cocoa producing families”.
A lot of companies reported donations – to Ukraine, Ukrainian refugees and/or large international charities or humanitarian organizations.
Figure A2 shows that companies mostly call the war the war. Some of them went even further and used such words as ‘invasion’ or ‘brutal aggression’. 14 statements directly or indirectly called Russia an aggressor, although in direct statements the formulation was “Russian army” or “Russian government” rather than Russia. To the contrast, 13 companies (almost a quarter) used some euphemisms to describe the war, such as “conflict”, “situation in Ukraine” or “events in Ukraine”.
It was the BMD-4 with the Thales-made Catherine FC thermal imaging camera that took part in the shelling of Ukrainian civilian cars in Bucha.
I saw a post by volunteers on a social network, and together with my fellow lawyers we launched our own probe into the French manufacturer’s involvement in Russia’s military aggression against Ukraine.
Oleksandr Dubilet,
Chairman of the Board of CB “PrivatBank” (1997-2016), Financial and banking expert
So-called exemplary company
In France, Thales is not just a public company. There are three arguments to support this assertion.
1) The company specializes in the manufacture of systems for military, aerospace and maritime purposes
2) The company’s shares are listed on the Paris Stock Exchange
3) It is not so much the private shareholder (the Dassault family with its 24.62% share) that is important, but the French government and its 25.67% share. Simply put, a company that is more than a quarter controlled by the French government, exports components that kill Ukrainians.
According to open sources, Thales supplied Catherine FC thermal imaging cameras to Russia, which were used to manufacture the Essa, Plissa and Sosna-U thermal sighting systems. They enhance the combat capabilities of modified Russian T-80, T-90, T-72 tanks and other military vehicles.
Conscious violators
After photo and video evidence of “fruitful” cooperation between Thales and Russia appeared on the Internet thanks to volunteers, my fellow lawyers and I have found real evidence that Thales supplied these combat components after the imposition of sanctions related to Russia’s annexation of the Crimea.
Since this model of equipment was created in 2016, foreign manufacturers had to supply components at least a year earlier. Consequently, Thales sold military goods and technologies to Russia after the introduction of the first wave of sanctions (Council Regulation (EU) No. 833/2014 of July 31, 2014).
Are these sanctions significant? Undoubtedly. In 2015, Thales failed to sign a $1.3 billion deal to supply two helicopter carriers to Russia. Instead, both ships were sold to Egypt.
I will also talk about a lesser-known episode of illegal but profitable cooperation between Thales and the aggressor state. The French company Sofradir, a subsidiary company of Thales, specializes in the manufacture of infrared detectors for military, space and commercial use.
According to NGO Disclose, in 2016, the company supplied 83 infrared detectors (S24) and 258 infrared detectors (S02) to Russia’s CJSC TPK Linkos.
What is Linkos? According to the Arms of Russia information agency, Linkos specializes in the development and production of computers and communications equipment, optical, optical and electronic and microwave systems and complexes, night vision equipment and quantum electronics products.
In addition, Sofradir supplied 138 infrared detectors (S10) to JSC NPO GIPO, the Russian state institute of applied optics, which develops and manufactures optical and electronic systems. Since 2008, GIPO has been a part of the Rostekhnologii state corporation.
Mutually beneficial cooperation between this subsidiary of Thales and Russian military institutions is evidenced by two decisions (documents 1 and 2) of the 2016 Inter-ministerial Commission for the Study of Military Exports (CIEMMG) of France. According to the documents found by our team, French officials allowed Sofradir to supply military technology and goods despite the sanctions.
In 2019, Sofradir and Ulis merged and created a new company – Lynred. The well-known Thales is a 50% shareholder in Lynred.
The conclusion is simple: Sofradir actually misled the Inter-ministerial Commission by concluding an additional agreement “to fulfill the contract.” The additional agreement extended the contract and aimed at circumventing sanctions for further supplies of military technology to Russia.
I and my colleagues found information that proves that Thales violated the sanctions in both the first (thermal imaging cameras) and the second (infrared detectors, through the subsidiary Sofradir) episodes, in the public domain (!). In my opinion, this illustrates the perception of sanctions very well. That is, the above French companies did not even bother to conceal evidence of their sanctions violations.
Demanding action
An EU Council decision bans the supply of dual-use goods and technology to Russia. However, you may be interested to know that this document has a loophole that reads as follows: the authorized state body may issue a license to supply such goods under contracts concluded before August 1, 2014.
And the French company Thales took full advantage of it, deliberately extending the old contracts through additional agreements and actually supplying military goods in 2015-2018.
My team of lawyers is working on each of two episodes of criminal cooperation between Thales and its subsidiary Sofradir with Russia. We have sent statements to the EU Council as the body that imposed the sanctions, as well as informing the law enforcement agencies, in particular, the French prosecutor’s office. Our goal is to open criminal cases based on these statements.
Having revealed the corporate structure of Thales and identified the shareholders (in particular, the French government), we plan to address the shareholders of this company, French banks, secondary monitoring bodies and stock exchanges and demand that they take appropriate action against sanctions violators.
As in the case of our legal “hunt” for the Belgian company New Lachaussee, which supplied ammunition equipment for the Kalashnikov concern, the purpose of international lawsuits against Thales is to punish violators of sanctions and show the toxicity of any cooperation with the aggressor state.
At a time when Ukrainians are dying for European values, Europe must be completely on our side.
Thales acknowledges in a press release on Saturday April 30 having delivered until 2019 to the Russian company Vomz “kits for assembling thermal cameras”namely infrared cameras, confirming information from the Parisian. The French defense group, however, ensures that it does not have “nothing sold since 2014” and “the application of European sanctions against Russia”.
“No new contract has been concluded with a Russian customer since the embargo”, adds Thales. Deliveries of new equipment made after 2014 concerned “contracts signed before July 2014”. “During the past few weeks, messages have been published on social networks showing our optronic equipment on board Russian military platforms”deplores Thales, who claims to share “the emotion aroused by these images”. But the group defends itself categorically.
“No deliveries have been made to Russia since the start of the conflict in Ukraine.”
Thales Group
The company also claims to have “taken the decision to cease its activities in Russia”. Thales claims to be “always strictly complied with French and international regulations, including concerning the application of the 2014 European sanctions against Russia”. “No defense equipment export contract has been signed with Russia since 2014”, says the company. The group “denies being in a joint venture with the Russian company Vomz”, to whom he sold these kits until 2014.
A senior Ukrainian official on Friday accused French defence electronics company Thales of violating European sanctions and selling Russia equipment that was used to kill civilians fleeing recent fighting outside Kyiv, claims strongly denied by Thales.
“A family was trying to escape but was killed by Russian murderers,” tweeted presidential adviser Mykhaylo Podolyak. “Killed, as it is now proved, with French weapons sold in circumvention of sanctions in 2015.”
Reached by AFP, Thales, whose largest shareholder is the French state, denied violating the sanctions that were imposed after Russia annexed Ukraine’s Crimea in 2014.
“Thales has always strictly complied with French and international regulations, including concerning the 2014 European sanctions against Russia,” the group said.
“No defence equipment export contract has been signed with Russia since 2014 and no delivery has been made to Russia since the start of the conflict in Ukraine”, said the company, adding that it has decided to cease operations in Russia.
In his Twitter post, Podolyak referenced a video made by Ukrainian blogger Pavlo Kashchuk, who examined a car found in the town of Bucha outside of Kyiv, where Ukraine accuses Russian forces of massacring hundreds of civilians.
Kashchuk said the car, in which a woman’s body was found, was riddled with holes from shells fired from armoured vehicles from a large distance.
“How could poorly trained Russian soldiers shoot so accurately with old post-Soviet equipment?” Kashchuk asked.
He said he found the answer to this question in the nearby town of Vorzel, where Ukrainian forces captured four of Russia’s BMD-4 armoured vehicles.
Kashchuk said those vehicles were equipped with sophisticated fire control systems, technology that had been sold to Russia by Thales.
In his video the blogger also showed a thermal camera which he says was recovered from an abandoned Russian tank. The Thales logo is visible on it, accompanied by the date 06/16 and the words “made in Russia.”
Kashchuk said it was assembled in Russia using Thales components.
“It’s just one of the many schemes allowing Western companies to circumvent the embargo and continue supplying the Russian army of evil with the most state-of-the-art military technologies,” he said.
The accusations follow a March report by the investigative outlet Disclose, which found that France had delivered military equipment, including thermal cameras, to Russia between 2015 and 2020.
The French Defence Ministry said it was fulfilling contracts concluded before the sanctions were adopted in July 2014, under the so-called grandfathering clause.
Pavlo Kashchuk, known as the founder of the infocar.ua project and host of the YouTube channel of the same name, published a video on it, shot after Bucha’s liberation from the ruscism occupiers. It shows not only traces of war crimes with the killing of civilians, but also abandoned equipment by retreating troops, which found French-made thermal imagers supplied by Thales Group after the imposition of sanctions against Russia.
The video begins with a demonstration of the cemetery of civilian cars taken to one place in Bucha. Paul draws attention to the holes from the 30-mm gun in the trunk lid of the Renault Sandero (in Europe, the car is sold as a Dacia Sandero) and their accuracy, despite the fact that the shots were fired from a great distance.
This 30-mm gun is installed on the BMD-4M (landing combat vehicle), entered service with the Russian army in 2016 (ie after the imposition of sanctions banning the supply of dual-use equipment to Russia). One of these BMD-4Ms was dropped by retreating racist troops in Bucha:
The modernization of the BMD-4M consists in the installation of equipment for the gunner, taking into account the stabilized sight in two planes, which has thermal imaging and rangefinder channels. This equipment allows the machine to fire at any time of day in any weather.
The equipment removed from the BMD-4M indicates a violation by Thales Group of the ban on the supply of dual-use equipment (ie, that can be used for military purposes).
The Thales logo is indicated on the equipment dismantled by the combat vehicle
In particular, a thermal imager is used, which allows the arrow to see the target in the dark, Catherine FC, made by this company. “It is allegedly going to the Russian plant in Vologda. That is, according to French drawings from components bought from the French,” – Kashchuk said in the video. — “And this is just one of the schemes that allow Western companies to circumvent the embargo and continue to supply the Russian army of evil with the latest military technology.”
According to the specifications, the Catherine FC thermal imager (note the date of manufacture – June 2016) allows you to create images with a resolution of 768×576 pixels and operates at a distance of up to 2.5 kilometers. The module itself weighs less than 3 kilograms with dimensions of 258x172x100 mm and is certified in accordance with the military standard MIL STD 810.
About Thales Group
Thales Group (pronounced “Thales”) has a history dating back to 1892 and until 2010 was called Thomson-CSF and named after the ancient Greek philosopher Thales of Miletus. Its headquarters are located in the Paris suburb of Neuilly-sur-Seine, near Paris. It employs about 68,000 people in more than 50 countries. In 2011, the company’s turnover was €13 billion. Fortune magazine ranked it among the world’s 500 largest companies, ranking 475th. Thales Group is ranked 11th in the world among companies engaged in the supply of military equipment. Since December 2014, Thales Group has been headed by Patrice Caine, who is also a member of the Board of Directors of Naval Group (since 2015) and L’Oréal (since 2018) and has received awards – bronze medal of national defense and the Order of Merit, and is also a cavalier of the Legion of Honor.
The fact that 27.1% of the company’s shares belong to the French government casts a shadow over the entire country, which appears to be a sponsor of terrorism that supports Russia’s military aggression against Ukraine.
FRANCE, Germany and Italy side-stepped an arms embargo to sell weapons to Vladimir Putin that are being used to slaughter Ukrainians.
On a day of shame for the EU, it emerged ten member states sold hundreds of millions of pounds of military kit to Russia between 2015 and 2020.
Paris sent bombs, rockets and explosives, as well as thermal-imaging cameras for 1,000 tanks and infra-red detectors for jets.
Berlin sold what it called “dual-use equipment” including rifles, “special protection” vehicles and icebreaker vessels and Rome provided armoured cars.
EU states, including then-member Britain, hit Russia with a weapons embargo in 2014 over the annexation of Crimea.
But a loophole allowed countries and firms to fulfil contracts they had previously signed with Russia.
And a probe by Investigate Europe shows EU27 states issued more than 1,000 licences after the ban.
France went on to flog £130million of military kit to the Kremlin, Germany sold £100million and Italy made £19million.
In 2015, Rome authorised the sale of Lynce military all-terrain vehicles to Moscow – which have been seen in Ukraine since the war began by Italian TV channel La7.
Despite the EU imposing an embargo on weapon sales, investigative website Disclose reports that between 2015 and 2020, France issued 76 export licences to Russia for military equipment.
And according to a report by Investigate Europe, ten EU member states continued to send weapons to Russia after the embargo – with Austria, Bulgaria, Czech Republic, Croatia, Finland, Slovakia and Spain on the list.
Figures from the EU Council Working Party on Conventional Arms Exports reveal the ten EU states exported military equipment worth a total of £291million to Russia between 2015 and 2020.
Out of the ten, France reportedly accounted for 44 per cent of sales, with aircraft, navigation systems, torpedoes and missiles among the equipment sent.
In 2015, French president François Hollande was pressured into ditching plans to flog two Mistral-class amphibious assault ships to Russia – but successive French governments went on to take advantage of the loophole.
Britain also sold weapons to Russia after the embargo was imposed, but only £1.7million worth.
And after dodging the Russian arms embargo, Germany was slammed by Kyiv’s mayor after offering to send 5,000 helmets to support Ukrainian forces against Putin’s troops.
Former boxer-turned politician Vitali Klitschko poked fun at the offer, asking if the nation would like to send pillows instead as Berlin refused to send weapons to Ukraine.
But just days into the invasion, Germany bowed to pressure and reversed its historic policy to not send weapons to conflict zones – offering to hand over 1,000 anti-tank weapons and 500 Stinger anti-aircraft defence systems to Ukraine
Meanwhile, as Putin’s invasion of Ukraine stalls with the US estimating some 30,000 Russian soldiers have been killed or captured since the conflict began, defiant Ukrainians have been seizing Russian equipment to use against them as the war rages on into its fourth week.
Volodymyr Zelensky has begged European leaders to send more weapons to help Ukrainians tirelessly defend their country as Russian forces continue to blast major cities.
The heroic leader urged leaders of the Joint Expeditionary Force on Tuesday to “help yourself by helping us” by sending more equipment.
“We all are the targets of Russia and everything will go against Europe if Ukraine won’t stand, so I would like to ask you to help yourself by helping us. ,” Zelensky said.
“You know the weapons we need. You know what kind of defence measures we need. You know that our need is fighter jets and without your support it would be very difficult
“‘We want you to help us and I would hope that you will be able to enhance that support and you will see how this will protect your security, your safety and how that will make a stable peace not only for us but for your countries.”
Zelensky said shipments of supplies from nations in Europe were being used up quickly as Ukrainian forces push captured Russian weapons and machinery into service.
It comes as the Ukrainian President again asked Washington and its NATO allies to impose a no-fly zone to ensure “Russia wouldn’t be able to terrorise our free cities”.
He addressed Joe Biden directly, saying: “I wish you to be the leader of the world. Being the leader of the world means to be the leader of peace.”
Biden and Nato have resisted Zelensky’s pleas for direct involvement against Russia – warning it could lead to World War Three.
But the US President this week unveiled his latest package of aid to Ukraine to add to the £10.3billion in military and humanitarian aid already approved.
The US said they would provide long-range missile defence and Switchblade armed drones, which will allow Kyiv’s forces to better defend against Russian aircraft from a distance.
And the West has stepped up the range of powerful weapons being supplied to Ukraine, with Bayraktar TB2 drones, Stinger missiles and Portable anti-tank weapons being sent.
It comes as Putin’s troops continue to press their assault on major cities, with fresh missile strikes and shelling on the edges of Kyiv and the western city of Lviv.
Outside Lviv, black smoke billowed for hours after a strike early on Friday, which the mayor said hit a facility for repairing military aircraft near the city’s international airport, also damaging a bus repair facility.
Early morning barrages also hit on the northern edges of the capital, with at least one person killed by shelling on Podil, a neighborhood just north of downtown Kyiv, according to emergency services.
Meanwhile, Mariupol is being flattened by a squadron of 25 Russian bombers flying sorties over the city every day — with 90 per cent of all buildings damaged or destroyed.
Around 14,000 elite Russian troops surround the city, with many of the 400,000 residents — trapped for a 17th day without power and running water — drinking from puddles to survive.
Missiles, aircraft, rockets, torpedoes, bombs. Russia continued to buy EU weapons until at least 2020. Despite the ongoing embargo, ten member states exported € 346 million worth of military equipment, according to public data analysed by Investigate Europe. Some of these weapons could be used against Ukraine now.
“Our destinies are linked. Ukraine is part of the European family. Vladimir Putin’s aggression is an aggression against all the principles we hold dear” said EU Commission president Ursula von der Leyen. Last week’s Versailles summit showed how the European Union is trying to unite after the Russian invasion of Ukraine.Yet, just over a year ago, Vladimir Putin and his army were still good customers of the European arms industry. A third of the European Union’s member states exported arms to the Russian Federation, according to data from the official Working Party of the Council on Conventional Arms Exports (COARM), analysed by Investigate Europe.
This data from all EU-27 official arms exports registers shows that between 2015 and 2020, at least 10 EU member states have exported a total of €346 million worth of arms to Russia.s. France, Germany, Italy, Austria, Bulgaria, Czech Republic, Croatia, Finland, Slovakia and Spain – to different extents – have sold “military equipment” to Russia. Our investigation shows that the term “military equipment” is broad and can include missiles, bombs, torpedoes, guns and rockets, land vehicles and ships.
An embargo full of loopholes
This is despite an embargo of the European Union that prohibits arms sales to Russia and which has been in place since 2014:
The direct or indirect sale, supply, transfer or export of arms and related materiel of all types, including weapons and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts therefore, to Russia by nationals of Member States or from the territories of Member States or using their flag vessels or aircraft, shall be prohibited whether originating or not in their territories.
COUNCIL DECISION 2014/512/CFSP of 31 July 2014
This decision followed the annexation of Crimea and the proclamation of the Donbas separatist republics. However, in the EU, the arms trade continued, as official data shows.
Many of the EU countries that exported weapons to Russia used a legal loophole in the EU regulations to continue their ongoing trade. The Working Party on Conventional Arms Exports of the Council answered IE’s questions, explaining that “the EU arms embargo contains the following exemption: contracts concluded before 1 August 2014 or ancillary contracts necessary for the execution of such contracts. The figures you find in the database should fall under this exemption. Member States are responsible to ensure compliance with the arms embargo and the EU Common Position.” That’s why, COARM concludes, “Member States are not arming Russia.”
But the conclusion is not that simple. Siemon Wezeman, senior researcher at the Stockholm International Peace Research Institute (SIPRI), makes a distinction between the regular economic trade and arms exports. “Weapons are a part of our foreign policy, not of economic policy. Political reasons are the main thing.”
According to the COARM data, after 2014 Member States issued more than a thousand licences (editor’s note: general authorisations for arms deals), while barely a hundred were refused. And at the top of the list of European exporters? France.
France, top exporter of arms to Russia
As reported by Disclose, France has sold €152 million worth of military equipment to Russia. A figure confirmed by Investigate Europe’s analysis, and places France far ahead of its neighbours, exporting 44% of European arms to Russia.
Our investigation found that since 2015 France has given its authorisation to export military equipment belonging to the category “bombs, rockets, torpedoes, missiles, explosive charges”, weapons directly lethal but also “imaging equipment, aircraft with their components and ‘lighter-than-air vehicles’”.
According to Disclose, French exports also include “thermal imaging cameras for more than 1,000 Russian tanks, as well as navigation systems and infrared detectors for fighter jets and combat helicopters. The Kremlin bought these from Safran and Thales, whose main shareholder is the French state. This equipment can now be found on-board the land vehicles, fighters and helicopters operating on the Ukrainian front.
The number of licences issued by France jumped in 2015, immediately after the embargo (see data visualisation). In 2014, according to our research, the French authorities were still giving their authorisation to send to Russia “chemical agents”, “biological agents”, “riot control agents”, “radioactive materials, related equipment, components and material”.
Questioned on Friday 4t March by IE, the Ministry of the Armed Forces took 11 days to reply that France is committed “to apply very strictly” the 2014 embargo. The missiles, rockets, torpedoes and bombs sold to Russia over the past five years are “in a word, a residual flow, resulting from past contracts (…) and which has gradually died out”, assures the French government.
Germany: €122 million for guns and vessels
According to information collected by Investigate Europe, Germany exported €121.8 million worth of military equipment to Russia. This represents 35% of all EU arms exports to Russia. It mainly consisted of icebreaker vessels, but also included rifles, and “special protection” vehicles which were sent to Russia. The German government has not responded to questions about this from Investigate Europe.
The German exports are labelled “dual use”. This is why even German politicians critical of the weapons exports and pacifist NGOs contacted by Investigate Europe don’t consider the exports a legal breach of the embargo.
Hannah Neumann, member of the European Parliament of the German Green Party, and member of the Subcommittee on Security and Defence, is upset by the situation. “Each country exports according to its own will, we need a common policy on arms exports, based on law and transparency with the involvement of the European Parliament (…)”, she told us “I am tired of backdoor deals to the benefit of only the arms industry and at the detriment of joint EU foreign policy – and peace“.
Italy: Land vehicles on the Ukrainian frontline
In third place on the list of exporters COARM data shows Italy, which has sold €22.5 million worth of military equipment to Russia between 2015 and 2020. According to our investigation, the first big contract signed with the Federation happened in 2015, when the government of Matteo Renzi authorised the Italian company Iveco to sell €25 million worth of land vehicles to Russia. Investigate Europe was able to read the “final authorisation” delivered by the Ministry of Foreign Affairs (the minister at that time was Paolo Gentiloni, now European Commissioner). In the end, our research shows that only €22.5 million worth of equipment went to Russia. But the war vehicles – the Lynce model, produced by IVECO – were clearly spotted by a journalist on the TV channel La 7 on the Ukrainian frontline, in the beginning of March. These vehicles were assembled in one of the three factories that Iveco has in Russia, but assembled from Italian parts.
Giorgio Beretta, Analyst at the Permanent Observatory on Light Weapons (OPAL), told IE:
“In arms export it’s mainly a political decision, the Italian government could have refused, then go into a legitimate trial with the arms company, and a judge would have taken into account the political situation and the need to respect a European agreement.”
After 2015, the flow of weapons and ammunition exported to Russia from Italy decreased, only to rise again in 2021.r. According to the Italian statistical office, Istat, data for foreign trade, between January and November 2021 Italy delivered €21.9 million worth of ‘arms and ammunition to Russia. This included ‘common arms’ such as rifles, pistols, ammunition and accessories.
How is it possible that six years after the embargo went into force, that the Italian government could still licence so many arms? These weapons – semi-automatic rifles and ammunition – were sold to the Russian civilian market, which includes private security, para-military and special State bodies.
Small exporters, big weapons
Looking at what other Member States were exporting to Russia in this period, some of them also had a constant flow of exports, albeit on a much smaller scale than the big suppliers. The Czech Republic exported “aircraft, lighter than air vehicles, unmanned aerial vehicles, aero-engines and aircraft equipment” every year between 2015 and 2019.
Austria also continued to export military equipment to Russia every year, “smooth-bore weapons with a calibre of less than 20mm, other arms and automatic weapons with a calibre of 12,7mm” and “ammunition and fuse setting devices, and specially designed components”.
Bulgaria had two deals, in 2016 and 2018, exporting “vessels of war, (surface or underwater) special naval equipment, accessories, components and other surface vessels” and “technology” for the “development”, “production” or “use” of items controlled in the EU Common Military List”, worth €16.5 million. Finland, Spain, Slovakia and Croatia each had one export to Russia, of a much smaller amount, in the previous years.
But Europe is not alone in having to deal with contradictions regarding their exports. According to SIPRI’s data on arms exports, there’s an even stranger fact: it was not just the EU selling arms to Russia after the annexation of Crimea – Russia also remained the second biggest market for weapons exports from Ukraine.
ByLaure Brillaud, Ana Curic, Maria Maggiore, Leïla Miñano and Nico Schmidt
STAGGERING unearthed data has revealed several NATO countries – including the UK – have supplied weapons and military equipment to Russia worth hundreds of millions of pounds, some of which are likely to be used against Ukraine today.
NATO military alliance members including the UK, France and Germany, are being accused of supporting Russia’s invasion of Ukraine by continuing to supply weapons to the Russian military up until at least 2020, despite an embargo following the annexation of Crimea in 2014. According to data unearthed from the Working Party on Conventional Arms Exports (COARM), a third of the European Union’s member states have exported weapons to Russia in recent years.
The COARM data, first analysed by Investigate Europe, reveals a staggering €346million (£290million) worth of military equipment – including aircraft, vehicles, missiles, rockets, torpedos and bombs – was exported to Russia from at least 10 EU countries between 2015 and 2020.
The report reveals several “loopholes” in an embargo against issuing weapons to Moscow after the 2014 Crimea annexation which were exploited by European countries.
Under the terms of the embargo, existing contracts could be fulfilled provided that they had been agreed to before 2014 – allowing nations to provide Russia’s military with weapons until 2020.
France, Germany, Italy, Austria, Bulgaria, Czech Republic, Croatia, Finland, Slovakia and Spain are all implicated in the report, with France singled out as the top exporter of arms to Russia.
Additionally, data from the UK Government’s Export Control Joint Unit (ECJU) shows the UK may also have taken advantage of this loophole.
So what has the UK supplied?
According to the ECJU data – which was compiled by the Campaign Against Arms Trade (CAAT) group – the UK granted 30 licences to export £3.7million worth of goods classes “for military purpose” to Russia between the 2014 embargo and September 2018.
Most of the licences were given in 2014, with additional licences in 2015 and 2016 with the last being in 2018 – according to the data which runs to the end of September 2021.
These included £1.4million to fund military aircraft, helicopter and drone components, as well as a further £1.2million worth of ammunition.
A total of £780,000 was approved for electronic equipment and £312,000 on small arms, while another £26,000 was paid out for equipment and test models and £2,900 on imaging equipment.
Note these figures do not necessarily reflect the actual value of good exported – the ECJU only collects data on the value of goods that companies were given permission to export, regardless of whether these contracts are eventually fulfilled.
Additionally, companies can be awarded ‘dual use’ licences for both military and non-military purposes by the Government, which weren’t halted under the 2014 embargo.
Including dual-purpose licences, a total of 1,129 licences have been granted to Russia since the annexing of Crimea, taking the total combined value to £1.2billion.
On February 24, UK Prime Minister Boris Johnson announced he would suspend dual-purpose licences to Russia as part of a package of sanctions following the invasion of Ukraine.
A UK Government spokesperson said: “The UK has not granted any licences to Russia that would be inconsistent with the sanctions measures imposed in July 2014.
“Following the illegal invasion of Ukraine, we suspended approval of new export licences for dual-use items to Russia with immediate effect.
“The UK takes its export control responsibilities extremely seriously. All licences not consistent with sanctions measures will be revoked and military exports to Russia remain prohibited.”
What about the rest of the EU?
According to the COARM data, France has emerged as the top exporter to Russia since 2014, with 44 percent of European arms to Russia originating there.
In total, the country issued more than 70 licences worth €152million (£128million) from 2014.
According to the Investigate Europe report on the figures, France has given authorisation to export items in the category of “bombs, rockets, torpedoes, missiles, explosive charges” alongside “imaging equipment, aircraft with their components and ‘lighter-than-air vehicles’”.
Furthermore, a report into the statistics by the independent Franch outlet Disclose showed that thermal imaging cameras and infrared sensors were purchased from French shareholder companies Safran and Thales.
This equipment is reported to adorn Russian tanks and fighter jets operating on the Ukrainian frontline in today’s brutal war.
Like the UK, the data shows most French licences were granted directly after the annexation of Crimea and have slowly declined since 2015 under the embargo.
France’s Ministry of the Armed Forces told Investigate Europe the country is committed “to apply very strictly” to the 2014 embargo and that weapons given to Russia since were “a residual flow, resulting from past contracts… and which has gradually died out”.
Germany also tops the list, with the figures showing the nation exported 35 percent of all EU arms to Russia, totalling €121.8million (£102.25million) worth of equipment.
This included icebreaker vessels, rifles and “special protection” vehicles.
German exports were largely granted under ‘dual use’ licences – as such, the exports are not deemed to be in breach of the 2014 sanctions, Investigate Europe said.
In third place, the COARM figures show Italy has sold weapons to Russia totalling €22.5million (£18.8million) with the first contract signed in 2015 authorising up to €25million (£20million) worth of land vehicles parts.
Such vehicles have been seen on the Ukrainian front line by the Italian TV channel La7.
Elsewhere in the data, Austria, Bulgaria, Czech Republic, Croatia, Finland, Slovakia and Spain are also implied in arms sales to Russia.
$134 million worth of military equipment shipped between 2014 and 2020, despite EU sanctions on Russia, according to local media
Germany shipped €122 million ($134 million) worth of military equipment to Russia despite the EU arms embargo in effect since 2014, local media has reported. Nine other EU member states also exported military goods during that time, said the report.
German arms exports to Russia between 2014 and 2020 included special protection vehicles and icebreaker vessels but also lethal weapons such as rifles, according to a report by Investigate Europe.
Economy Ministry spokesperson Annike Einhorn told reporters on Friday that since the EU’s arms embargo in 2014, Germany has not granted any new licenses for exports of military equipment to Russia.
But she was unable to account for the deliveries that continued until 2020.
According to the report, between 2014 and 2020 at least 10 EU member states exported a total of €346 million worth of arms to Russia.
France was the top exporter of arms to Russia, with €152 million worth of military equipment, followed by Germany (€122 million) and Italy (€22 million).
Following Moscow’s illegal annexation of Crimea in 2014, the EU decided to ban export or transfer of any arms and related material to Russia.
France, Germany and Italy sold hundreds of millions worth of arms to Russia
They sold military kit to the Kremlin for years despite an EU embargo banning it
They were three of at least 10 countries to use a loophole to get past the ban
France alone sold €152million out of a total €350million (£293million) exported
France, Germany and Italy used a loophole in a ban of exporting arms to Russia to send the Kremlin €296million worth of military equipment that is now being used against Ukraine.
They were just three of at least 10 EU member states to export almost €350million (£293million) in equipment that can include missiles, rockets, ships and bombs.
It should have been impossible to do so owing to an EU embargo that banned selling arms to Russia following the 2014 annexation of Crimea.
A T-72B3 is one of the tanks French military kit could be equipped on. Pictured: A T-72B3 during a military drill in St. Petersburg, Russia on February 14, 2022, ten days before the war in Ukraine started
France, Germany and Italy used a loophole in a ban of exporting arms to Russia to send the Kremlin €296million worth of military equipment that is now being used against Ukraine. They were just three of at least 10 EU member states to export almost €350million (£293million) in equipment that can include missiles, rockets, ships and bombs
The EU banned ’the direct or indirect sale, supply, transfer or export of arms and related material of all types, including weapons and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts therefore, to Russia’ eight years ago.
However, countries were able to sell hundreds of millions of pounds worth of kit to Russia despite the ban using a backdoor technicality that permitted contacts signed before August 1, 2014, or additional contracts that would help conclude those deals.
France was responsible for the majority of exports, raking in €152 million in sales, as revealed by Disclose.
Ukraine claimed to have shot down a Russian Su-30SM jet, which could have had French infrared kit on board, over the outskirts of Kyiv, with wreckage falling on a house and leaving several people injured
A Russian helicopter is shot down somewhere over Kyiv (left), while the wreckage of what appears to be a jet falls from the skies near the capital (right). European detecting systems may have been attached to Russian helicopters
That amounts to 44 per cent of European arms exported to Russia, as reported by Investigate Europe.
From 2015 French authorities allowed the sale of weapons that fell into the category of bombs, rockets, torpedoes, missiles and explosive charges to Russia.
Other exports included thermal imaging cameras for more than 1,000 Russian tanks, including T-80BVMs and T-72B3s, and infrared spotters for attack jets and helicopters.
Even in 2014 France was still allowing the sale of chemical and biological weapons to Moscow.
Germany came in at a close second, exporting 35 per cent of all EU arms to Putin with €121.8million sold.
Italy sold the third most, exporting €22.5million from 2015 to 2020. They also allegedly sold €21.9million in arms and ammunition to Russian civilians and paramilitary groups between January and November 2021.
Britain also sold £1.7million worth of army to Russia after the EU ban was imposed.
President Zelensky of Ukraine has maintained calls for more Western support, weapons as well as a no-fly zone as Putin’s invasion today entered its fourth week.
Vladimir Putin today held a huge rally to prop-up support for his invasion of Ukraine in front of thousands of ‘Z’ flag-waving Russians crammed into Moscow’s Luzhniki World Cup stadium.
The pro-war event saw the Russian talk about the success of his ‘special operation’ in Ukraine.
Vladimir Putin today held a huge rally to prop-up support for his invasion of Ukraine in front of thousands of ‘Z’ flag-waving Russians crammed into Moscow’s Luzhniki World Cup stadium
Ukrainian forces have mounted stiff resistance and the West has imposed sweeping sanctions on Russia in an effort to force it to withdraw its forces.
As his bombs continued to fall just hundreds of miles away in Ukraine, Putin boasted of Russia and Crimea’s ‘shared destiny’, and praised the peninsula’s people for voting in a referendum to be part of Russia – which was held while it was still occupied by Russian troops.
‘We are united by the same destiny,’ he said of the people of Russia and Crimea. ‘This is how the people thought and that’s what they were guided by when they had the referendum in Sevastopol.
‘They want to share their historical destiny with their motherland Russia – let us congratulate them on this occasion, it is their occasion. Congratulations,’ he said to huge cheers.
Putin repeated false claims about neo-Nazis in Ukraine, a line he has used repeatedly in an attempt to justify his invasion – despite Ukraine’s President Volodymyr Zelensky being Jewish, and far-right parties enjoying almost no political support in the country.
France continued to issue arms export licences to Russia after the 2014 embargo, investigative website Disclose has revealed.
According to leaked documents, French companies delivered arms to Russia after the EU imposed sanctions, including an arms embargo, against Russia in 2014. France has since issued more than 70 licences to export military equipment to companies worth €152 million.
Contacted by EURACTIV France, the Armed Forces ministry confirmed that France “allowed “the execution of certain contracts concluded before 2014”, something the EU embargo against Russia allowed.
According to the ministry, other European countries did the same. Additional export licences the ministry considered problematic like those for Mistral fighter jets had not been fulfilled.
But equipment delivered after 2014 would have enabled Russia’s army and air force to modernise its vehicles, notably with cameras and navigation systems for aircraft, Disclose reported. According to the ministry, this is a “residual flow from past contracts […] that has gradually died out” and is mentioned in annual reports to parliament.
The latest report to parliament on arms deliveries from 2021 shows a considerable decrease since 2016 in the number of delivery licences granted by France, both in terms of number and value of equipment delivered, with 2020 seeing the lowest figure of around €300,000.
Since 2018, Russia has not placed any more arms orders despite being France’s largest buyer from 2011, the report states.
A third of European Union (EU) member states exported weapons to Russia after the 2014 embargo banning them, according to data from the working group, which records all military exports from the 27, analyzed by Investigate Europe.
The data, released today in the newspaper Public, indicate that 10 EU countries exported weapons to Russia after the July 2014 embargo, which prohibits “the direct or indirect sale, supply, transfer or export of weapons and related material”. The 2014 embargo followed the annexation of Crimea and the proclamation of the breakaway republics of Donbass six months earlier.Every year, the 27 member states submit their data to the Council of the EU Working Group on Conventional Arms Exports, COARM.
Data analyzed by the Investigate Europe consortium indicates that between 2015 and 2021 at least 10 member states exported weapons to Russia worth a total of 346 million euros.
According to the consortium’s investigation, some European Union countries used a legal loophole in regulations to continue their trade.
The embargo “does not apply to contracts and agreements, nor to ongoing negotiations carried out before August 1, 2014, nor to the supply of spare parts and services necessary for the maintenance and security of existing capacities,” according to the consortium.
COARM explained in a response sent to Investigate Europe that “the EU arms embargo contains the following exemption: contracts concluded before 1 August 2014 or accessory contracts for the performance of such contracts. should be covered by this exemption. Member States are responsible for ensuring compliance with the arms embargo and the EU Common Position”.According to COARM, member states are not arming Russia.
Investigate Europe’s analysis puts France far ahead of EU partners, with 44% of sales to Russia.
Since 2015, France has issued export licenses for “bombs, rockets, torpedoes, missiles, explosive charges”, but also “imaging equipment, planes with their components and drones”.
According to the survey, in 2014 French arms dealers authorized the shipment to Russia of “toxic chemical or biological agents, riot control agents and radioactive substances”.
After France comes Germany, which, according to the consortium, exported 121.8 million euros to Russia, representing 35% of total exports.Behind France and Germany are also Italy, Austria, Bulgaria, Czech Republic, Croatia, Finland, Slovakia and Spain, but with lower sales. Portugal is not part of this group.
Three EU-based firms are suspected of trying to smuggle arms to Belarus and Russia, in what might be the tip of a larger black market.
Czech firm Česká zbrojovka tried to export over 100 rifles and pistols via Moldova to Russia in 2020, according to a Moldovan document seen by EUobserver.
The shipment included ‘CZ TSR’-model sniper rifles, which can be used for sport or by special police.
Hungarian firm De Fango and Slovak firm XXeurope also tried to export hundreds of thousands of ammunition cartridges via Moldova to Belarus at about the same time, the document indicated.
The EU imposed arms embargoes on Belarus and Russia in 2011 and 2014.
And a Moldovan liaison officer shared the information – a 12-page PowerPoint presentation created by Moldovan law-enforcement authorities – with an EU diplomat in Chișinău in July to raise the alarm.
It also named Moldovan arms firm Cartuș, a Russian company called Alliance, and a Belarusian one called Outdoor Team in the alleged scheme to bypass EU sanctions.
“What are the documents required in EU countries to export [military items] to non-EU countries?”, the Moldovan document asked.
“Is circumventing [EU] embargoes by using states [Moldova] that have not ratified the embargo criminalised or entails only pecuniary liability?,” it also said.
Moldova’s foreign ministry confirmed one of the cases to EUobserver, saying: “The [Moldovan] government … stopped an attempt to export civilian ammunitions to Belarus”.
“They were confiscated and are currently being kept on the territory of the Republic of Moldova. The judiciary … has opened an investigation into the case, followed by several searches last week,” it said on Tuesday (5 October).
“The ammunitions were imported from Hungary, but originally produced in Finland and Switzerland,” Moldova added, widening the list of potential EU culprits.
Moldova was “open to collaboration with any EU institution or EU member state agency investigating this case,” the ministry told EUobserver.
“The [prime minister Natalia] Gavrilița-government … has made it a priority to fight against corruption and to clean state institutions,” it also said.
Slovakia corroborated fishy goings on at XXeurope.
“We can confirm that XXeurope applied for an export licence for ammunition with a declared end-user in Moldova (for the civilian market) in April 2020. After thorough examination of the application, the Slovak MFA [ministry of foreign affairs] decided not to grant a permission for export,” it said.
“Slovakia applies strict control in arms exports,” it added.
“Czechia also fully implements all EU or UN arms embargoes,” its foreign ministry told EUobserver.
The Hungarian foreign ministry said it “complies … with the rules on arms embargo and other restrictive measures adopted by the United Nations or the European Union”.
Czech firm Česká zbrojovka told EUobserver after this story was already published “it has not supplied any of its products subject to international sanctions to either Russia or Belarus, while such sanctions have been in place” and “not authorised any of its customers or business partners to make any such sales”.
De Fango, the Hungarian arms company, told EUobserver it “does not supply goods to Russia and Belarus”.
“All deliveries by our company are carried out exclusively with the permission of the competent state authorities of Hungary, observing all Hungarian laws and EU laws,” it said.
XXeurope, the Slovak firm, which is located in Žilina in north-west Slovakia, did not list a phone number or email address.
Moldovan company Cartuș denied wrongdoing in a statement also sent after this article was published.
Belarusian firm Outdoor Team, which is located in an industrial estate outside Minsk, did not reply.
A man who answered when EUobserver phoned Russian firm Alliance in St Petersburg declined to identify himself. But he said: “We don’t have any interest to talk about this problematic [sic]. It’s too big emotion [sic]. We don’t need to talk with you. Good day. Excuse me”.
EU light
For its part, the EU foreign service recently asked Bratislava, Budapest, and Prague to shed light on the affair in the EU Council, where member states meet.
The European Commission and Europol, the joint EU police agency in The Hague, have also been seized of the Moldova re-export scheme, according to internal EU documents seen by EUobserver.
“Moldovan authorities made a presentation about possible cases of violation of arms embargoes on Russia and Belarus from Hungary, the Czech Republic, and Slovakia,” a recent internal EU foreign-service email said, referring to Chișinău’s PowerPoint document.
“The alleged scheme involves manufacturers from these countries which exported weapons (pistols and rifles) or ammunitions to Moldova and then re-exported to Russia and Belarus,” the email added.
The EU foreign service declined to comment when asked if it was pursuing an investigation.
“In cases where the EEAS [EU External Action Service] hears about a potential case of violation of EU arms embargoes, it informs the relevant EU member state(s) and requests the necessary information in order to investigate the allegations and ensure implementation,” its spokesman said.
But the revelation of the Moldova scheme posed the question if there was a wider black market in EU arms to embargoed states.
And the EU foreign-service email highlighted a potential loophole in the arms-control regime.
“EU sanctions apply in the territory of the EU and third states [such as Moldova] cannot be found liable of violation of EU sanctions,” it said.
“In case of alignment of third countries on EU sanctions, it is for the third country to decide on the course of action under its own national law,” it added.
For the Czech foreign ministry, the existing rules worked fine.
“There is no loophole in EU arms embargoes – if any end-user in the third country re-exports arms to embargoed countries, then it constitutes a clear breach of EU law and it is subject to an investigation,” it told EUobserver.
But EU guns and riot-control equipment have turned up in Belarus before.
These included German-made pistols brandished by Belarusian police against pro-democracy protesters last September, according to German broadcaster ZDF.
And they included Czech-made stun grenades used against crowds last year, some of which caused serious injuries, according to US think-tank the Atlantic Council.
The EU also has arms embargoes on Afghanistan, the Central African Republic, China, the Democratic Republic of Congo, Iran, Iraq, Lebanon, Libya, North Korea, Somalia, South Sudan, Sudan, Syria, Venezuela, Yemen, and Zimbabwe.
Symbolic?
But the Moldova-Belarus scheme showed that some of the EU measures were “just symbolic”, one EU security source commented.
“In general, the flow of arms and ammo to Belarus and Russia [from EU countries] is wider [than the Moldova scheme], including other military equipment,” the source said.
Sometimes, the devil was in the detail of individual EU arms bans, which contained derogations.
And for its part, the Czech Republic took an interest in tweaking EU rules on arms to Russia earlier this year.
“Coest discussed the CZ [Czech] proposal concerning a modification of the scope of the [Russia] arms embargo,” a memo dated 22 July from the EU Council’s Working Party on Eastern Europe and Central Asia (Coest) to its Working Party of Foreign Relations Counsellors (Relex), said.
But if anybody misbehaved, they should have known better, because another EU memo, dated 14 May 2019 and also seen by EUobserver, spelled out the details of the Russia and Belarus bans.
Some types of “civilian firearms” could be sold to Russia, the letter from Relex to the Council’s Working Party on Conventional Arms Exports said.
But nothing should be sold to Belarus because its EU sanctions included “restrictions on equipment used for internal repression,” while the EU sanctions on Russia did not, Relex said.
The European Union’s poorly co-ordinated arms export policy is undermining Europe’s security, its foreign policy and its defence industry.
The EU’s arms export policy should have three aims. First, arms control, in order to keep arms out of the wrong hands. Second, targeted arms exports to allies and countries that share the EU’s security challenges. Third, supporting the development of European military technology.
The Union’s current arms export regime, the ‘Common Position’, sets out eight criteria that member-states must test export licenses against, such as respect for international humanitarian law in the destination country. But because defence is considered a matter of national sovereignty, the Common Position is not implemented or enforced at the EU level.
The recent spat over arms exports to Saudi Arabia – Berlin ceased arms exports to the kingdom, to the chagrin of Paris and London – exposed how national arms export decisions are often driven by different political, economic and industrial concerns. Such disunity makes it harder for Europe to help resolve conflicts or influence the behaviour of third countries.
Arms export policies differ across European countries because there is little consensus on the threats to the EU or on the Union’s interests. This has been evident in the EU’s foreign policy towards Syria and Venezuela. In May 2013, the EU’s 28 foreign ministers failed to reach a consensus on renewing the embargo on arms sales to Syria, with some member-states vying to arm rebel groups. And when anti-government protests erupted in Venezuela in early 2017, EU member-states spent months debating whether or not to intervene, allowing the situation to deteriorate significantly before finally agreeing on a sanctions package that included an arms embargo. In both cases, the EU found itself unable to seize its opportunity to alleviate the situation.
Exporting to third countries allows defence companies to enlarge their customer base and create economies of scale. At the same time it raises the bar for European firms to make more competitive products. By combining stricter export controls with more research and development spending, the EU would create incentives for defence companies to improve technology while reducing death, injury and destruction outside the EU.
Member-states will only join forces to develop new military equipment or weapon systems if they trust each other to provide the necessary components in times of crisis – to customers both inside and outside the EU. Without a reliable and consistent arms export policy at European level, the EU’s recent high-profile initiatives to improve European defence capabilities risk falling flat.
A truly common EU arms export policy would require a supervisory body controlled by the European Commission to report violations of the Common Position by member-states. The Commission could refer member-states that refused to follow the rules to the European Court of Justice. But such a radical overhaul would require changes to the EU treaties – and there is no appetite among member-states to surrender their autonomy.
However, there are smaller steps that the EU can take without treaty changes that would more closely align member-states’ arms exports regimes:
specify what constitutes a ‘clear risk’ or ‘serious violation’ in the Common Position, make it explicit that existing licenses can be suspended or revoked, and make reporting obligations more stringent;
help member-states implement stronger ‘end-use’ controls to ensure arms do not end up in unintended hands;
clarify terms in the EU’s regulation on ‘dual-use’ goods (those with both a civilian and military use such as cyber-surveillance technology), and encourage information exchange between member-states;
reach inter-governmental binding commitments to abide by the EU’s toughened export criteria between some member-states, especially France and Germany, which would put greater pressure on laxer member-states.
Together, the EU’s member-states are second only to the US in the volume of arms they export.1 But EU arms export policy is poorly co-ordinated. The divergence is weakening Europe’s ability to achieve its foreign policy objectives, undermining not only its credibility as a principled, values-driven power but also its recent high-profile initiatives to improve European defence capabilities.
Europeans recently fell out over arms exports to Saudi Arabia. Following the murder of Saudi journalist and dissident Jamal Khashoggi in October 2018, Germany decided to suspend all arms exports to the kingdom. Other European countries including Finland, Denmark and Norway had already taken this decision following the devastating Saudi-led intervention in Yemen in 2015. France and the UK, however, sharply criticised Germany and pressed Chancellor Angela Merkel to revoke the decision.
Too often, arms exports are driven by political, economic and industrial concerns, rather than by the EU’s own laws and guidelines. Governments are not only concerned with national security and regional stability, but also with facilitating the exports of domestic defence companies, which generate profits, jobs and tax revenues. Thus the allure of large arms contracts can skew a country’s foreign policy.
The Saudi case underlines the need for a co-ordinated European arms export policy, which should have three strands. The first is arms control: keeping arms and dual-use goods out of the wrong hands, that is, state or non-state actors that could use them to violate international law or create instability.2 The second is targeted arms exports: selling military equipment to actors with shared security challenges. The third strand is the arms industry itself: a consistent, predictable and shared arms export policy would help support European capability development and foster a stronger European defence industry.
Arms exports have been repeatedly excluded from EU treaty provisions. Member-states are unwilling to surrender their autonomy in this area of defence policy, which is guarded as a matter of national sovereignty. Attempts by the EU to co-ordinate national policies have repeatedly failed. The Council of the EU is currently reviewing the EU’s guidelines on arms exports: now is the time for a closer look at the EU’s arms export regime.
This policy brief argues in favour of an effective common European arms export policy, examining its potential to support foreign policy through several case studies, and how it can support the EU’s ambition to build a strong European defence industrial base. We assess the EU’s current arms export regime, and ask whether a greater role for the EU in arms export regulation is possible and compatible with member-states’ interests. Finally, we make recommendations on how Europe’s arms export policy could be improved.
Why does the EU need an arms export policy?
A genuinely common policy would help prevent weapons made in the EU from being used to undermine stability or violate international humanitarian and human rights law. It would also help the EU to promote regional stability, protect allies and friendly states, and strengthen Europe’s defence industry.
1. Control: Preventing weapons falling into the ‘wrong’ hands
By restricting arms supplies, the EU can attempt to change a state’s behaviour. Arms embargoes can constrain aggressive behaviour by depriving a country of military resources. Restricting arms exports can also send a strong signal condemning human rights abuses or violations of international humanitarian law.
Arms embargoes can constrain aggressive behaviour by depriving a country of military resources.
Politicians sometimes oppose arms embargoes on the basis that the target state will simply switch to an alternative, possibly less ethical, supplier.3 But switching suppliers is costly, and may leave the target state with multiple incompatible weapons systems. Such obstacles might end up delaying or constraining its behaviour. At the very least, an embargo stops the Union contributing to a humanitarian crisis or atrocity.
The effect is much greater if member-states work together. Take Germany’s 2018 ban on arms exports to Saudi Arabia. There are good reasons for Europeans to stop exporting arms to countries like Saudi Arabia that are involved in an active conflict with desperate humanitarian consequences. The debate in Germany, however, did not centre on the violation of the EU’s arms export regime, the 2008 Common Position, but instead on pacifist principles and the consequences of German history.4 The episode was a missed opportunity: Berlin chose to take a stand on its own rather than work with other EU member-states to arrive at a European position.
At the same time, the impact of arms embargoes should not be overstated. Alone, they are ineffective in changing state behaviour. Arms embargoes are particularly poor at preventing human rights abuses and crackdowns on democracy. The most effective embargoes are usually accompanied by other measures – economic sanctions hit countries far harder.5
2. Export: Putting weapons in the ‘right’ hands
Europeans sometimes export to strategic partners or allies in crisis-prone regions in the hope of contributing to regional stability. For instance, the German government is donating 50 Marder tanks to Jordan to protect its borders against Islamist militant groups.6
Exporting arms to conflict zones is a risky strategy, and should always form part of a comprehensive support programme, including training security forces about how to use the arms in line with international law. Supplying arms can alter regional dynamics in unpredictable ways, making a previously militarily weak country more belligerent, as seen with US arms sales to Iran in the 1970s.
European arms and equipment can, however, be exported to support countries struggling with globally significant security challenges. Maritime security, for instance, is crucial for Europe’s prosperity and stability: 50 per cent of EU external trade is transported by sea, and maritime crime in the forms of theft, smuggling, piracy and terrorism is widespread. EU member-states can assist countries in their attempts to combat piracy by selling them naval equipment.
Arms exports can also ensure that European allies and partners maintain technological parity with or superiority over shared adversaries. This strategy is already being pursued in Asia. To counterbalance Chinese dominance in the region, the US and some EU countries are exporting arms to countries like Indonesia: the Dutch company Damen, for example, exported two Sigma naval frigates to the Indonesian navy in 2017 and 2018. Arms exports can also increase interoperability and make it easier to conduct joint operations with partners.
3. Supporting the EU’s defence industry
If Europe is to become a credible defence player, it needs to have a strong defence industry. But a competitive defence industry requires a coherent and credible EU arms export policy.
First, EU defence policy can help companies become less dependent on exports, and more selective about who to export to. To cope with the relatively low national-level defence spending in Europe in recent years, and with the fragmentation of the market, companies have prioritised commercially attractive dual-use capabilities – which can be used for both military and civilian objectives – or have shifted away from their home market and focused instead on exports. A business model that relies on exports means that restrictions on arms exports immediately endanger jobs. And since European countries tend to ‘buy national’, the main export markets for European arms are often in countries outside the EU, rather than in other member-states. As a result, European industries at times prioritise the capability needs of non-European customers over those of EU states.7
At the same time, pursuing a strict ‘buy EU’ policy would make it more difficult for European military forces to fill their capability gaps in time, since the EU’s defence industries are not able to cater to all of Europe’s equipment needs.8 The more units of goods with high development costs that are produced, the lower the average cost of each unit. To achieve such ‘economies of scale’ in defence production, European industry has an interest in enlarging its potential customer base through exports. Plus, keeping the European market open and exporting to partner countries (such as democratic, law-abiding NATO members) would also raise the bar for European companies and lead to more competitive products.
In a best-case scenario, the EU would stimulate defence research and development spending from member-states, which would benefit European industries and simultaneously relieve at least some of the pressure on them to find export customers and prioritise their requirements over those of European security.
Second, member-states’ arms export policies need to be reliable and consistent in order to engage in joint capability development. The EU has devised a range of new initiatives to improve its defence capabilities. Among the most high-profile of these new initiatives are the Co-ordinated Annual Review on Defence (CARD), the European Defence Fund and Permanent Structured Co-operation (PESCO). All of these aim to encourage member-states to co-operate on capability development.
The EU envisages that the process will work as follows: the EU institutions together with European governments identify Europe’s capability gaps and opportunities for joint capability development through CARD; they agree on a list of military equipment that is needed in Europe (the so-called Capability Development Plan); a group of PESCO members decides to develop an item together; and that group gets co-funding from the European Commission via the defence fund. But so far, the EU has not yet developed a plan about what to do when these member-states cannot agree on arms export rules.
Germany’s decision in the autumn of 2018 to suspend all arms exports to Saudi Arabia indicated just how much of an obstacle arms export policy could become to joint capability development. In 2018, Berlin put a halt to the sale of already assembled items, such as patrol boats, as well as German-produced components used by other companies across Europe. The freeze held up the delivery of Meteor air-to-air missiles to Saudi Arabia.9 The missiles are produced by the European company MBDA (jointly owned by Airbus, BAE Systems and Leonardo), but the propulsion system and warheads are built in Germany. German components are also needed to maintain European products after delivery, such as the Eurofighter Typhoon planes, produced jointly by the UK, Germany, Italy and Spain. Germany’s allies criticised the unpredictability of Berlin’s arms export policy and warned that European defence companies would resort to producing ‘German-free’ goods in the future.10
Member-states will only come together to create new military equipment, like the next European fighter jet, if they can rely upon one another for the supply of components. Without a common arms export policy, jointly-produced systems will always be vulnerable to one of the partners introducing export controls on one or more of the potential purchasers.
How does the EU export and control arms?
The EU’s arms export regime is fragmented, and based on three layers of law: international, EU and national. The regime is made up of several legislative instruments, which are monitored by different EU institutions. And while the EU sets out basic tenets for arms exports, licensing and regulation is determined at the national level, resulting in 28 national licensing systems and sets of rules.
Although arms exports ultimately remain a matter of national competence, EU member-states have agreed to “high common standards” and “convergence” in managing arms transfers.11 There are two parts to this commitment. First, the European Council adopted the Common Position on Arms Export Controls in 2008, which defines common rules governing the control of exports of military technology and equipment. Second, all member-states are party to the international Arms Trade Treaty (ATT), which establishes the “highest possible common international standards” for the global arms trade. The ATT was adopted by the UN General Assembly in 2013 and entered into force in the EU in 2014. Both the ATT and the Common Position are legally binding, and regulate exports of conventional weapons.
The Common Position sets out eight criteria against which member-states must test export licences, including respect for human rights and international humanitarian law in the destination country.
However, the regulation of arms exports is a national competence in the EU. Article 346 of the Treaty on the Functioning of the European Union affirms that a member-state can take measures in relation to arms trade and production to protect its security interests, and that the EU treaties do not apply to such measures. Article 346 cannot in principle be invoked for economic reasons such as to protect national industries and jobs. But the reality has often been different.12
The EU encourages convergence between member-states’ export policies through information-sharing on export licences. National export authorities attend monthly meetings of the Council’s Working Group on Conventional Arms Exports, known as COARM, where they consult one another and exchange sensitive information on licences they have denied. COARM uses the EU’s electronic communication network to allow member-states to notify one another in real time when an export licence has been turned down (around five to 10 times per day).13 The denial notifications are collated in a central EU database. Once a year, member-states submit their export data, which is compiled into a report. COARM has also developed a user’s guide which outlines best practices for applying the eight licensing criteria to arms exports.
If it were properly implemented, the Common Position would be one of the one of the strongest international arms export frameworks in the world. However, member-states often fall far short of their obligations under the Common Position and fail to apply its criteria to their export decisions. France has refused to incorporate the eight criteria into its domestic legislation.14
Countries often fall short of their obligations under the Common Position and fail to properly apply its criteria to their exports.
The Common Position says licences should be granted on a case-by-case basis, so national authorities assess whether a specific weapon export violates the eight criteria. But testing exports in isolation makes it easier for authorities to avoid acknowledging the broader context and cumulative effect of arms exports. Thus a European country may decide to export a weapon to a repressive regime that is committing abuses of international human rights or humanitarian law if the authorities judge that those weapons will not be directly used to commit those abuses. For instance, the UK government has continued to arm Saudi Arabia, even after the kingdom became engaged in a bloody conflict in Yemen in 2015, and despite evidence from the UN that the Saudi-led coalition was violating international humanitarian and human rights law.15 The then international trade secretary, Liam Fox, defended the government’s decision to export to the Saudis, arguing that it is the government’s job to conduct “a prospective and predictive exercise as to whether there is a clear risk that exports might be used in the commission of a serious violation of IHL in the future”.16 Decisions about large-scale arms exports are taken at the highest political level, meaning that judgements will be political rather than guided by the details of the Common Position.
The Common Position is also poorly enforced. Although it is legally binding, member-states are free to decide how they implement it, and there is no formal mechanism to sanction non-compliance. National governments could be taken to court if their export decisions violate the Common Position. The European Council’s legal service says that national courts can use the Position as a legal basis for prosecution, though this rarely happens. But with few exceptions, the Treaty on European Union (TEU, 2009) gives the European Court of Justice (ECJ) no powers in relation to common foreign and security policy. As a result, export authorities can be confident that there will be no material consequences for a loose interpretation of the Position.
Instead of relying on EU oversight, member-states tend to draw up memorandums of understanding ahead of joint capability projects, designed to prevent any one country from blocking sales of arms that other partners want to make. But even these agreements do not legally bind their signatories – Germany broke some of them in 2018, for example.17 In spite of the EU’s Common Position, each country currently maintains the final say over where its arms are exported to, and enjoys quite a bit of flexibility in that decision.
Sales of military goods within the EU are regulated by the Intra-Community Transfers Directive (2009). Its aim was to facilitate trade of conventional military goods within the EU. Member-states have implemented the directive via their national laws, but it has had limited success. As it stands, few defence companies have taken the opportunity to become certified, as it is not considered worth the cost and effort.18
Goods that have both a military and a civilian application – dual-use products – do not fall under the Common Position. Controlling the trade of these items is an EU competence, so they are regulated as part of the Union’s common commercial policy under Council Regulation 428/2009 (Dual-Use Regulation). As a result, and unlike conventional arms, dual-use items fall under the ECJ’s jurisdiction. However, cases involving these products tend to come before national courts – no such case has ever been tried at the ECJ. The EU is the only region in the world with a shared legal basis for controls on dual-use exports.19
At its most stringent, arms export control can take the form of an arms embargo on specific states or non-state actors. The Union has imposed arms embargoes on 38 such actors since 1996. The legal basis is set out in the TEU which states that sanctions (‘restrictive measures’) can be issued to pursue common foreign and security policy goals, such as the advancement of democracy, the rule of law and human rights. The EU can also impose sanctions under a UN Security Council mandate.
The Council and the European External Action Service (EEAS) are the two key institutions in the arms embargo process. The EU’s High Representative can initiate an embargo. The Council then adopts a decision (with the advice of the EEAS), which must be unanimous.
If the embargo is part of a broader sanctions package that involves economic or financial measures, then the High Representative (and in the case of dual-use items, the European Commission) drafts an implementing regulation, and the Council adopts the regulation by qualified majority voting. The decision is legally binding on member-states, which must then implement the embargo via national legislation.
The Union’s sanctions packages (other than those that are mixed with UN measures), including arms embargoes, are adopted for six months or a year. Towards the end of the period, the Council must reach consensus in order to prolong or adapt the embargo. There are very few exceptions, for instance, the Iran nuclear deal which sets specific expiry deadlines. The Council must also reach consensus in order to terminate sanctions before the specified end date.
Like the Common Position, arms embargoes are often poorly implemented and enforced in EU member-states. The EU’s foreign and security policy sanctions committee monitors EU sanctions but has little control over how they are implemented by member-states.
The following three cases – Saudi Arabia, Syria and Venezuela – show how co-ordination at the EU level, or lack of it, has played out in previous arms exports decisions.
Saudi Arabia
In 2015, the Saudi Crown Prince Muhammad bin Salman launched a military intervention in Yemen. The Houthis, a Shiite tribal group, had taken control of the country’s capital, Sana’a, and forced the resignation of President Abdrabbuh Mansour Hadi and his government – which had been backed by the Saudis. Saudi Arabia presented the incursion as necessary to control Iranian influence on the Arabian Peninsula, exaggerating the extent of Iranian support for the Houthis.20 The Saudis formed a coalition of nine other Sunni Arab countries: the UAE, Bahrain, Kuwait, Qatar, Jordan, Sudan, Egypt, Morocco and Senegal.21 The coalition wants to restore the Hadi government and provides financial and military support to the Yemeni army and proxy armed groups. The US, UK and France provide the coalition with arms, military equipment and training. The conflict has left 22 million people, three-quarters of all Yemenis, in need of humanitarian aid and protection.22
Member-states exporting arms to Saudi Arabia could themselves be in breach of international humanitarian law.
The Arms Trade Treaty, the Common Position and national legal frameworks all predicate arms exports upon respect for international humanitarian law, which governs armed conflicts, in the destination country. EU member-states have an obligation to take all possible steps to safeguard respect of international humanitarian law by the warring parties in Yemen.23 But UN experts have concluded that the governments of Yemen, the UAE and Saudi Arabia are responsible for numerous violations of international human rights and humanitarian law.24 Member-states exporting arms to Saudi Arabia, in the knowledge that the equipment could be used to violate international humanitarian law, could themselves be in breach of international humanitarian law.25 The European Parliament has stated that member-states that supply weapons to the Saudi-led coalition are “in violation” of the Common Position and called for an embargo, though this opinion has no legal weight.26
France and the UK were the second and third largest suppliers of arms to the Saudis from 2013-17, after the US. The French and British governments have insisted that arms exports to the coalition are lawful and strategically important. The logic for supporting the Saudi-led coalition is the need to counter-balance Iranian efforts to dominate the region. But given Saudi Arabia’s tilt towards an erratic, aggressive foreign policy, the usefulness of the Saudis as a regional partner is questionable.27 The UK Court of Appeal recently ruled that the British government’s decision-making process for export licences for billions of pounds’ worth of arms to Saudi Arabia had been unlawful. In its judgment, the court said the British government failed to assess whether the Saudi-led coalition had violated international humanitarian law during the Yemen conflict. For now, the British government cannot grant new licences to Saudi Arabia until it has re-evaluated its existing export licences in line with the law.28 The UK government will appeal the decision.
The UK and France believe Saudi Arabia is an important strategic partner in the region, and fear the lost business if they stop arms exports to the kingdom. But other member-states have imposed their own national arms embargoes on the kingdom in response to the situation in Yemen and to the murder of Khashoggi. Finland, Denmark, Norway, Germany, the Wallonia region in Belgium and the Netherlands have stopped licensing exports. Sweden refused to renew its military co-operation with Saudi Arabia in 2015, and the Flemish parliament in Belgium rejected a request for military supplies in 2016.
Alleviating the humanitarian crisis in Yemen and supporting European interests in the region requires a co-ordinated approach, however. The Saudi-led intervention in Yemen poses a serious danger to the stability of the region, and thus to European interests there. The Yemen crisis could lead to more migration from the Middle East towards the EU. The current power vacuum in Yemen and the dire humanitarian situation there have bred instability, allowing extremist organisations like al-Qaeda to flourish. The EU is worried that conflict might spill over to other countries, after Europe has invested heavily in promoting stability and security in Egypt, Iran, Syria, the Gulf of Aden, and
the Horn of Africa. Europe’s divergent arms exports policies are thus undermining the continent’s security and credibility.
Syria
Much like the Yemen conflict, the Syrian civil war has exposed Europe’s lack of common foreign policy, as exemplified by diverging arms export policies.
Syria descended into civil war after President Bashar al-Assad brutally cracked down on pro-democracy protesters in April 2011. The EU responded by imposing sanctions on Syria, including an embargo on the sale of arms and military equipment to all actors (other than humanitarian workers). The embargo was fleshed out by Council regulations in 2012, which banned specific items such as telecoms interception equipment.
Although lifting the embargo did not significantly alter the situation on the ground, it revealed Europe’s disunity.
In September 2012, when Assad looked dangerously close to victory, the UK and France began to agitate for lifting the embargo. The UK and France wanted to arm the Syrian rebels, whom they saw as the moderate opposition to Assad. They argued that strengthening the Syrian rebels would protect civilians, ‘level the playing field’ and help facilitate a diplomatic solution by forcing Assad to the negotiating table.29 Austria, the Czech Republic, Finland, the Netherlands and Sweden strongly opposed lifting the embargo, arguing that this could exacerbate the conflict and that weapons could be diverted to al-Qaeda.
In May 2013, following a 13-hour meeting of European foreign ministers, the EU lifted the arms embargo for the Syrian rebels. The 28 foreign ministers failed to reach consensus on renewing the arms embargo. Instead, they agreed a weaker political commitment not to supply arms, and then High Representative Catherine Ashton attempted to gloss over the disunity. “Member-states may take different decisions – that doesn’t mean we’ve lost the capacity to have a common foreign policy”, she said. The Austrian vice chancellor and foreign minister, Michael Spindelegger, lamented: “It is regrettable that we have found no common position”. The Council promised to review its position before August 2013. It did not.
In June 2013, a UN report detailed war crimes and abuses by Syrian opposition forces (though to a lesser extent than by government forces and affiliated militia). The report urged the international community to restrict arms transfers “given the clear risk that arms will be used to commit serious violations of international human rights or international law”.30
In 2014, Germany, the UK and Finland issued 16 licences for “vehicles”, “chemical, biological or radioactive agents” and “armoured or protective equipment”, worth €1.5 million – some of which were destined for UN-mandated or other international missions.31 This was just a slight increase from the 10 licences the years before.32 In the end, there was no reporting of European member-states directly supplying the rebels – although it later emerged that European weapons had inadvertently reached armed rebel-groups. Lifting the embargo did not significantly alter the situation on the ground, though it did reveal Europe’s disunity.
Venezuela
Since Venezuela descended into crisis in 2010, Europe has struggled to speak with one voice. The EU’s High Representative for foreign and security policy Federica Mogherini has often been limited to making declarations when member-states could not reach a consensus on sanctions or who to designate as the country’s legitimate government.
After months of anti-government protests, President Nicolás Maduro was re-elected in a rigged election in the autumn of 2017. The EU’s member-states spent months arguing over how to manage the unfolding crisis, with disputes over the EU’s right to intervene and encourage a change of regime. The EU was unable to reach a unanimous decision on sanctions, in part because Greece and the populist Five Star Movement within Italy’s coalition argued that sanctions interfered in Venezuela’s sovereign affairs. Only in November 2017 did the EU adopt sanctions on Venezuela and call for free and fair elections. The restrictive measures included asset freezes and travel bans on individuals, as well as an arms embargo, including on equipment that could be used for internal repression or monitoring. In an official communication, the Commission later argued that this delayed decision followed “a further substantial deterioration of the situation on the ground”.33
Member-states continue to prioritise short-term financial and industrial concerns above common EU foreign and security objectives.
Member-states’ arms policies towards Venezuela have often been guided by economic and industrial interests, rather than by concern for regional stability. However, most of Venezuela’s military equipment is procured from Russia and China (82 per cent), with EU member-states playing a minor role (11 per cent, most of which came from Spain, the Netherlands, France and Germany).34
Before the embargo, European member-states sold arms to Venezuela despite rising regional tensions. In 2008 the Chávez regime threatened to send tanks, troops and Russian combat aircraft across the Colombian border – threatening regional stability and even European territory like the (then) Netherlands Antilles. That did not stop EU countries approving seven more arms export licences to Venezuela in 2009 than the previous year. That included a huge contract for almost a billion euros worth of warships from Spain – Madrid’s largest ever arms contract at the time and licences for fire control systems and naval equipment worth €28.3 million from France.35 The risks of Europe providing such equipment were brought into focus years later in December 2018, when one of the Spanish frigates sold to Venezuela intercepted a Norwegian oil exploration vessel (which was undertaking a survey on behalf of the US company ExxonMobil) off the shore of Guyana and forced it to flee the area, in an attempt by Venezuela to claim its sovereignty over contested waters.36
As late as the first quarter of 2018, the Spanish government authorised the sale of €20 million worth of tank parts to Maduro’s government – even though the embargo had started in November 2017. The authorisation was technically permissible because the embargo includes an exemption for contracts that were already concluded. The Spanish government said the contract for the sale had been signed before the embargo, and that it was just the political approval that came later. But the deal would have been halted without this political approval. The latest Spanish sale shows that member-states continue to prioritise short-term financial and industrial concerns rather than common EU foreign and security objectives – in spite of the clear risks involved.
Is a greater role for the EU in regulating arms exports possible?
Europe needs more co-ordination when it comes to arms exports. Divergent arms export policies undermine Europe’s common foreign and security policy goals. Sanctions taken at the individual country level are ineffective. When Europeans act in unison, the impact of their foreign policy is multiplied, especially when their arms export policies are integrated into broader EU policies towards particular regions or conflicts.
There are radical, and for now unrealistic, ways of bringing about a common European arms export policy. For example, to ensure that member-states adhere to the Common Position, the EU would have to introduce a mechanism to hold governments accountable for breaking the rules. Or if member-states agreed to give up some national decision-making authority over arms exports, the EU could establish a supervisory body controlled by the Commission or the High Representative to report violations of the Common Position by member-states. The Commission could refer member-states that refused to follow the rules to the ECJ.37 Such a new body would require a change to the EU fundamental treaties and therefore unanimity among EU member-states, however.
At present, there is little appetite among member-states (including Germany) to give up decision-making power in this field. Anne-Marie Descôtes, the French ambassador to Germany, recently dismissed the idea of Europeanising arms exports as a cop-out and an attempt to pass responsibility to European institutions.38 She argued that it would be an unparalleled transfer of sovereignty and an unacceptable violation of Article 346. Her reading of the mood in Europe is accurate. But the EU’s plans to build a ‘defence union’ could open a window of opportunity for ‘more EU’ in arms export policy.
At present, there is little appetite among member-states to give up decision-making power on arms exports.
The EU’s recent defence initiatives represent a qualitative shift in the way the EU gets involved in defence. For years the European Commission has kept out of the defence realm, long considered a bastion of national sovereignty. Now, it has slowly begun to carve out a role for the EU in order to address some of the underlying problems that beset European defence technology and industry.
The proposed introduction of the European Defence Fund into the next EU budget is a step towards a greater EU role in capability development. The fund’s regulation states that Commission funding should have no effect on exports of arms developed with the help of EU money – the result of rigorous opposition from member-states, in particular from France, to any EU authority over exports.39 The regulation also stipulates that EU money cannot be used to fund small and light weapons that are meant mainly for export purposes, when no member-state has expressed a requirement for the weapon. And the regulation says member-states have to notify the Commission of any export of EU-funded kit to a non-EEA country;40 and, if that export “contravenes the security and defence interests of the Union and its member-states”, the money provided under the fund must be reimbursed. The security and defence interests of the Union are not laid down anywhere in a binding manner. But in the future, the Commission could potentially refer back to the regulation to expand its involvement in arms export policy.
The European Parliament will also want to become more involved in the EU’s defence planning and capability development process, and to have greater oversight of the defence fund. When the fund was first put to a vote in April 2019, 328 EU parliamentarians voted in favour of it and 231 voted against.41 In addition to those who opposed a greater EU defence role on principle, MEPs who opposed the fund questioned in particular the defence industry’s involvement in the drafting of the Commission’s proposal, as well as the Commission’s plans to spend EU money on disruptive technologies – potentially including artificial intelligence, robotics and unmanned systems – which some MEPs consider problematic from an ethical perspective. The Parliament currently has very limited control over the EU’s defence efforts, but now that the EU budget is being used for capability development, this could change in the future.
The Commission is also using its control over the trade of dual-use goods to expand its influence over arms exports. The institution recently tightened the regulation of cyber-surveillance equipment, which could bolster its ability to add items to the dual-use list, further embedding the Commission in defence matters. The institution emphasises the fact that European defence markets deal with many dual-use goods, thus strengthening its basis for challenging member-states that invoke Article 346.42
There are thus some signs of an increasing role for the EU in defence industrial policy. But treaty reform and an overhaul of Europe’s arms export regime are still a long way off. Plus, some fear that a harmonised policy would necessarily have to settle for a ‘lowest common denominator’ level of restraint, and be less restrictive than those of many member-states currently. And some NGOs and civil society organisations worry that giving greater powers to the Commission, which is less accountable than member-states’ governments, would make the system still less democratically accountable.
Without a functioning common European arms export regime, the EU is unlikely to be able to live up to its full potential in terms of foreign policy. But in the meantime, there are still ways in which the EU could maximise the impact of export and embargo decisions, strengthen the European defence market, and ensure that arms exports are in line with European values and interests.
Recommendations
1. Improve the Common Position
A review of the Common Position began in 2018, and is ongoing in COARM. Reviewers are considering how to improve the wording of the Position; possible changes to the users’ guide, including an e-licensing system for military goods; and adapting the annual report into a publicly available online database to improve transparency. Any change to the Common Position will require unanimity.43
COARM should take seriously the gaps and failings of the current arms export regime.
COARM should take seriously the gaps and failings of the current arms export regime. Reviewers should clarify some terms – on which the recent UK Court of Appeal case turned – such as ‘clear risk’, ‘might [be used]’ and ‘serious violations’. COARM could also consider shifting the emphasis in the Common Position away from the current narrow, functional approach, where the licensing authority tests whether that particular weapon system could be used to violate international human rights or humanitarian law, towards a more holistic view of the situation in the destination country. The Common Position should also make it explicit that existing licences can be suspended or revoked if the export authority so decides. This would confirm that compliance with international law takes precedence over reliable supply, and might avoid decisions like that of the Spanish government to authorise the sale of tank parts to the Maduro government in 2018.
The Common Position sets out member-states’ obligations to report annually on the export licences they have issued. But many member-states, including France, the UK and Germany, still fail to submit full reports on time. The EU should establish strict reporting deadlines and standardise the format of these reports – some member-states compile their statistics differently, and some use national classifications of military equipment rather than the EU Military List. Reporting obligations should include actual deliveries, which would give a more complete picture than just reporting export licences – this could for instance signal that a regional balance might be disturbed by a sudden influx of weapons. If one member-state feels that another has authorised an export in violation of the Common Position criteria, it could ask the exporting state to share its risk assessment in confidential channels, showing how its exports fit with the criteria.
Some countries struggle to implement even the current reporting obligations, due to a lack of resources or know-how. COARM should organise peer review meetings where governments can exchange best practices on how to gather data from industry.44 The peer review process could also be broadened, so that member-states could discuss how they implement the Common Position at the national level: whether it has been transposed into national legislation, and what guidance is available for licensing authorities.
2. Implement stronger end-use controls at the EU level
Licences for the export of military equipment should only be issued once the seller knows who will use the weapons in the destination country and what for. But any arms export regime runs the risk of diversion, where weapons can, and do, end up in the wrong hands. This is particularly true for small arms, which cause the largest share of human casualties in internal and cross border conflicts; frequently contribute to their violent escalation; and, in the hands of criminal groups, can impede economic and social development.45
A 2017 report found that more than 30 per cent of arms used by IS fighters in Syria and Iraq came from Bulgaria, Romania, Hungary and Germany.46 In spite of clear diversion risks, Bulgaria, Croatia, the Czech Republic, Slovakia and Romania supplied weapons to Saudi Arabia, Jordan, the UAE and Turkey. EU countries licensed €1.2 billion worth of assault rifles, mortar shells, rocket launchers, anti-tank missiles and heavy machine guns between 2012 and 2016.47 This was in the face of evidence suggesting that the weapons could end up with armed rebels and Islamist groups operating in Syria and Iraq, including those responsible for human rights abuses, like Ansar al-Sham, Jabhat al-Nusra (affiliated with Al-Qaeda), and the so-called Islamic State. Given that military components manufactured in Central and Eastern Europe were not compatible with equipment already in service with Saudi forces, it should have been even clearer that there was a risk of diversion. These weapons sales may have violated national, EU and international law.48
European countries have a responsibility to ensure none of their arms end up in the wrong hands. To accomplish that, governments can employ end-use controls, where the recipients have to agree not to re-export the weapons or to pass the weapons on to another user within the country without approval by the seller; and to destroy the weapons that are being replaced by the imported arms (rather than, for example, selling them to a third party).
European countries have a responsibility to ensure that none of their arms end up in the wrong hands.
Experience shows, however, that compliance with these rules is poor. For example, German G36 assault rifles exported to the Mexican government in 2013 subsequently found their way to Mexican police in states at high risk of violence and not covered by the export licence. The rifles are suspected to have been used in the high profile 2014 kidnapping and apparent murder of 43 students from a college in Iguala in the south of the country. The German arms seller Heckler & Koch has since been fined by a German court.
The German government has taken steps to ensure better compliance with its end-use regulations. For example, Berlin introduced post-shipment controls for small arms and light weapons in 2015, which can involve spot-checks once the arms have been dispatched.49 The first on-the-spot controls to verify the final destination of small arms were carried out in recipient countries India and the United Arab Emirates in 2017.50 A few European countries, including Finland, Sweden and Switzerland, have similar regulations or plans to introduce them.51 Others, like the UK, instead rely on their diplomatic connections and resources in the buyer country to prevent exported weapons ending up in the wrong hands.
The EU could explicitly encourage and support member-states to implement their own post-shipment controls. End-use controls are difficult to implement: they require significant financial, legal and human resources, as well as political leverage in the buying country. EU resources, such as expert teams made up of Commission or EEAS staff, dispatched to EU delegations in the buying country, could be employed to help with controls. This would have to be pre-negotiated and included in the contract signed by the purchaser. And it would require the EU to find solutions for confidentiality issues that arise with sharing export information with EU staff, as well as investment in staff with the expertise to identify weapons. But it could become a good instrument to keep purchasing countries honest and to discourage exporters from proceeding with sales where there is clear risk of diversion.
3. Tighten and revise dual-use regulations at the EU and national level
The Dual-Use Regulation (2009) is also under review. During the Arab Spring in 2010-2012, European and American companies exported cyber-surveillance technology to repressive Arab governments. That prompted the European Parliament to call for tighter controls on surveillance technology, which is classified as dual-use. In 2016 the European Commission proposed strengthening the Dual-Use Regulation to include cyber-surveillance technology, and the European Parliament argued for the inclusion of human rights considerations, calling on the Commission to add clear criteria and definitions to the regulation that would protect the right to privacy, data protection and freedom of assembly. The Commission proposal included an EU-specific list of dual-use items52 and the ‘catch-all’ control, which would mean the export of any item could be denied if it might be used to violate human rights.
After a lengthy review process, the Council Working Party on Dual-Use Goods removed the references to cyber-surveillance technology and human rights. This was due to criticism from industry, which was unhappy with the ‘catch-all’ idea, which would place legal liability on defence companies. Some member-states were also concerned that an EU-specific list would affect competitiveness, as the Union would be going beyond internationally accepted standards.53 The Council must now negotiate an agreed text with the European Parliament. Whether or not the new European Parliament will accept this diluted version of the recast regulation remains to be seen.
The EU should establish clear criteria and guidelines for assessing whether to export dual-use goods. As it stands, there is too little clarity on important terms at the EU level, leading national authorities to apply the regulation inconsistently. The EU could also encourage an information exchange between member-states, where authorities can share how they implement the regulation – from how the authority understands specific terms, to the penalties applied, to how licences are issued.54
The EU should strengthen the reporting procedure, requiring member-states to report licence denials, and the number and type of licences that have been approved. Member-states should be obliged to make this information public. To relieve the burden on member-states, authorities could just publish data on exports of cyber-surveillance technology, rather than on all dual-use export items.55
4. Expand inter-governmental agreements
Even at the inter-governmental level, the lack of agreement on arms export policy prevents collaboration. Pending an EU-wide agreement, a practical way to increase harmonisation of EU arms exports could lie in agreements between small groups of member-states.
A way to increase harmonisation of EU arms exports could lie in agreements between small groups of member-states.
In 2000, six EU member-states – France, Germany, Italy, Spain, Sweden and the UK – signed the Farnborough Framework Agreement, to improve consultation and co-operation on defence. The framework discusses simplifying and harmonising the signatories’ export licensing procedures, and even developing common instruments.
It is an EU adage that nothing can happen without compromise between France and Germany, and that such a compromise can then be applied to the rest of the EU. In 2019, France and Germany signed the Aachen Treaty, a follow-up to the 1963 Elysée Treaty, pledging deeper co-operation between the two countries. They promised to develop “a common approach to arms exports with regard to joint projects”.
In the months since the treaty was signed, Paris and Berlin have also signed a supplementary agreement specifically on the subject of arms exports.56 They agreed that for jointly developed systems – such as the planned European fighter jet – they would inform each other, well in advance of formal negotiations, of any opportunity for sales to third countries. They promised not to oppose the other’s exports “except on an exceptional basis, where their direct interests or national security are compromised”, which again leaves room for each country to fall back on national sovereignty concerns. If there is disagreement over an export, France and Germany plan to hold “high-level talks” where the state opposing the export does “everything possible” to propose alternative solutions. They also agreed on provisions to prevent whole European production lines being stalled because of a national freeze on the export of components. Components produced by one country and incorporated into weapons systems by another will be subject to the de minimis principle: so long as the contribution of that component to the overall system remains below a percentage jointly determined beforehand, the country producing the component guarantees authorisation of the export.
Arms exports provisions agreed by the two frontrunners could be extended to include other countries’ arms exports, or member-states could sign similar agreements between themselves. This government-led process could gradually develop to make arms export rules more predictable throughout the EU. However, to strengthen rather than erode EU foreign policy objectives, these agreements would have to go much further than the one proposed by Berlin and Paris, and include a binding commitment to abide by the EU’s export criteria.
The latest bilateral agreement between Paris and Berlin is very similar to the Debré-Schmidt agreements, signed in 1971 by the two countries’ then defence ministers, which successfully governed exports of jointly developed arms until Germany decided to ban exports to Saudi Arabia. This indicates that the issue is not necessarily the lack of agreements, but rather the lack of a common view of the threat environment.
Conclusion
Europe’s diverging export policies are harming the EU’s interests and credibility. Without stronger co-ordination at the EU level, Europe’s ability to protect its security is diminished, and the Union runs the risk of its member-states violating international law and being complicit in human rights abuses and other atrocities.
A stronger, unified arms export policy is also vital for EU ambitions to develop a European defence industry. Joint European capability projects will perpetually stumble when governments run into disagreements on export rules.
However, before a common arms policy can be agreed, EU member-states must first reach a shared analysis of any given conflict and establish what the EU’s interests are. This often proves difficult. For instance, EU member-states have different views on whether supplying weapons to Saudi Arabia will help stabilise the Gulf region, and how exports might affect European security. At the heart of the issue lies a lack of consensus on threat perception and strategic assessment. And many member-states think in terms of national efforts to protect national security, rather than considering that their national security is rarely distinct from wider EU and European security. Lucrative arms contracts for national defence industries and preserving or creating domestic jobs also generate pressure to interpret the Common Position liberally.
A common and enforceable EU arms export regime, including a sanctions mechanism and supervisory arms control body, should be the goal. Conversations with EU officials and industry figures make it abundantly clear that this is a long way off. But the development of EU defence initiatives and the increasing role of the Commission in defence policy suggest the first tentative steps towards this end may be taking place.
Even if an overhaul were legally possible without consensus, it would be unwise. EU member-states should attempt to reach a shared view on the security context of arms exports, improve the wording of the Common Position and agree on the format of reporting by member-states, tighten dual-use regulation and end-use controls, and reach inter-governmental export agreements. Europe’s security will benefit if the EU can keep moving towards convergence on arms export policy.
1: The combined arms exports of European Union member-states accounted for 27 per cent of global arms exports between 2014-18.
2: Goods that have both a military and a civilian application are known as dual-use.
3: “It’s not as easy as saying cut off arms sales. If we don’t … sell them munitions that are precision-targeted … with our rigour and standards … the situation could get a whole lot worse”, British MP Johnny Mercer argued in defence of continued supply of arms to the Saudi-led coalition in Yemen, ‘Peston’s Politics’, ITV, October 25th 2018.
4: Rolf Mützenich, deputy head of the Social Democratic Party of Germany (SPD) in the German Bundestag, ‘German ban on arms exports to Saudis spurs pushback’, Spiegel Online, March 6th 2019.
5: Michael Brzoska, ‘Measuring the effectiveness of arms embargoes’, Peace Economics, Peace Science and Public Policy, 2008; Clara Portela, ‘The EU’s use of ‘targeted’ sanctions: Evaluating effectiveness’, CEPS, March 2014.
6: German Federal Ministry for Economic Affairs and Industry, ‘Report by the government of the Federal Republic of Germany on its policy on exports of conventional military equipment in 2016’, June 2017.
7: 90 per cent of France’s arms exports and 73 per cent of Germany’s went to non-EU buyers between 2014 and 2018, and 89 per cent of UK arms exports went outside Europe in 2017. France and Germany data from Pieter Wezeman and others, ‘Trends in International Arms Transfers’, SIPRI, 2018; UK data from UK Government, ‘UK defence and security export statistics for 2017’, March 14th 2019.
8: Douglas Barrie and others, ‘Protecting Europe: meeting the EU’s military level of ambition in the context of Brexit’, IISS and DGAP, November 2018.
9: Matthias Gebauer and Christoph Schult, ‘Britain accuses Berlin of lacking loyalty to allies’, Der Spiegel, February 19th 2019.
10: Anne-Marie Descôtes, ‘Working Paper on Security Policy No. 7/2019: From “German-free” to mutual trust’, German Federal Academy for Security Policy, March 26th 2019.
11: Council Common Position 2008/944/CFSP of 8 December 2008.
12: Sophia Besch, ‘Security of supply in EU defence: Friends in need?’, CER insight, August 17th 2016.
13: Interview with COARM official. 14: National Assembly, ‘Ordinary Session of 2010-2011’, 13th Legislature, 161st meeting, April 12th 2011.
15: UN Human Rights Council, ‘Situation of human rights in Yemen, including violations and abuses since September 2014’, August 17th 2018. The findings are still subject to a determination by an independent and competent court.
16: House of Commons Hansard, ‘Export licences: High Court judgment’, volume 662, June 20th 2019.
17: Giovanni de Briganti, ‘Dispute over arms exports: France threatens Germany with exit from fighter jet project’, Defense-Aerospace.com, October 2018.
18: European Commission, ‘Evaluation of Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms and conditions of transfers of defence-related products within the Community’, November 2016.
19: Interview with Ian Stewart, Senior Research Associate at War Studies Department, King’s College London, February 2019.
20: A UN Security Council report from January 2017 concluded there was insufficient evidence to confirm large-scale supply of arms from the Iranian government to the Houthi rebels. See UN Security Council, ‘Letter from the Panel of Experts on Yemen addressed to the President of the Security Council’, S/2017/81, January 31st 2017.
21: Qatar’s membership was suspended in 2017 following the GCC diplomatic crisis. Morocco left the coalition in February 2019 after increasing tension between Rabat and Riyadh.
22: International Organisation for Migration, Yemen report, July 22nd 2018; Armed Conflict Location and Event Data Project, ‘Press release’, March 20th 2019.
23: See Common Article 1 of the Geneva Convention; Knut Dormann and Jose Serralvo, ‘Common Article 1 to the Geneva Conventions and the obligation to prevent international humanitarian law violations’, International Committee of the Red Cross, September 21st 2015.
24: UN Human Rights Council, ‘Situation of human rights in Yemen, including violations and abuses since September 2014’, August 17th 2018.
25: See Marco Sassòli, ‘State responsibility for violations of international humanitarian law’, International Committee of the Red Cross, June 2002; and International Commission of Jurists, ‘Bearing the brunt of war in Yemen: International law violations and their impact on the civilian population’, July 2018.
26: European Parliament, Resolution on the situation in Yemen, 2018/2853(RSP), October 4th 2018.
27: Beth Oppenheim, ‘You never listen to me: The European-Saudi relationship after Khashoggi’, CER policy brief, May 2nd 2019.
28: Beth Oppenheim, ‘UK arms sales to Saudi Arabia have been found unlawful’, Independent, June 20th 2019.
29: UK Foreign and Commonwealth Office, ‘Foreign secretary statement to parliament on Syria’, May 20th 2013.
30: UN Human Rights Council, ‘Report of the Independent International Commission of Inquiry on the Syrian Arab Republic’, June 4th 2013.
31: Due to a lack of detail in the EU’s annual report, it is not possible to see precisely how many licences. These descriptions are those cited in ‘Brief descriptions of EU Common Military List categories’, ‘Annual report on the European Union Code of Conduct on Arms Exports’, the Official Journal of the European Union, 2014.
32: Annual reports on the European Union Code of Conduct on Arms Exports, the Official Journal of the European Union, 2012-2014.
33: European Commission, ‘Communication from the Commission to the European Council, the European Parliament and the Council: A stronger global actor: A more efficient decision-making for EU Common Foreign and Security Policy’, September 12th 2018.
34: The exporting European member-states were Austria, France, Germany, Italy, The Netherlands, Poland, Spain, and Sweden, see SIPRI’s trend-indicator value (TIV) tables, 1999-2016.
35: Value of licensed goods, ‘Annual report on the European Union Code of Conduct on Arms Exports’, Official Journal of the European Union, 2009.
36: Martin Arostegui, ‘Critics: Spain’s tank, arms deals with Venezuela prop up Nicolas Maduro’, The Washington Post, January 21st 2019.
37: Bodil Valero, ‘The change we need in EU arms export control’, Friends of Europe, May 14th 2018.
38: Anne-Marie Descôtes, ‘Working Paper on Security Policy No. 7/2019: From “German-free” to mutual trust’, German Federal Academy for Security Policy, March 26th 2019.
39: ‘Proposal for a regulation of the European Parliament and of the Council establishing the European Defence Fund’, COM/2018/0254, June 13th 2018..
40: The European Economic Area includes EU countries plus Iceland, Liechtenstein and Norway.
41: Alexandra Brzozowski, ‘EU lawmakers rubber-stamp European Defence Fund, give up parliamentary veto’, Euractiv, April 18th, 2019.
42: Daniel Fiott, ‘European defence-industrial co-operation: From Keynes to Clausewitz’, Global Affairs, 2015.
43: Anne-Marie Descôtes, ‘Working Paper on Security Policy No. 7/2019: From “German-free” to mutual trust’, German Federal Academy for Security Policy, March 26th 2019.
44: European Parliament Policy Department, ‘The further development of the Common Position 944/2008/CFSP on arms exports control’, July 2018.
45: German Federal Ministry for Economic Affairs and Industry, ‘Report by the government of the Federal Republic of Germany on its policy on exports of conventional military equipment in 2016’, June 2017.
46: ‘Weapons of the Islamic State’, Conflict Armament Research, December 2017.
47: Lawrence Marzouk, Ivan Angelovski and Miranda Patrucic, ‘Making a killing: The €1.2 billion arms pipeline to Middle East’, Organised Crime and Corruption Reporting Project (OCCRP), July 27th 2016.
48: Patrick Wilcken, Amnesty International, cited in Lawrence Marzouk and others, OCCRP, July 27th 2016.
49: German Federal Ministry for Economic Affairs and Industry, ‘A restrictive, responsible policy on the export of military equipment’, accessed April 17th 2019.
50: German Federal Ministry for Business and Energy, ‘Short question by MPs Sevim Dagdelen, Heike Hänsel, Matthias Höhn, and the Die Linke party concerning: “carrying out post-shipment controls on arms exports to third countries”’, September 2018.
51: House of Commons Quadripartite Select Committee, ‘UK arms exports during 2016’, ‘The licencing regime’, July 18th 2018.
52: This list would go beyond the international ‘Wassenaar list’, compiled under the Wassenaar Arrangement (1996), a voluntary multilateral export control regime with 42 participating states. The list is divided into dual-use and conventional items.
53: In January 2018, a working paper of objections to the proposal was put forward by 11 member-states, including France, Germany, Italy and Spain. See Council of the European Union, ‘Working Paper: EU Export Control – Recast of Regulation 428/2009’, WK 1019/2018 INIT, January 29th 2018. In May 2018, a further working paper was put forward by a different, overlapping, group of nine member-states, including the UK. See Council of the European Union, ‘Working Paper: For adoption of an improved EU export control regulation 428/2009’, WK 5755/2018 INIT, May 15th 2018.
54: Mark Bromley and Giovanna Maletta, ‘The Challenge of Software and Technology Transfers to Non-Proliferation Efforts: Implementing and Complying with Export Controls’, SIPRI, April 2018.
55: Mark Bromley, ‘Export controls, human security and cyber-surveillance technology: Examining the proposed changes to the EU dual-use regulation’, SIPRI, December 2017.
56: Thomas Wiegold, ‘German-French arms export plans – veto only in exceptional cases’, Augen Ggeradeaus!, February 22nd 2019.
The Council of the EU is currently struggling over whether to impose an arms embargo on Russia as punishment for its role in destabilising Ukraine. Several governments in the EU, including the UK, have already announced that they are denying arms export licences for Russia and revoking those that have previously been granted.
Also in place is a Council Common Position that governs exports of military technology and equipment. This already obliges EU member states to deny arms export licences if there are concerns about the recipient’s respect for international humanitarian and human rights law or non-proliferation – or if they are involved in internal, regional or international conflict and tensions.
Arms embargoes are a vital part of the EU’s “smart sanctions” toolbox, with 22 currently in force. They have no negative humanitarian impact and are usually deployed to restrict arms flows and change target behaviour, and send political signals. The targets of EU arms embargoes tend not to be significant importers of EU-produced arms.
Russia plans to spend more than $700 billion on military equipment in the decade to 2020, and its domestic arms industry will be the main beneficiary of these plans. However, under former Russian defence minister Anatoly Serdyukov (2007-2012), licensed production agreements were struck with EU arms producers for armoured vehicles, helicopters and small arms, as well as parts and components for Russian systems.
This means Russia’s garguantuan €1.1 billion order for two Mistral amphibious assault ships from France is on a very different scale from other deals. It dwarfs Rheinmetall’s €120m contract to build a military training centre in Mulino, a deal suspended earlier in 2014 in response to the Crimean crisis.
Opening the books
EU member states are among the most open in the world when it comes to providing information on arms exports; they annually report on their deliveries of major conventional weapons to the United Nations Register of Conventional Arms. That register reveals that during 2008-2012, most of the EU’s arms exports to Russia were destined for a museum or destruction.
EU member states are also obliged to provide annual data on the value of all arms export licences issued and deliveries made, broken down by destination and categories of military equipment. This data is presented in a publicly-available EU annual report on arms exports.
But while all states provide information on licences issued, major exporters such as Germany and the UK do not provide information on their deliveries.
Here’s what we do know: during 2008-2012, EU member states issued export licences worth €925m for Russia, representing just 0.5% of the total value of all export licences issued. France accounted for more than a third of this value, issuing licenses worth €382.5m during this period and delivering €131m worth of military equipment.
Most EU member states provide information in annual reports that appear before the publication of the EU annual report. For its part, the UK has an online database that provides additional information, including descriptions of the items. In addition, the UK’s active and inquisitive parliamentary Committees on Arms Export Controls (CAEC), provide oversight of these decisions. They have been closely scrutinising the UK’s exports to Russia of late.
For example, on July 23 2013, the CAEC’s Sir John Stanley asked the UK’s prime minister and foreign minister to confirm whether the UK has suspended all 285 licences issued for exports of military equipment and dual-use items for Russia, in line with a government statement made in the spring.
Embargo could damage EU
Russia is a limited market for complete weapons systems produced in the EU. Since the dismissal of Serdyukov, Vladimir Putin has spoken of greater arms production cooperation among the BRICS, not with the EU. Dmitriy Rogozin, the deputy prime minister, has already made it clear that he regards an EU arms embargo as having a greater impact on France than Russia.
A leaked European Commission sanctions memo indicates that an EU arms embargo might exempt contracts already concluded with Russia – in particular the French Mistral deal. That would mean France could deliver the first Mistral to Russia this year, in accordance with its contractual obligations. That the deal was authorised in the aftermath of Russia’s 2008 war with Georgia showed the depth of EU divisions over Russia.
Allowing France to complete such a vast arms deal at this deeply sensitive time will reinforce the view that EU arms embargoes are tokenistic measures, staged to give the impression of “doing something” – as long as it does not significantly damage the interests of the EU’s largest members.
The West has slapped stringent sanctions on Russia in response to the downing of Malaysia Airlines Flight 17, believed by the U.S. and others to have been shot down with a Russia-supplied Buk missile system by eastern Ukraine rebels.
While the introduction of financial sanctions will create the most immediate squeeze on Russia, it is the crack-down on the arms trade which has triggered debate. Future imports and exports between the EU and Russia are now banned — but existing contracts, including France’s $1.6 billion Mistral-class warships deal, are allowed to go ahead.
But Russia is one of the few countries in the world that is nearly self-sufficient in its defense production, according to IHS Jane’s expert Guy Anderson. So will the arms embargo have an impact?
Here is a cheat-sheet on Europe’s arms trade with Russia.
How big is the arms trade between Europe and Russia?
European Union countries earned $583 million from weapons exports to Russia in 2013, the bulk of which was part-payment of the Mistral deal, according to analysis from IHS Jane’s.
Russia is, by comparison, the world’s second largest military exporter after the U.S., earning $13.2 billion from arms exports last year. Its biggest customers are India and China, countries which have not joined the sanctions against Russia.
The industry is heavily regulated and EU figures track the bloc’s arms trade by licenses approved. In total, European Union countries granted 922 licenses to sell $259 million worth of weapons to Russia in 2012, according to the latest statistics available.
However, according to Anderson, the licenses — which in the UK, for example, expire after two years — are more an “expression of intent” than indication of likely sales.
The trade with Russia compares to $4.3 billion worth of weapons the EU licensed arms companies to sell to the U.S.
What are the biggest deals?
While Russia is a significant player in the supply of arms, it has also leaned on Europe for some big deals.
The biggest — and now most controversial — is the Mistral contract of 2011, signed by France’s previous government. The warships are powerful vessels equipped with six helicopter landing zones. Each of them can carry up to 16 heavy helicopters and around 500 marines.
The first of the two carriers due to be delivered is now completing sea trials, and 400 Russian troops are currently training on it in the French port of Saint-Nazaire.
David Prater, of Stockholm International Peace Research Institute (SIPRI), said they were Russia’s first “serious” weapon supplied by Europe.
Russia’s other significant deals include its purchase of two German engines for missile boats in 2001, and four light transport aircraft from the Czech Republic in 2012, according to the SIPRI databases.
Details on the contracts are scarce but the Czech planes were reported to be worth around $3.2 million each. Russia also bought 60 army vehicles, reportedly worth estimated $24 million, from Italy in 2011.
According to the SIPRI, Russia has also agreed to buy at least eight drones from Israel in 2009, worth a reported $50 million.
“Ironically, the loss of Ukraine as a supplier to Russia is far more significant that the loss of Europeans,” Anderson said. “A lot of subcontracted work for Russia’s industrial base took place in Ukraine.”
Russian President Vladimir Putin’s office did not respond to a request for comment on the deals and impact of sanctions.
Why is the Mistral deal so politically hot?
The Mistral warships — which experts say are “very capable weapons of mobile war” — have landed France in a politically awkward spot.
French Foreign Minister Laurent Fabius last week argued the country is contractually obligated to deliver the ships — but his comments were made as European relations with Russia deteriorated.
UK Prime Minister David Cameron declared the deal’s completion “unthinkable” before being slapped back by Fabius, who echoed the phrase in reference to the UK’s involvement in the 2003 Iraq invasion.
The Mistral deal keeps some 1,000 Frenchmen and women employed in a country with a 10% unemployment rate — and reversing it would be costly.
However, French President Francois Hollande has thrown doubt on delivery of the second ship, saying last week it “depends on Russia’s attitude.”
What happens next?
European leaders are trying to hit Russia where it hurts with the latest round of sanctions.
As of Thursday, Russia state-owned banks will be restricted from accessing European capital markets and exports of oil-related equipment and technology to Russia will be slowed or stopped by red tape.
All new contracts for arms imports and exports between the EU and Russia will stop, and there will be a prohibition on exporting goods and technology that can be used for both military and civilian purposes.
But in the short-term, the arms ban is unlikely to have a significant impact on Russia’s military might. “The embargo in itself doesn’t change anything in Russian military capabilities right now,” Siemon Wezeman, senior researcher with SIPRI said.
In the long term, he said, Russia could feel pain from losing access to the latest high-tech defense electronic systems developed in the EU.
Het Delftse computer- en beveiligingsbedrijf Fox-IT verkoopt sinds 2010 haar producten in Rusland en is hier na de invoering van de internationale sancties tegen het land in 2014 mee doorgegaan. De Nederlandse overheid is een belangrijke klant van Fox-IT. Het bedrijf verzorgt onder andere de beveiliging van staatsgeheimen.
De Rus Evgeny Gengrinovich speelt een sleutelrol in de handel van Fox-IT met Rusland. Hij werkte in het verleden voor verschillende Russische staatsbedrijven. Vanaf 2011 promoot hij de Fox DataDiode namens het Zwitserse Snitegroup GmbH en het Russische ZAO NPF Simet. Later presenteert hij zich als vertegenwoordiger van Fox-IT en heeft hij een sleutelrol bij het aantrekken van andere tussenhandelaren.
De tussenhandelaren van Fox-IT hebben nauwe banden met Russische staatsbedrijven in de energiesector en de financiële sector, maar ook met het Russische Ministerie van Defensie, defensiebedrijven en de Russische inlichtingendienst FSB. Het Delftse bedrijf heeft in het algemeen weinig zicht op de eindgebruikers aan wie haar producten door tussenhandelaren worden aangeboden en doorverkocht.
Gengrinovich heeft zelf ook banden met defensie en de FSB. Zo deed hij van 2010 tot 2014 certificeringswerk voor de FSTEC (Federal Service for Technical and Export Control) en het Ministerie van Defensie. In september 2017 treedt hij als adviseur in dienst van het Russische informatiebeveiligingsbedrijf Infotecs. In 2018 wordt dit bedrijf op de Amerikaanse sanctielijst geplaatst vanwege haar banden met de Russische inlichtingendienst FSB.
Na de invoering van de internationale sancties in 2014 gaat Fox-IT door met de verkoop van haar producten in Rusland. De oorlog in Oost-Oekraïne, de annexatie van de Krim, het neerhalen van vlucht MH17 en het instellen van de internationale sancties tegen Rusland hebben geen invloed op de verkoopactiviteiten.
Verkoop in Rusland na de sancties
In 2015 verkrijgt Fox-IT zelfs de Russische certificering voor de Fox DataDiode. Het vergroot daarmee haar toegang tot de Russische markt. De FSTEC, dat verantwoordelijk is voor de Russische certificering van de DataDiode, valt onder het Ministerie van Defensie en werkt samen met de FSB.
Over de FSTEC-certificering en het keuringsbedrijf Echelon, dat ook de DataDiode onderzocht, bestaan al sinds 2013 twijfels. In 2017 beoordeelt het gerenommeerde Amerikaanse cybersecurity bedrijf Symantec het certificeringsproces als onvoldoende onafhankelijk van de Russische Staat en ziet het zelfs af van samenwerking met de FSTEC en Echelon.
In 2015 is de Fox DataDiode door ARinteg, een Moskous bedrijf in informatiebeveiliging, te koop aangeboden aan onder andere Russische banken. Volgens commercieel directeur Dmitry Slobodenyuk van ARInteg heeft het bedrijf de Datadiode na de invoering van de internationale sancties in 2014 in ieder geval verkocht aan een van de grootste banken van Rusland.
Veel Russische banken en hun topmannen zijn op de Amerikaanse en Europese sanctielijsten geplaatst vanwege hun banden met de Russische defensie-industrie. Het betreft veelal klanten van ARinteg, zoals de staatsbank Vnesheconombank VEB en de Alfa Bank, een bank die nauw verweven is met de Russische defensie-industrie.
Fox-IT zelf onderkent tot 2015 te hebben geleverd aan Rusland, ook aan de Russische overheid. Het Delftse bedrijf maakt echter niet bekend aan welke overheidsinstanties het heeft geleverd. Het gaat echter in ieder geval om een levering van de Fox DataDiode aan het staatbedrijf RusHydro. Vanwege de nauwe banden van dit bedrijf met het Kremlin worden verschillende topmannen van RusHydro in 2018 op de Amerikaanse sanctielijst geplaatst.
Exportvergunningen
De Fox DataDiode is een soort eenrichtingsverkeer firewall tussen een publiek en een privaat netwerk waarmee toegang tot vertrouwelijke informatie gereguleerd kan worden. Het behoort sinds 2009 tot de dual-use goederen: goederen met een civiele toepassing, die ook een militaire toepassing kennen, waarvoor een exportvergunning vereist is. Volgens Fox-IT zijn overheidsinstellingen in de hele wereld, waaronder de defensie-industrie, belangrijke potentiële klanten voor de Fox DataDiode.
In 2011 beschikte Fox-IT over een globale exportvergunning specifiek voor de Fox Datadiode, waarmee het kon exporteren naar Rusland. In 2012 en 2013 verkreeg het een exportvergunning voor ‘apparatuur voor informatiebeveiliging’ waaronder naast de DataDiode ook andere Fox-IT producten zoals Redfox en Skytale kunnen vallen. Tot op heden heeft het Ministerie van Buitenlandse Zaken niet bekend gemaakt of, en hoeveel, exportvergunningen Fox-IT sinds 2013 heeft aangevraagd en gekregen. De export van dual-use goederen zonder exportvergunning naar landen buiten de Europese Unie, waaronder Rusland, is in beginsel strafbaar.
Fox-IT reageert niet op vragen van Buro Jansen & Janssen
Op 7, 13, 19 en 20 mei 2021 heeft Buro Jansen & Janssen Fox-IT om commentaar verzocht op de bevindingen van dit onderzoek. Het Delftse bedrijf heeft tot op heden niet gereageerd. Evgeny Gengrinovich reageert ook niet op vragen van Buro Jansen & Janssen.
Sinds de Arabische Lente zijn meerdere westerse computer- en beveiligingsbedrijven in opspraak geraakt vanwege hun leveranties aan repressieve regimes in het Midden-Oosten. Sommige bedrijven zijn daarvoor ook juridisch vervolgd. Ook in Nederland stond de export van Nederlandse bedrijven (waaronder Fox-IT) naar landen in het Midden-Oosten rond 2011 in de politieke en publieke belangstelling.
Het Midden-Oosten was vanaf 2006 een belangrijke afzetmarkt voor het Nederlandse bedrijf Fox-IT, actief op de markt voor de surveillance-industrie in de regio. Volgens Dirk Peeters (toenmalig Vice President Business Development van het bedrijf) maakte Fox-IT in de periode 2008-2011 met de internationale verkoop een totale omzet van 20 miljoen euro. De helft hiervan (10 miljoen euro) betrof de verkoop van producten aan ‘LEA (Law Enforcement Agencies)’, waarvan 4 miljoen euro in het Midden-Oosten.
Fox-IT richtte zich in het Midden-Oosten met name op de verkoop van de FoxReplay (interceptie-apparatuur om internetverkeer al dan niet real time te analyseren) en de DataDiode (apparatuur waarmee toegang tot vertrouwelijke informatie tussen een publiek en een privaat netwerk kan worden gereguleerd).
De export van dual-use goederen (goederen met een civiele toepassing, die ook een militaire toepassing kunnen hebben, en waartoe ook IT-technologie en software kunnen behoren) naar landen buiten de Europese Unie is vergunningsplichtig. Bedrijven dienen een exportvergunning aan te vragen bij de Afdeling Exportcontrole en Strategische Goederen – deze valt sinds 2013 onder het Ministerie van Buitenlandse Zaken, en daarvoor onder het Ministerie van Economische Zaken.
In dit onderzoek gaat Buro Jansen & Janssen in op de beoordeling door de Nederlandse overheid van de aanvragen voor exportvergunningen van Fox-IT in de periode 2006-2013, met bijzondere aandacht voor de export van het bedrijf naar het Midden-Oosten.
Onderzoek Buro Jansen & Janssen
Uit documenten die door de Nederlandse overheid via de Wet Openbaarheid Bestuur openbaar zijn gemaakt blijkt dat Fox-IT in de periode 2006-2010 geen enkele exportvergunning heeft aangevraagd, en dat het bedrijf nooit een exportvergunning heeft aangevraagd voor de FoxReplay.
In de periode 2011-2013 ontving Fox-IT jaarlijks een globale exportvergunning voor de DataDiode waarmee het kon exporteren naar klanten in de hele wereld. Hiermee bestond het risico dat de producten van het bedrijf in handen kwamen van repressieve regimes in het Midden-Oosten, zeker daar Fox-IT exporteerde naar partnerbedrijven die haar producten in de regio doorverkochten.
Het exportbeleid voor dual-use goederen vereist een risicoanalyse om ongewenst eindgebruik te voorkomen. Daarvan was in de praktijk echter geen sprake omdat de Afdeling Exportcontrole meer prioriteit gaf aan het faciliteren van de export van het bedrijf.
In 2011 uitte de Tweede Kamer haar zorgen over mogelijk misbruik van door Nederlandse computer- en beveiligingsbedrijven (waaronder Fox-IT) geëxporteerde dual-use producten aan landen in het Midden-Oosten. Fox-IT had een bepalende rol bij de beantwoording van Kamervragen. Ook bij beantwoording van WOB-verzoeken heeft het bedrijf veel invloed op welke informatie door de overheid openbaar wordt gemaakt.
Export zonder vergunning
Fox-IT heeft in de periode 2006-2010 geen enkele exportvergunning aangevraagd en heeft nooit een exportvergunning aangevraagd voor de FoxReplay. Het is echter duidelijk dat het bedrijf haar producten (waaronder FoxReplay) in deze periode heeft geëxporteerd, ook naar landen buiten de Europese Unie.
Na de oprichting van het bedrijf in 1999 werd Fox-IT steeds meer internationaal actief. Zo schreef het bedrijf in december 2006 in haar nieuwsbrief dat het ‘een internationale sales force heeft opgericht waarmee we voornamelijk producten aan law enforcement organisaties zullen aanbieden. Denk hierbij aan de data diode, de tapanalyse software FoxReplay en onze cryptografische producten.’ Het bedrijf breidde haar internationale sales force in de hierop volgende jaren uit: in 2010 bestond deze uit acht accountmanagers en sales engineers.
Fox-IT berichtte zelf ook over de export van de FoxReplay. Op 26 september 2011 meldde het bedrijf in een persbericht: ‘FoxReplay Analyst is in gebruik door overheidsinstellingen over de hele wereld. FoxReplay Analyst biedt analisten vertrouwde en gedetailleerde real-time interpretatie van internetactiviteiten van de gebruikers op een logische manier in de juiste context.’
Fox-IT exporteerde in de periode 2006-2010 ook de DataDiode. Peter Geytenbeek (sinds 2014 international salesmanager van Fox-IT) verklaarde in 2017 dat het bedrijf de DataDiode sinds 2008 naar landen in de hele wereld exporteert: ‘Since 2008 Fox-IT has successfully installed over hundreds of Fox DataDiode’s in over 40 countries, covering every geographical region except Antarctica.’
De handelwijze van Fox-It roept vragen op. Het exporteren van dual-use goederen zonder exportvergunning naar landen buiten de Europese Unie is in beginsel strafbaar.
Fox-IT in het Midden-Oosten
Het Midden-Oosten werd vanaf 2006 een belangrijke afzetmarkt voor Fox-IT, waarbij het zich vooral richtte op de verkoop van de FoxReplay en de DataDiode. Het bedrijf berichtte hierover in haar eigen nieuwsbrieven en websites. Het bedrijf maakte in haar ‘Fox bericht’ van december 2006 melding van de aanstelling van Matthijs van der Wel als Manager Business Development EMEA (Europe Middle East Africa). In november 2007 werd hij opgevolgd door Rens de Wolf.
Volgens zijn LinkedIn account was Van der Wel van november 2007 tot maart 2010 ‘International sales manager for Fox-IT (crypto and lawful interception) products in Europe, Middle East and Africa. Target groups are governmental bodies with a need for state secret level security and/or active in the lawful interception/SIGINT business.’
Volgens Dirk Peeters (van 2008 tot 2011 Vice President Business Development van het bedrijf) bedroeg de omzet van de verkoop aan Law Enforcement Agencies in het Midden-Oosten in deze periode 4 miljoen euro. Volgens Peeters exporteerde Fox-IT tussen 2008 en 2011 naar Dubai, Abu Dhabi, Oman, Saoedi-Arabië, Israël en Jordanië. Dirk Peeters werkte na Fox-IT bij Netscout en BAE Systems AI alvorens te solliciteren bij het Italiaanse bedrijf Hacking Team.
Fox-IT gaf in haar nieuwsbrieven en websites enige ruchtbaarheid over haar activiteiten in het Midden-Oosten, zoals deelname aan beurzen en bezoeken aan de regio. Het bedrijf heeft nooit duidelijk gemaakt aan welke landen in de regio het wel en niet heeft geleverd, maar publiceerde wel enige details over haar verkoopactiviteiten.
Zo berichtte het in 2008 op haar website dat het aftaptechnologie exporteerde aan politie en intelligence diensten in het Midden-Oosten: ‘In other parts of the world, including the Middle east and the USA, Fox-IT is represented by partners offering selected Fox-IT solutions. In 2006 the foundation of FoxReplay took place. This business unit develops for the analysis of intercepted internet traffic for police and intelligence organisations all over the world. Her market has expanded to big parts of Europe, the Middle East, the Caribbean and America.’
De Nederlandse overheid was op de hoogte van de verkoopactiviteiten van het bedrijf in het Midden-Oosten. Fox-IT was van 2007 tot 2011 jaarlijks met een infokraam of presentaties aanwezig op de ISS (Intelligence Support Systems) World MEA (Middle East and Africa), een handelsbeurs voor afluister- en surveillance-apparatuur.
Deze beurzen werden bezocht door medewerkers van legers, politie en inlichtingendiensten uit verschillende landen in het Midden-Oosten. Ook de Nederlandse overheid bezocht deze beurzen: in 2007 alleen ambtenaren van het Ministerie van Binnenlandse Zaken, in 2008 ook ambtenaren van Justitie en Defensie, en in de jaren hierna bezochten ook de Nederlandse politie en het Openbaar Ministerie ISS World beurzen in het Midden-Oosten en Europa.
Ook ambtenaren van het Ministerie van Economische Zaken (waaronder de Afdeling Exportcontrole tot 2013 viel) bezochten ISS beurzen. Tevens benaderde het Ministerie van Economische Zaken in 2008 Fox-IT voor deelname aan een onderzoek naar de defensie gerelateerde industrie in Nederland. Het aanschrijven van het bedrijf voor dit onderzoek duidt erop dat het Ministerie op de hoogte was dat Fox-IT dual-use goederen produceerde en exporteerde.
Het Ministerie heeft via de WOB enige informatie over het onderzoek openbaar gemaakt. In de vragenlijst die Fox-It op 4 januari 2008 door het Ministerie werd toegestuurd, werd het bedrijf onder meer gevraagd: ‘Richt u zich met uw defensiewerkzaamheden op de Nederlandse of op de buitenlandse markt’ (vraag 22) en ‘In welke landen u voornamelijk actief bent?'(vraag 23). Het is niet bekend of (en hoe volledig) Fox-IT de vragenlijst heeft ingevuld, omdat de antwoorden van Fox-IT en de uitkomsten van het onderzoek niet openbaar zijn gemaakt.
Fox-IT had ook met Nederlandse ambassades in het Midden-Oosten contact over haar verkoopactiviteiten in de regio. In 2007 gaf het bedrijf tijdens tours door de regio besloten workshops aan overheidsinstanties, militairen en inlichtingendiensten in onder meer Egypte, Syrië, Saoedi-Arabië en de Verenigde Arabische Emiraten, vooral gericht op de verkoop van de FoxReplay en DataDiode.
Matthijs van der Wel had tijdens deze tours afspraken met vertegenwoordigers van Nederlandse ambassades in Saoedi-Arabië en Syrië. Zo had hij op 20 mei 2007 een lunchafspraak met de Nederlandse ambassade in Damascus. Een dag later (op 21 mei) gaf hij een workshop aan vertegenwoordigers van de Syrische overheid en inlichtingendiensten in het Four Seasons Hotel in Damascus.
Fox-IT werkte in de regio zelfs samen met twee overheidsorganen, het NFI (Nationaal Forensisch Instituut) en TNO (Nederlandse Organisatie voor Toegepast natuurwetenschappelijk Onderzoek). De samenwerking betrof de voorbereidingen van het Surveillance Lab in Saoedi-Arabië in 2011, het opzetten van een landelijk netwerk van telefoon- en internetsurveillance onder verantwoordelijkheid van het Saoedische Ministerie van Binnenlandse Zaken.
De Nederlandse overheid was dus op allerlei manieren op de hoogte van de verkoopactiviteiten van Fox-IT in het Midden-Oosten. Het vormde voor de Afdeling Exportcontrole en Strategische Goederen echter geen aanleiding om het bedrijf hierop aan te spreken en te wijzen op haar wettelijke verplichting een exportvergunning aan te vragen.
2011-2013 Export met vergunningen
De Nederlandse overheid heeft enkele documenten openbaar gemaakt over door Fox-IT ingediende aanvragen voor exportvergunningen in de periode 2011-2013. Het bedrijf ontving in deze periode drie globale vergunningen voor klanten van Fox-IT in de gehele wereld (m.u.v. moeilijke landen).
De Afdeling Exportcontrole en Strategische Goederen baseert zich bij de beoordeling van aanvragen voor exportvergunningen op de Europese lijst voor dual-use goederen (opgenomen als bijlage I in de dual-use verordening 428/2009). Voor de producten van computer- en beveiligingsbedrijven is met name categorie 5 (Telecommunicatie en informatiebeveiliging) relevant. De lijst bevat geen namen van specifieke producten, maar verschillende categorieën van productomschrijvingen met bijbehorende codes. Exportvergunningen zijn in beginsel een jaar geldig, maar soms worden er vergunningen voor een langere periode verleend.
De overheid publiceert sinds 2004 een overzicht van de verstrekte exportvergunningen: de Maandelijkse Rapportage uitvoer dual-use goederen. De Rapportage bevat een beperkte hoeveelheid informatie. De naam van het exporterende bedrijf wordt niet gepubliceerd. Ook de naam van het product waarvoor een exportvergunning is verleend wordt in het overzicht niet genoemd, maar slechts een algemene omschrijving (zoals bijvoorbeeld ‘apparatuur voor informatiebeveiliging’).
Exportvergunningen worden vaak verleend voor export naar een specifiek land. Er worden echter ook globale exportvergunningen verleend voor ‘de wereld m.u.v. moeilijke landen’ (Noord-Korea en Iran). Hierbij is het dus onbekend naar welke landen een bedrijf exporteert en is er geen zicht op de eindgebruiker en eindtoepassing. De rapportage vermeldt evenmin of een bedrijf exporteert naar een partnerbedrijf, dat de producten vervolgens weer doorverkoopt, waarmee er dus nog minder zicht is op de eindgebruiker.
Het exportbeleid voor dual-use goederen suggereert een risicoanalyse om ongewenst eindgebruik te voorkomen. Het Handboek Strategische Goederen en Diensten stelt: ‘Het Nederlands dual-use exportcontrolesysteem is gebaseerd op risicoanalyses. De nadruk ligt bij de controle vooraf. Het gaat er om met behulp van risicoanalyses en, waar nodig, het verkrijgen van extra waarborgen, de risico’s van ongewenst gebruik of doorgeleiding naar een onwenselijke bestemming tot een minimum te beperken.’
Uit een reconstructie van de afhandeling van de aanvragen voor de exportvergunningen in 2011-2013 blijkt dat er in de praktijk nauwelijks sprake is van een risicoanalyse. Fox-IT verstrekt de Afdeling Exportcontrole nauwelijks informatie over de eindgebruikers van de te exporteren producten. De Afdeling vraagt het bedrijf nauwelijks om informatie, die noodzakelijk is voor het maken van een risicoanalyse om ongewenst eindgebruik te voorkomen.
Eerste aanvraag exportvergunning
Op 17 februari 2011 doet Fox-IT voor de eerste keer een aanvraag voor een exportvergunning. Het bedrijf vraagt een globale exportvergunning aan voor klanten van Fox Crypto in de gehele wereld (m.u.v. moeilijke landen). De aanvraag is voor de DataDiode (Fort Fox hardware data diode FFHDD2+) met als eindgebruik ‘het koppelen van hoog gerubriceerde netwerken aan laag gerubriceerde netwerken’. De aanvraag wordt binnen enkele dagen (op 21 februari) gehonoreerd en is een jaar geldig.
Opvallend is een opmerking in het pre-advies van het CDIU (Centrale Dienst voor In en Uitvoer van de Douane): ‘Het product is recentelijk goedgekeurd voor EAL 7+. Hierdoor is het op de lijst van dual-use goederen gekomen.’ De informatie in het pre-advies is afkomstig van Fox-IT.
Fox-IT refereert hiermee aan de EAL-7 certificering, die het in juni 2010 voor de DataDiode verkreeg. EAL (Evaluation Assurance Level) is een internationale norm voor IT-veiligheidscertificeringen, EAL-7 is het hoogste gegarandeerde waarderingsniveau. Fox-IT stelt dat de DataDiode pas na het verkrijgen van de EAL-7 certificering vergunningsplichtig is geworden.
Dit is echter onjuist, aangezien ook producten met een lagere EAL certificering vergunningsplichtig kunnen zijn. In 2009 verkreeg Fox-IT voor de DataDiode al een EAL-6 certificering, waarmee het product in ieder geval vergunningsplichtig werd. Volgens het Handboek Strategische Goederen zijn vergunningsplichtig: telecommunicatie en informatiebeveilingsproducten met de code 5A002a7 (niet-cryptografische beveiligingssystemen en –voorzieningen voor informatie- en communicatietechnologie (ICT), met een beveiligingsniveau hoger dan of gelijkwaardig aan klasse EAL-6)
De opmerking over de EAL-certificering leidt bij de Afdeling Exportcontrole echter niet tot vragen aan het bedrijf. Het ontgaat de Afdeling dat de export van de DataDiode al eerder vergunningsplichtig was en de Afdeling vraagt het bedrijf niet of het de DataDiode in voorgaande jaren geëxporteerd heeft.
Wanneer bedrijven een exportvergunning aanvragen voor een product dat cryptografie bevat dienen zij een zogenaamd cryptoformulier in te vullen. Fox-IT voegt bij de aanvraag echter geen cryptoformulier bij. Volgens het bedrijf bevat de DataDiode geen cryptografie, hoewel het op haar website als een van haar cryptografische producten genoemd wordt. Het CDIU pre-advies vermeldt: ‘Het product is door certificering op de Cryptolijst gekomen, terwijl het geen crypto bevat. Het beschermt netwerken gebaseerd op de wetten van de fysica en niet met crypto.’
De Afdeling vraagt Fox-IT niet naar het cryptoformulier. Door het cryptoformulier niet in te vullen hoeft Fox-IT minder informatie te verschaffen over de eindgebruikers. In het cryptoformulier wordt bedrijven namelijk gevraagd om aan te geven tot welke van de vier categorieën (financiële instelling, overheidsinstelling, bedrijf, particulier) de eindgebruikers behoren.
De klanten van Fox-IT
Met het verstrekken van een globale exportvergunning heeft de Afdeling Exportcontrole en Strategische Goederen geen zicht op de eindgebruikers. Fox-IT mag niet exporteren naar de zogenaamde ‘moeilijke landen’ (zoals Noord-Korea en Iran), maar verder bevat de vergunning geen beperkingen aan welke landen en klanten het bedrijf de DataDiode kan leveren.
Fox-IT verstrekt de Afdeling geen informatie wie haar ‘klanten in de gehele wereld’ zijn. Het kunnen overheidsinstellingen zijn, maar ook partnerbedrijven die de DataDiode doorverkopen. De Afdeling verzoekt het bedrijf echter niet om nadere informatie te verstrekken over haar klanten. Van een risicoanalyse over mogelijk ongewenst eindgebruik is hierdoor geen sprake. Zeker daar Fox-IT in het Midden-Oosten samenwerkt met partnerbedrijven die haar producten in de regio doorverkopen.
In het Midden-Oosten werkt Fox-IT vanaf 2006 samen met het Duitse bedrijf AGT (Advanced German Technology). AGT had kantoren in Syrië, Egypte, Saoedi-Arabië en de Verenigde Arabische Emiraten, en verkocht technologie van Westerse bedrijven door aan landen in het Midden-Oosten. Tot haar klanten behoorden overheidsinstellingen, zoals het Egyptische Ministerie voor Communicatie en Informatie Technologie en het Syrische staatsbedrijf STE (Syria Telecommunication Establishment), dat toezicht houdt op de telecommunicatie in het land.
Fox-IT en AGT sloten in 2007 een reseller agreement. Hierin waren geen voorwaarden opgenomen over aan welke klanten AGT de producten van Fox-IT kon doorverkopen. Fox-IT had zelf weinig zicht op wie de eindgebruikers waren van de door het bedrijf geëxporteerde producten en voor welke doeleinden deze gebruikt werden. Gezien de klantenkring van AGT was er een reëel risico dat de producten van Fox-IT terecht kwamen in landen met repressieve regimes, zoals Syrië, Egypte en Saoedi-Arabië.
Een andere partner van Fox-IT in het Midden-Oosten is GSN (Global Security Network), een Frans bedrijf dat gevestigd is in Dubai. Fox-It werkt sinds 2010 samen met het bedrijf, dat regeringen, militairen en inlichtingendiensten in het Midden-Oosten als klant heeft. GSN omschrijft zichzelf als een bedrijf met ‘experience in delivering high-end IT Security projects in Middle East since 1999’ en vermeldt op haar website: ‘GSN is serving government defense and intelligence organizations. As such GSN has achieved the status of being a ‘trusted’ security vendor for these organizations.’
GSN opereert als reseller van de DataDiode in het Midden-Oosten. GSN communiceert geen details over de landen en klanten aan wie het de DataDiode verkoopt. In november 2010 berichtte Fox-IT in haar nieuwsbrief Fox Files over de levering van de DataDiode aan een inlichtingendienst in een land in het Midden-Oosten: ‘At the moment, Fox-IT is represented by partners in the Middle East and the United States, among others. A recent example is a project where Fox-IT and partner GSN (Global Security Network) implemented the Fox Data Diode for an intelligence service.’
Contact over FoxReplay
Twee maanden na de toekenning van de eerste exportvergunning zoekt Fox-IT opnieuw contact met de Afdeling Exportcontrole en Strategische Goederen. Op 27 april 2011 mailt een medewerker van Fox-IT: ‘Naar aanleiding van de gesprekken die mijn collega’s (…) onlangs met jullie hebben gehad, vroeg ik mij af of het mogelijk is een praktijksituatie waar wij momenteel voor staan aan jullie voor te leggen. Ik doe het stiekem alvast.’
Fox IT refereert met ‘de gesprekken’ aan een gesprek op 12 april tussen het Ministerie van Economische Zaken en enkele Nederlandse computer- en beveiligingsbedrijven, naar aanleiding van in maart gestelde Kamervragen over mogelijke export van IT-technologie aan repressieve regimes in het Midden-Oosten.
Het gaat om een verzoek om levering van de FoxReplay: ‘een partner (…) heeft gevraagd of wij FoxReplay Analyst kunnen leveren aan de (…) Met behulp van FoxReplay Analyst kan onderschept Internet- en ander IP-verkeer op eenvoudige wijze inzichtelijk en doorzoekbaar gemaakt worden. Vooralsnog is niet bekend hoe de (…) de oplossing precies wil inzetten. Wel is gevraagd of we een demonstratie kunnen verzorgen in (…).’
Het Ministerie maakt niet openbaar om welk land en om welke instantie het gaat – deze informatie is onleesbaar gemaakt. Uit de WOB-documenten wordt evenmin duidelijk of Fox-IT in dit geval een exportvergunning heeft aangevraagd.
Het is de eerste (en enige) keer dat Fox-IT met de Afdeling Exportcontrole en Strategische Goederen contact zoekt over de FoxReplay. Dit is opmerkelijk, omdat het bedrijf zich al sinds 2006 richt op de internationale verkoop van het product. De mail van Fox-IT leidt bij de Afdeling echter niet tot vragen aan het bedrijf. De Afdeling vraagt niet waarom het voor de Replay niet eerder een exportvergunning heeft aangevraagd, en vraagt niet naar welke landen en klanten het de Replay in voorgaande jaren heeft geëxporteerd.
Risicoanalyse
Vanwege het aflopen van de in februari 2011 verleende vergunning vraagt Fox-It een jaar later, op 28 maart 2012, een nieuwe exportvergunning aan. Het betreft wederom een globale exportvergunning voor klanten van Fox Crypto in de wereld (m.u.v. moeilijke landen). De aanvraag betreft deze keer niet alleen de DataDiode, maar ook de producten RedFox en SkyTale. RedFox is een cryptomodule. SkyTale is een high-security-netwerkversleuteling voor het tactische en mobiele domein.
Fox-IT vult (in tegenstelling tot de eerste aanvraag van februari 2011) het cryptoformulier summier in. Bij de vraag naar de eindgebruikers zijn beide categorieën (overheidsinstellingen en niet-overheidsinstellingen) aangevinkt. Fox-IT kondigt aan dat het cryptoformulier later per fax zal toezenden.
In tegenstelling tot de vorige aanvraag verzoekt de Afdeling Exportcontrole en Strategische Goederen het bedrijf nu wel om aanvullende informatie over zowel de dual-use toepassing van de producten als de eindgebruikers. Gedurende 2011 stond de mogelijke export van aftaptechnologie door Nederlandse bedrijven aan repressieve regimes in het Midden-Oosten in de politieke en publieke belangstelling. Mogelijk heeft de Afdeling hierdoor nu meer aandacht voor het maken van een risicoanalyse van mogelijk ongewenst eindgebruik.
Er vindt overleg plaats. De Afdeling vraagt het bedrijf om meer informatie over de dual-use toepassing van de DataDiode, RedFox en SkyTale. Een interne notitie vermeldt: ‘DataDiode, hoogwaardige technologie, level 7 (EAL), behoort tot de top 3 in de wereld. RedFox, hoogwaardige crypto, Stg niveau, gemaakt in opdracht. SkyTale, hoogwaardige crypto, voor lage bandbreedte.’
Ook wil de Afdeling meer informatie ontvangen over de eindgebruikers. Een medewerker van de Afdeling vermeldt in een interne notitie van 27 juni: ‘Bedrijf gaat nieuwe aanvraag doen; (…) stelt voor geen algemene vergunning af te geven omdat hij wil weten wie wat ontvangt.’
De aanvraag komt te vervallen. Op 19 juli meldt de Afdeling aan het CDIU: ‘Het bedrijf is op 13 juli bij het Ministerie EL&I op bezoek geweest. Aldaar besproken dat het bedrijf een nieuwe aangepaste aanvraag in gaat dienen.’
Met het verzoek om nadere informatie te verstrekken over de dual-use toepassing en de eindgebruikers geeft de Afdeling Exportcontrole en Strategische Goederen dus invulling aan de beleidsmatig vereiste risicoanalyse om ongewenst eindgebruik te voorkomen. Tegelijkertijd moet het de Afdeling (wederom) duidelijk zijn geworden dat Fox-IT in voorgaande jaren heeft geëxporteerd zonder een exportvergunning aan te vragen. Zo mailt het bedrijf op 25 juli: ‘(…) onze hartelijke dank voor de ontvangst op 17 juli, waarbij we hebben kennisgemaakt, en veel hebben geleerd over de zaken die komen kijken bij bet internationaal verkopen van de producten van Fox Crypto.’
Sluitende administratie
Fox-IT gaat aan de slag met de voorbereidingen van een nieuwe aanvraag. In de mail van 25 juli 2012 kondigt het bedrijf aan voor de DataDiode een ‘globale vergunning op maat’ aan te vragen. Voor de RedFox wordt vanaf 2013 ‘per project een individuele vergunning (…) aangevraagd’. SkyTale, dat nog wel was opgenomen in de aanvraag van maart 2012, wordt door het bedrijf niet meer genoemd.
Voor de DataDiode verstrekt Fox-IT een landenlijst en een lijst met wederverkopers – deze zijn in de WOB-documenten onleesbaar gemaakt. Tevens meldt het bedrijf: ‘We houden een sluitende administratie bij van uitgeleverde (en geretourneerde) exemplaren, zowel export buiten de EU, als leveringen binnen de EU en binnen (…) Per kwartaal informeren we EL&I met een overzicht van uitgeleverde (en geretourneerde) exemplaren.’
Het is onduidelijk of het bedrijf daadwerkelijk over een administratie van de export van de DataDiode beschikt en of het deze met de Afdeling Exportcontrole heeft gedeeld. Het Ministerie heeft een dergelijke administratie niet openbaar gemaakt.
Voor RedFox verstrekt Fox-IT geen lijst met landen en wederverkopers. Het bedrijf schrijft: ‘Dit speelt vanaf begin 2013.’ Deze opmerking suggereert dat het bedrijf RedFox nog niet eerder geëxporteerd heeft. Dit is opmerkelijk omdat het bedrijf al sinds 2005 bezig is met de ontwikkeling van het product. De Afdeling vraagt het bedrijf echter niet om verduidelijking en of het RedFox in voorgaande jaren geëxporteerd heeft.
Fox-IT somt op hoe de procedure voor de RedFox zal verlopen: ‘Per project zal een individuele vergunning worden aangevraagd. De vergunningen worden vooraf doorgesproken met het (…). De verwachting is dat het advies van (…) leidend zal zijn. (…) Er zal een zeer nauwkeurige administratie wordt bijgehouden zodat elk exemplaar gevolgd kan worden.’
Ook met betrekking tot RedFox is het niet bekend of het bedrijf een dergelijke nauwkeurige administratie van de export heeft bijgehouden en aan de Afdeling heeft verstrekt. Het Ministerie heeft deze niet openbaar gemaakt.
Tweede globale exportvergunning
Enkele maanden later, op 26 september 2012, dient Fox-IT de nieuwe aanvraag in. Fox-It vraagt (wederom) een globale exportvergunning aan voor klanten in de hele wereld. De vergunning wordt op 12 oktober toegewezen. Opmerkelijk genoeg wordt de naam van het te exporteren product in de toekenning niet vermeld, maar wordt de algemene term ‘apparatuur voor informatiebeveiliging’ (met als eindgebruik netwerkbeveiliging) gehanteerd.
Uit de toekenning kan eigenlijk niet worden opgemaakt voor welk product de exportvergunning wordt verleend. De in de toekenning genoemde SG Post code 5A002a7 lijkt er echter op te duiden dat de vergunning wordt verleend voor de DataDiode.
Fox-IT noemt RedFox in de aanvraag niet, hoewel het bedrijf het product in de aanvraag van maart nog had opgenomen en het in juli nog aankondigde RedFox vanaf 2013 te gaan exporteren. De Afdeling verzoekt echter niet om verduidelijking en vraagt niet of het bedrijf voornemens is om RedFox onder deze exportvergunning te gaan exporteren, of dat het voor RedFox nog een aparte exportvergunning zal aanvragen. Het Ministerie heeft via de WOB geen informatie over andere exportaanvragen voor RedFox openbaar gemaakt.
Fox-IT vraagt een globale exportvergunning aan voor klanten in de hele wereld. Hiermee verschilt de aanvraag niet met de in maart ingediende aanvraag. De Afdeling Exportcontrole en Strategische Goederen had toen nog bezwaren vanwege het gebrek aan informatie over de eindgebruikers, maar de Afdeling laat deze bezwaren nu vallen. Het gebrek aan informatie over de eindgebruikers vormt geen beletsel meer voor het verlenen van een globale exportvergunning, het maken van een risicoanalyse van mogelijk ongewenst eindgebruik heeft geen prioriteit meer.
De Afdeling is vervolgens ook behulpzaam bij een probleem tussen Fox-IT en de douane. Fox-IT heeft bij de aanvraag geen cryptoformulier bijgevoegd, hoewel het bedrijf in maart 2012 nog aankondigde het cryptoformulier toe te zullen zenden. De Afdeling vraagt het bedrijf niet meer naar het cryptoformulier, maar de douane doet dit wel. Fox-IT informeert de Afdeling hierover en mailt op 25 september: ‘Douane Groningen vraagt om een cryptoformulier (…) Ik heb begrepen dat jij even in de telefoon klimt.’
De contactpersoon van de Afdeling Exportcontrole en Strategische Goederen mailt een dag later vanuit Wenen terug: ‘Uit Wenen kan ik je berichten dat een cryptoformulier niet nodig zal zijn. Je krijgt nog bericht. Zaak zal er niet door worden opgehouden. Excuses voor ogenschijnlijk geharrewar.’
Faciliteren export heeft prioriteit
Het faciliteren van de export van Fox-IT heeft bij het verlenen van de exportvergunning in oktober 2012 dus meer prioriteit dan het maken van een risicoanalyse over mogelijk ongewenst eindgebruik. De Afdeling Exportcontrole is het bedrijf in dezelfde periode ook behulpzaam bij een andere kwestie.
Op 5 oktober 2012, mailt Fox-IT de Afdeling voor het maken van een afspraak: ‘Fox Crypto is benaderd met de vraag of we één onze IT-beveiligingsproducten (…) zouden kunnen/willen leveren aan (…) De toepassing van het product en het doelland zijn zodanig dat we graag even met jullie van gedachten zouden willen wisselen om te bepalen of daar bezwaren aan kleven.’ Het gaat om het product SkyTale, dat door Fox-IT ook was opgenomen in de aanvraag van maart 2012 (maar in de maanden hierna door het bedrijf niet meer werd genoemd). De naam van het ontvangende land is in de WOB-documenten onleesbaar gemaakt.
Er volgt een afspraak op 16 oktober met als onderwerp de ‘exportvraag over een ongebruikelijk land’. De Afdeling Exportcontrole en Strategische Goederen verzoekt om nadere informatie over de dual-use toepassing van SkyTale en over de eindgebruikers, en mailt op 19 oktober: ‘We hebben op dit moment dus te weinig informatie om die inschatting te kunnen maken of het militair dan wel civiel product betreft dat zou worden uitgevoerd. Er is echter ook een ander probleem. Het zou ook behulpzaam zijn als jullie meer kunnen achterhalen over de identiteit van de eindgebruiker.’
Fox-IT antwoordt niet en verstrekt de gevraagde informatie niet. De Afdeling blijft het bedrijf echter stimuleren om de aanvraag door te zetten, waarbij het haar bezwaren over het ontbreken van informatie over de dual-use toepassing en de eindgebruikers gaandeweg laat vallen.
De Afdeling Exportcontrole en Strategische Goederen mailt het bedrijf op 2 november, omdat de indeling van SkyTale in dual-use, militair en/of SG Post (telecom toepassing) niet duidelijk wordt. De Afdeling dringt er echter niet op aan de gevraagde duidelijkheid te verschaffen, maar stelt voor om de indeling te negeren: ‘In dit geval denk ik dat dat de zaak te veel zou vertragen. Laten we die stap maar overslaan.’
De Afdeling Exportcontrole en Strategische Goederen maakt wel de volgende inschatting: ‘Op basis van de huidige informatie die je overlegt neig ik ernaar te concluderen dat het een dual-use product betreft, 5A002a1 (crypto). Mogelijk is er ook een dual use 5A001 SG Post telecom van toepassing, kijk daar even naar graag. Deze conclusie onder voorbehoud want ben afhankelijk van wat jij zegt uiteindelijk te gaan doen.’
Fox-IT beantwoordt ook deze mail niet, waarna de Afdeling op 8 november een herinnering stuurt: ‘Ik weet niet of je nog overweegt de zaak formeel in te dienen om voor een vergunning in aanmerking te komen? Als je het indient bij de CDIU, kan je mij eventueel een seintje geven. Ik ben dan in elk geval alert op de voortgang in de stukkenstroom.’
Nadat het bedrijf wederom niet antwoordt, mailt de Afdeling Exportcontrole en Strategische Goederen op 10 december: ‘Ik begrijp van de CDIU dat er tot op heden nog geen aanvraag voor de (gemodificeerde) SkyTale is binnen is gekomen. (…) Kan het inderdaad kloppen dat jullie nog niet aan de aanvraag toe zijn, of zien we hier iets over het hoofd?’
De gang van zaken is opmerkelijk en vergelijkbaar met de gang van zaken rond de verlening van de exportvergunning in oktober 2012. In plaats van te wachten tot Fox-IT de gevraagde informatie verstrekt, geeft de Afdeling prioriteit aan het faciliteren van de voortgang van de aanvraag en laat het haar bezwaren vanwege het gebrek aan informatie varen.
Fox-IT kent eindgebruiker niet
De mail van 10 december wordt wel beantwoord door Fox-IT. Het bedrijf geeft aan nog steeds geen antwoord op de vragen over de dual-use toepassing van SkyTale. Het wordt nu wel echter duidelijk dat Fox-IT de vragen over de eindgebruikers niet kan beantwoorden: ‘Ik heb de klant gevraagd om adres-details van de eindgebruiker, die benodigd zijn voor de sondage, maar ik heb tot nu toe nog geen antwoord ontvangen.’
De mail geeft inzicht in de relatie van Fox-IT met deze wederverkoper. Ondanks herhaaldelijk vragen ontvangt Fox-IT van haar partnerbedrijf geen nadere informatie over de eindgebruiker, en blijkt het dus niet te weten aan welke klant haar partnerbedrijf haar product SkyTale wil doorverkopen.
Dit leidt bij de Afdeling Exportcontrole en Strategische Goederen echter niet tot reflectie over de risico’s van het verlenen van globale exportvergunningen. Fox-IT exporteert ook onder deze vergunningen naar partnerbedrijven, die de producten vervolgens doorverkopen. Het is zeer voorstelbaar dat Fox-IT door haar partnerbedrijven ook in deze gevallen niet geïnformeerd wordt over de identiteit van de eindgebruikers.
De Afdeling Exportcontrole en Strategische Goederen ziet echter geen aanleiding om Fox-IT nadere informatie te vragen over de klanten naar wie het bedrijf onder de twee verstrekte globale exportvergunningen heeft geëxporteerd. De Afdeling vraagt evenmin naar de afspraken die Fox-IT hierover met haar wederverkopers heeft, en of deze het bedrijf informeren over de identiteit van de eindgebruikers aan wie zij producten doorverkoopt. De Afdeling toont ook geen terughoudendheid bij het verstrekken van een nieuwe globale exportvergunning in 2013.
Derde globale exportvergunning
Op 30 oktober 2013 vraagt Fox-IT – vanwege het aflopen van de in 2012 verleende vergunning – een nieuwe exportvergunning aan bij de Afdeling Exportcontrole en Strategische Goederen (die inmiddels valt onder het Ministerie van Buitenlandse Zaken). Het betreft een aanvraag voor een globale exportvergunning (m.u.v. moeilijke landen) voor klanten van Fox Crypto met als eindgebruik ‘beveiligde eenwegkoppeling voor vertrouwde en niet vertrouwde omgeving’.
Fox-IT verstrekt bij de aanvraag geen eenduidige informatie over voor welk product de exportvergunning wordt aangevraagd. Het bedrijf geeft in een begeleidende e-mail van 1 november aan dat het een exportvergunning aanvraagt voor de DataDiode. Volgens het pre-advies van de CDIU is de aanvraag voor ‘een beveiligingsproduct zonder cryptografie met een EAL-7 certificaat’, hetgeen duidt op de DataDiode. In het aanvraagformulier noemt het bedrijf de naam van het product echter niet, maar gebruikt het de algemene term ‘apparatuur voor informatiebeveiliging’. Hieronder zouden – naast de DataDiode – dus ook andere producten (zoals RedFox en SkyTale) kunnen vallen.
De Afdeling Exportcontrole en Strategische Goederen vraagt het bedrijf echter niet om een verduidelijking. De exportvergunning wordt op 20 december 2013 verleend. In de toekenning wordt geen productnaam vermeld, maar alleen de algemene term ‘apparatuur voor informatiebeveiliging’.
Net als bij de toekenning van de twee eerdere exportvergunningen in 2011 en 2012 vraagt de Afdeling Exportcontrole en Strategische Goederen het bedrijf niet om nadere informatie over de eindgebruikers. Het toezicht op de eindgebruiker lijkt nu zelfs nog verder te worden uitgehold.
Fox-IT vermeldt in het aanvraagformulier als ‘lidstaat waar de aangifte ten uitvoer zal worden gedaan’ naast Nederland namelijk ook Estland. Dit betekent dat Fox-IT voornemens is om vanuit Estland te exporteren, terwijl het bedrijf geen vestiging in Estland heeft. Mogelijk betekent dit dat het Estse partnerbedrijf Hermitage Solutions op basis van de exportvergunning producten van Fox-IT gaat exporteren. De Afdeling vraagt Fox-It echter niet om een verduidelijking en vraagt niet naar de redenen waarom het in de aanvraag refereert aan Estland.
Zorgvuldige risicoanalyse?
Het exportbeleid voor dual-use goederen suggereert een zorgvuldige risicoanalyse om ongewenst eindgebruik van dual-use goederen (zoals IT-technologie en software) te voorkomen. Volgens het Handboek Strategische Goederen wordt een vergunning ‘alleen verleend als de overheid de overtuiging heeft dat de goederen worden gebruikt voor het opgegeven en acceptabel bevonden eindgebruik.’
Van een zorgvuldige risicoanalyse is in de periode 2011-2013 geen sprake. Het wordt de Afdeling Exportcontrole en Strategische Goederen op verschillende momenten duidelijk dat Fox-IT in voorgaande jaren heeft geëxporteerd zonder exportvergunning, maar de Afdeling stelt hierover geen nadere vragen aan het bedrijf.
Fox-IT verkrijgt in 2011, 2012 en 2013 jaarlijks een globale exportvergunning, waarmee het kan exporteren naar klanten in de hele wereld. Fox-IT geeft nauwelijks informatie over de eindgebruikers naar wie het exporteert, en de Afdeling vraagt nauwelijks om nadere informatie. Hoewel het bij de Afdeling bekend is dat Fox-IT samenwerkt met partnerbedrijven die de producten van het bedrijf doorverkopen, vormt ook dit voor de Afdeling geen aanleiding om het bedrijf te vragen om meer informatie over de eindgebruikers te verstrekken.
Met het verlenen van globale exportvergunningen bestaat het risico dat producten van Fox-IT in handen komen van repressieve regimes in bijvoorbeeld het Midden-Oosten. De Afdeling geeft echter meer prioriteit aan het faciliteren van de export van Fox-IT, dan aan het maken van een risicoanalyse om ongewenst eindgebruik te voorkomen. Bij de aanvragen voor exportvergunningen weet Fox-IT haar belangen succesvol te behartigen en komt de Afdeling Exportcontrole het bedrijf tegemoet.
Eenzelfde beeld kwam in 2011 naar voren bij de politieke discussie over het exportbeleid voor dual-use goederen. De Tweede Kamer sprak haar zorgen uit over mogelijk misbruik van door Nederlandse bedrijven (waaronder Fox-IT) geëxporteerde IT-technologie en software naar het Midden-Oosten. De minister van Economische Zaken was niet bereid om hiernaar nader onderzoek te doen, maar gaf Fox-IT een invloedrijke rol bij de beantwoording van Kamervragen. Dit wordt duidelijk uit interne correspondentie die via de Wet Openbaarheid Bestuur openbaar is gemaakt.
Minister heeft geen overzicht voor handen
Op 15 maart 2011 stelt GroenLinks Tweede Kamerlid El-Fassed Kamervragen aan de minister van Economische Zaken, Landbouw en Innovatie (zoals het Ministerie destijds genoemd werd) over de deelname van Nederlandse bedrijven aan de ISS World surveillance beurs in Dubai.
De minister wordt gevraagd om een overzicht ‘van recente en lopende contracten van Nederlandse bedrijven met overheden en telecombedrijven in het Midden-Oosten en Afrika omtrent de levering van technologie voor en expertise over het aftappen, filteren en blokkeren van telecommunicatie.’ Ook wordt de minister gevraagd om een nader onderzoek in te stellen naar de risico’s van ongewenst eindgebruik van door Nederlandse bedrijven geëxporteerde producten.
De beantwoording van de minister van 12 april 2011 is summier. Hij antwoordt dat er van dergelijke contracten van Nederlandse bedrijven ‘geen overzicht voor handen is’. De vraag naar een mogelijk nader onderzoek wordt door de minister niet beantwoord, maar hij zegt wel toe in gesprek te gaan met een aantal computer- en beveiligingsbedrijven (waaronder Fox-IT).
De minister verzuimt de Kamer te informeren dat Fox-IT in de periode 2006-2010 geen exportvergunningen heeft aangevraagd, terwijl het evident was dat Fox-IT in deze jaren exporteerde – ook naar landen in het Midden-Oosten. De export van Fox-IT zonder exportvergunning had aanleiding kunnen zijn voor nader onderzoek. Zeker daar Fox-IT in een e-mail aan het Ministerie onderkent dat Nederlandse bedrijven aftaptechnologie exporteren.
Op 11 april 2011 schrijft een Fox-IT medewerker: ‘Voorts suggereert hij nu dat bedrijven in NL zijn die filter software/hardware exporteren. Ik denk dat dat niet juist is. Tappen wel, maar censureren gebeurt niet.’ Deze mail had aanleiding kunnen zijn om nader onderzoek te doen naar de export van Nederlandse bedrijven, waaronder Fox-IT. Het Ministerie laat het echter passeren.
Ministerie wordt gesouffleerd door Fox-IT
Het Ministerie van Economische Zaken wordt gesouffleerd door Fox-IT. Het bedrijf wil duidelijk maken dat het zich bewust is van de risico’s van mogelijk ongewenst eindgebruik van de door het bedrijf geëxporteerde producten, en dat het bedrijf hiernaar handelt. Deze boodschap wordt door het Ministerie overgenomen.
Het door de minister toegezegde gesprek met een aantal computer- en beveiligingsbedrijven bedrijven (waaronder Fox-IT) vindt op 12 april 2011 plaats – op dezelfde dag als de Kamerbrief. Op 15 april legt het Ministerie aan Fox-IT een concept nieuwsbericht over het gesprek voor, met de vraag: ‘Ik verneem graag of u akkoord bent met dit bericht.’
Enkele dagen later (op 18 april) antwoordt Fox-IT kribbig: ‘Van onze kant moet ik toch wat moeilijk kijkende gezichten melden.’ Het bedrijf is niet tevreden met het concept want ‘het Ministerie schetst de indruk dat onze bedrijven voorafgaande aan het gesprek nog niet zo kritisch waren over leveringen in landen met moeilijke situaties. (…) Dit beeld kwam ook al bij de oorspronkelijke beantwoording van de Kamervragen naar voren en wij (Fox-IT) herkennen ons daar niet in.’
Vervolgens dicteert Fox-IT het Ministerie een aanpassing in het bericht: ‘Wij zouden een alinea zoals de volgende daarom waarderen: Tijdens de bijeenkomst kon geconstateerd worden dat voornoemde bedrijven zich reeds zeer bewust waren van het potentieel tot misbruik en een leveringsbeleid voerden om dit te zo veel mogelijk te voorkomen.’
Een dag later (op 19 april) heeft het Ministerie de voorgestelde aanpassingen verwerkt en antwoordt: ‘Het lijkt me inderdaad niet goed de indruk te wekken dat jullie tot afgelopen week niet over deze thematiek hebben nadachten. We hebben geprobeerd zoveel als mogelijk je opmerking in het bericht te verwerken.’
Elf minuten later reageert Fox-IT, omdat men nog steeds niet helemaal tevreden is: ‘Wij herkennen ons nog steeds niet voldoende in dit bericht, terwijl onze naam wel genoemd wordt.’ Exact 23 minuten later antwoordt het Ministerie: ‘Hopelijk kunnen we met bijgaande nieuwe versie jullie zorgen wegnemen. Is het voor jullie zo akkoord?’ Twee minuten later antwoordt een Fox-IT medewerker het Ministerie: ‘Dit dekt de lading goed, dank voor je inzet.’
Het Ministerie neemt het tekstvoorstel van Fox-IT over en vermeldt in het nieuwsbericht van 19 april 2011: ‘Tijdens het gesprek gaven de bedrijven aan nu al zeer kritisch om te gaan met levering van hun producten aan landen waar de mensenrechtensituatie te wensen overlaat.’
Tevens kondigt het nieuwsbericht aan dat overheid en bedrijven zich gezamenlijk gaan inspannen: ‘Bedrijven die internetbeveiliging exporteren gaan zich samen met de overheid inspannen om misbruik van deze technologieën tegen te gaan. Zowel de bedrijven als de overheid onderschrijven het belang van internetvrijheid en onderkennen de gevaren van mogelijk misbruik van beveiligingstechnologieën.’
Hiermee worden de zorgen van de Kamer dus op een weinig concrete wijze geadresseerd. Opmerkelijk genoeg vindt Fox-IT dit zelf ook. Het bedrijf mailt het Ministerie op 18 april 2011: ‘Wij blijven het gevoel hebben dat een zalvende verklaring zoals nu voorgesteld mogelijk juist meer zorgen genereert dan minder, maar ik kan me goed voorstellen dat de wens bestaat iets uit te doen gaan.’
Beantwoording Kamervragen
Op 17 oktober 2011 stelt El-Fassed (GL) een tweede set Kamervragen over de export van internetfilters en aftaptechnologie door Nederlandse bedrijven, waaronder Fox-IT. Hij vraagt of het in april gevoerde gesprek met de bedrijven tot concrete stappen heeft geleid, zoals ‘de ontwikkeling van een toetsbaar beleid voor maatschappelijk verantwoord ondernemen op basis van de OESO-richtlijnen voor multinationale ondernemingen’.
Net als bij het opstellen van het nieuwsbericht speelt Fox-IT ook bij de beantwoording van deze Kamervragen een invloedrijke rol. Het Ministerie vraagt het bedrijf om assistentie en mailt op 18 oktober: ‘Ik zou graag van u horen of er initiatieven zijn die u heeft genomen sinds het gesprek op het Ministerie van ELI, die we zouden kunnen gebruiken bij het beantwoorden van deze vragen?’
Drie dagen later, op 21 oktober, stuurt het Ministerie een herinnering. In september heeft Fox-IT haar divisie FoxReplay ondertussen verkocht aan het Amerikaanse bedrijf Netscout. Het Ministerie blijft echter aandringen: ‘Ik hoop dat Fox-IT ook medewerking wil verlenen bij het beantwoorden van deze Kamervragen.’ Op 26 oktober antwoordt Fox-IT: ‘Fox-IT is zelf niet meer actief in de wereld van Lawful Interception dus ik vermoed dat de beantwoording zeer beperkt kan blijven.’
Blijkbaar wil Fox-IT toch betrokken zijn bij de beantwoording van de Kamervragen, want op 27 oktober volgt een gesprek tussen het Ministerie en het bedrijf. Het Ministerie legt de concept-antwoorden op 21 november aan Fox-IT voor: ‘Ik wil u vragen om te bevestigen dat u akkoord kunt gaan met de vermelding van uw antwoorden zoals verwoord in antwoord 3. Ik heb de vrijheid genomen hier en daar een klein beetje te redigeren, maar heb getracht uw antwoorden zoveel mogelijk intact te laten.’ Fox-IT is tevreden en antwoordt met een smiley: ‘Geen bezwaar. Voor zover dat bericht niet al binnen was gekomen.’
Fox-IT krijgt zijn zin. In de Kamerbrief van 18 januari 2012 worden de bedrijven die bij het gesprek aanwezig waren geciteerd. In de Kamerbrief wordt zeer summier verwezen naar Fox-IT verwezen in een zin, welke integraal afkomstig is uit de e-mail van het bedrijf van 26 oktober: ‘Fox IT is niet langer actief op het gebied van Lawful Interception. Alle activiteiten op dit gebied zijn overgenomen door het Amerikaanse bedrijf NetScout.’
Het Ministerie en Fox-IT hebben niet meer gesproken over eventuele concrete stappen die het bedrijf heeft ondernomen, zoals de ontwikkeling van een beleid maatschappelijk verantwoord ondernemen. In de Kamerbrief wordt de vraag naar de ontwikkeling van een beleid maatschappelijk verantwoord ondernemen niet beantwoord.
Nog altijd actief in het Midden-Oosten
Tijdens de politieke discussie over het exportbeleid voor dual-use goederen weet Fox-IT haar belangen bij het Ministerie van Economische Zaken succesvol te behartigen. Het Ministerie verricht geen nader onderzoek en informeert de Kamer niet dat het bedrijf tot 2011 heeft geëxporteerd zonder exportvergunning.
Het Ministerie doet de zorgen van de Kamer af met de opmerking dat Fox-IT niet langer actief is op het gebied van Lawful Interception. Dit is niet waar. Ook na de verkoop van haar divisie FoxReplay aan Netscout in september 2011 blijft Fox-IT actief op de internationale markt voor Lawful Interception producten, ook in het Midden-Oosten.
Sinds 2010 is Fox-IT bezig met ontwikkeling van Tracks Inspector, een softwaretool om digitale informatie te filteren. Vanaf 2012 exporteert het bedrijf Tracks Inspector, ook naar landen in het Midden-Oosten waarbij het samenwerkt met partnerbedrijven die het product doorverkopen. In september 2014 gaat Tracks Inspector door als zelfstandig bedrijf, waarbij Fox IT een minderheidsaandeel blijft behouden.
Hans Henseler (managing partner van Fox-IT en mede-ontwikkelaar van Tracks Inspector) verklaart bij de lancering van het nieuwe bedrijf in september 2014: ‘Wel zijn we in gesprek met andere bijzondere opsporingsdiensten. We zijn op dit moment eigenlijk alleen nog niet actief in China, Rusland en Zuid-Amerika.’ Het nieuwe bedrijf meldt in een persbericht: ‘De Tracks Inspector oplossing zal verder worden ontwikkeld en geleverd aan politie en zakelijke klanten via channel partners in Europa, Midden-Oosten, Azië en Noord-Amerika.’
Fox-IT richt zich nog altijd op de internationale verkoop van de DataDiode. Volgens Peter Geytenbeek (sinds 2014 International Sales Manager van Fox-IT) verkoopt het bedrijf de DataDiode aan meer dan 40 landen. Hij verklaart in 2017: ‘Despite the increasing importance of data diode technology, the Netherlands R&D position on data diodes remains quite small globally. Cybersecurity and IT company Fox-IT is the only Netherlands-based stakeholder which is successful in exporting its technology to more than 40 countries.’
Fox-IT werkt in het Midden-Oosten nog steeds samen met haar in de Verenigde Arabische Emiraten gevestigde partnerbedrijf GSN (Global Security Network). GSN legt zich toe op het leveren van de DataDiode aan overheidsinstellingen, militairen en law enforcement in de regio. Zo is GSN met presentaties van de DataDiode aanwezig op de ISS World beurzen in de regio.
GSN vermeldt op haar website: ‘We focus on delivering specialized IT Security solutions such as Fox It DataDiode and Sentryo ICS monitoring solution to customers like Government High Security, Military, Law Enforcement and Critical National Infrastructure as well as Oil and Gas Companies.’
Het is niet bekend of, en hoeveel, exportvergunningen Fox-IT sinds 2013 heeft aangevraagd. De Nederlandse overheid heeft via de WOB alleen documenten openbaar gemaakt die betrekking hebben op de periode t/m 2013.
Uit de Maandelijkse Rapportage Uitvoer Dual-use Goederen van het Ministerie van Buitenlandse Zaken valt niet op te maken hoeveel exportvergunningen Fox-IT sinds 2013 heeft verkregen. Wel wordt uit de rapportage duidelijk dat het Ministerie jaarlijks tientallen exportvergunningen verstrekt aan Nederlandse computer- en beveiligingsbedrijven in de categorie telecommunicatie en informatiebeveiliging. Het gaat zowel om exportvergunningen voor specifieke landen (waaronder landen in het Midden-Oosten) als globale exportvergunningen voor de gehele wereld (m.u.v. moeilijke landen).
Invloedrijk in beantwoording WOB-verzoeken
In 2011 was een patroon zichtbaar. De minister van Economische Zaken verschafte de Tweede Kamer nauwelijks informatie over de export van dual-use producten door Nederlandse computer- en beveiligingsbedrijven (waaronder Fox-IT). Fox-IT bepaalde voor een belangrijk deel de inhoud van de beantwoording van Kamervragen.
Eenzelfde patroon wordt zichtbaar bij de beantwoording van WOB-verzoeken. Buro Jansen & Janssen heeft sinds 2014 WOB-verzoeken bij meerdere overheidsorganen ingediend over de relatie tussen de Nederlandse overheid en Fox-IT. Het bedrijf heeft veel invloed op welke informatie door de overheid openbaar wordt gemaakt.
Naar aanleiding van de WOB-verzoeken zoekt Ronald Prins (toenmalig directeur van Fox-IT) in 2014 contact met Buro Jansen & Janssen. Hierbij wordt duidelijk dat het bedrijf is geïnformeerd over de ingediende WOB-verzoeken. Het is op zich gebruikelijk dat bedrijven een zienswijze mogen indienen bij de beantwoording van WOB-verzoeken die betrekking hebben op het betreffende bedrijf. Het is echter zeer opmerkelijk dat de overheid Fox-IT informeert over de identiteit van de indiener van het verzoek, omdat de privacy van indieners van WOB-verzoeken door de overheid conform Artikel 8 van de Wet Bescherming Persoonsgegevens beschermd dient te worden.
Buro Jansen & Janssen heeft naar aanleiding hiervan een WOB-verzoek ingediend om informatie openbaar te maken over de wijze waarop het WOB-verzoek door het Ministerie van Economische Zaken is afgehandeld. Uit de hierop openbaar gemaakte documenten blijkt dat Fox-IT aanzienlijke invloed heeft bij de beantwoording van het WOB-verzoek, en welke informatie door het Ministerie wel en niet openbaar wordt gemaakt.
Fox-IT schrijft in een zienswijze rond een WOB-procedure bij het Ministerie van Economische Zaken: ‘Fox-IT stelt dat het overleggen van bepaalde documenten of onderdelen daarvan de belangen van De Staat, klanten, partners, relaties en medewerkers Van Fox-IT en Fox-IT zelf onevenredig zal of kan schaden.’
Vervolgens bekijkt Fox-IT zelf de stukken en schrijft het Ministerie voor welke informatie niet openbaar gemaakt mag worden: ‘In de bijgevoegde documenten zelf is met een markeerstift aangegeven welke onderdelen van de betreffende documenten wat Fox-IT B.V: betreft niet geopenbaard kunnen worden. Deze onderdelen dienen dan ook deugdelijk te worden verwijderd of onherkenbaar te worden gemaakt.’
In een begeleidende brief bij de door Fox-IT met markeerstift bewerkte documenten concludeert het bedrijf tevreden: ‘Fox-IT heeft overigens ook begrepen dat op de documenten op de genoemde wijze zullen worden aangepast?’
Fox-IT geeft geen antwoord
Bij de beantwoording van de Kamervragen en WOB-verzoeken weet Fox-IT haar belangen succesvol te behartigen. Fox-IT heeft veel invloed op welke informatie door de Nederlandse overheid over het bedrijf naar buiten wordt gebracht. Fox-IT wekt hiermee de indruk iets te verbergen te hebben. Deze indruk wekt het bedrijf eigenlijk al jaren.
In 2011 raakte Fox-IT in opspraak, mede naar aanleiding van enkele publicaties in de media over haar verkoopactiviteiten in het Midden-Oosten. Het bedrijf gaf nooit openheid van zaken. Volgens het bedrijf zou het nooit zaken hebben gedaan met dictatoriale regimes, maar toenmalig directeur Ronald Prins liet aan Vrij Nederland wel weten dat zijn bedrijf aan landen levert ‘waarvan het beleid ons niet helemaal aanspreekt.’ Hij maakte hierbij echter niet duidelijk welke landen hij hiermee bedoelde, en met welke landen het bedrijf wél zaken deed.
In april 2019 publiceerde Buro Jansen & Janssen het onderzoek Fox-IT in het Midden-Oosten. Het onderzoek is gebaseerd op een grote hoeveelheid interne bedrijfsdocumenten en e-mails over de relatie van Fox-IT met haar Duitse partnerbedrijf AGT in de periode 2006-2012. Uit het onderzoek blijkt onder meer dat Fox-IT besloten workshops en trainingen gaf in onder andere Syrië, Egypte en Saoedi-Arabië, waar het haar producten wist te verkopen aan overheidsinstanties, militairen en inlichtingendiensten, en dat Fox-IT in 2008 een training gaf aan de National Defence Council in Egypte.
Buro Jansen & Janssen vroeg Fox-IT om een reactie. In eerste instantie wekte Fox-IT de indruk de vragen te zullen beantwoorden, maar het bedrijf zag hier toch van af. Het bedrijf antwoordde dat de vragen van Buro Jansen & Janssen ‘tot 13 jaar terug in de tijd gaan.’ Volgens Fox-IT ‘maakt dit het lastig (wellicht onmogelijk) om feitelijk en inhoudelijk te kunnen reageren, daarom onthouden wij ons op dit moment van commentaar.’
In december 2019 vroeg Buro Jansen & Janssen Fox-IT om een reactie over de exportvergunningen en vroeg of het klopt dat het bedrijf in de periode 2006-2010 nooit een exportvergunning heeft aangevraagd, niet voor FoxReplay en in de periode 2006-2014 ook niet voor RedFox.
Fox-IT geeft een ontwijkend antwoord. Het bevestigt noch ontkent en schrijft op 31 december 2019: ‘Bij alles wat wij als Fox-IT doen en dus ook bij het exporteren van goederen geldt dat, wanneer wij dat doen, de daarvoor geldende wet- en regelgeving te allen tijde leidend is in ons handelen.’
Buro Jansen & Janssen heeft Fox-IT ook gevraagd naar de juistheid van de omzetcijfers zoals gegeven door een voormalig manager van het bedrijf. Van 2008-2011 is 10 miljoen verdiend aan de export van producten aan Law Enforcement Agencies, waarvan 4 miljoen in het Midden-Oosten. Het bedrijf beantwoordt deze vraag niet en laat weten: ‘Vanuit Fox-IT doen wij geen uitspraken over behaalde (omzet)cijfers of de herkomst daarvan, anders dan door middel van de reguliere openbare publicaties.’ Dirk Peeters wil ook geen antwoord geven op vragen van Buro Jansen & Janssen en verwijst naar Fox-IT.
Noodzaak nader onderzoek naar vervolging
De waarheid over de betrokkenheid van westerse bedrijven bij de opbouw van de surveillancestaat in verschillende landen in het Midden-Oosten komt de afgelopen jaren steeds vaker boven tafel. Sommige bedrijven worden, jaren na dato, alsnog vervolgd voor leveranties aan repressieve regimes, met name Syrië en Libië.
Ook AGT, de voornaamste partner van Fox-IT in het Midden-Oosten, kwam eind 2016 in opspraak na een onderzoek van Privacy International. Uit het onderzoek (Open Season; Building Syria’s Surveillance State) blijkt dat AGT de Syrische overheid heeft geholpen bij de opbouw van een surveillancestaat en betrokken was bij levering van technologie die door de Syrische autoriteiten werd gebruikt voor het opzetten een systeem om internet te monitoren. AGT werkte in Syrië samen met een aantal andere bedrijven die inmiddels vervolgd worden, zoals het Italiaanse bedrijf Area SpA.
Nader onderzoek naar mogelijk strafbaar handelen van Fox-IT in het Midden-Oosten is op zijn plaats. Fox-IT heeft in 2006-2010 geen enkele exportvergunning aangevraagd en heeft nooit een exportvergunning aangevraagd voor de FoxReplay. Het exporteren van dual-use goederen naar landen buiten de Europese Unie is in beginsel strafbaar.
Van 2011-2013 ontving Fox-IT drie globale exportvergunningen, waarmee het de DataDiode kon exporteren naar klanten in de hele wereld. De Afdeling Exportcontrole en Strategische Goederen gaf meer prioriteit aan het faciliteren van de export van het bedrijf dan het maken van de beleidsmatige vereiste risicoanalyse om ongewenst eindgebruik te voorkomen. Hiermee was er een reëel risico dat door Fox-IT geëxporteerde producten terecht kwamen bij repressieve regimes in het Midden-Oosten, zeker daar Fox-IT in de regio samenwerkte met partnerbedrijven die haar producten in de regio doorverkochten.
Spinwatch can reveal that the Skripal affair has resulted in the issuing of not one but two ‘D-Notices’ to the British media, which are marked private and confidential. We can also disclose the contents of both notices, which have been obtained from a reliable source.
That two notices were issued has been confirmed by the ‘D-Notice’ Committee. The Committee, which is jointly staffed by government officials and mainstream media representatives has recently changed its name to the ‘Defence and Security Media Advisory (DSMA) Committee’. The use of the word ‘advisory’ is no doubt a bid to discourage the public from thinking that this is a censorship committee. However, the DSMA-Notices (as they are now officially called) are one of the miracles of British state censorship. They are a mechanism whereby the British state simply ‘advises’ the mainstream media what not to publish, in ‘notices’ with no legal force. The media then voluntarily comply.
When a former Russian spy and his daughter were found slumped on a park bench in Salisbury, it wasn’t long before investigators started looking at the Kremlin with suspicion.
The pair were identified as Sergei Skripal and his daughter, Yulia. The British government said they had been poisoned with a military grade nerve agent called Novichok, originally developed in Russia.
Over the following weeks, as the victims remained in hospital, Britain’s relationship with Russia began to fall apart. Diplomats from both countries have now been expelled and all planned high-level contact is suspended.
The stakes could not be higher. With Russia denying any involvement in the attack, the stability of global politics hangs in the balance.
But how strong is the UK’s evidence against Russia? And what do the experts think?
In view of the seriousness of the rapidly worsening relations between the West and Russia, and the quickly evolving military events in the Middle East, especially Syria, we have taken the step to publish relevant evidence-based analysis with respect to the Skripal incident of 4 March 2018. This update to our earlier briefing note covers new material that has become available. We welcome comments and corrections which can be sent to piers.robinson@sheffield.ac.uk or provided in the Comments section below.
A tent is secured over the bench in Salisbury where Sergei and Yulia Skripal were found critically ill. Photograph: Andrew Matthews/PA
The international chemical weapons watchdog has backed the UK’s findings on the identity of the chemical used to poison the former Russian spy Sergei Skripal and his daughter Yulia in Salisbury.
The findings by the Organisation for the Prohibition of Chemical Weapons will be a major relief to the UK, which has said novichok, a military-grade nerve agent developed by Russia, was used in the attack.
The executive summary released by the OPCW does not mention novichok by name, but states: “The results of the analysis by the OPCW designated laboratories of environmental and biomedical samples collected by the OPCW team confirms the findings of the United Kingdom relating to the identity of the toxic chemical that was used in Salisbury and severely injured three people.”
‘We have not identified the precise source, but we have provided the scientific info to government who have then used a number of other sources to piece together the conclusions’
Giant fissure opens in Hawaii volcano, flinging lava bombs into sky
Accusations and recriminations between Britain and Russia are set to escalate with the news that scientists at the Porton Down military research facility have been unable to establish exactly where the novichok nerve agent used to carry out the Skripal attack was manufactured.
The admission comes the day before Moscow convenes an emergency meeting of the Organisation for the Prohibition of Chemical Weapons (OPCW) in The Hague in which it is expected to demand access to samples from the Salisbury poisoning for analysis by Russian scientists.
London (CNN)The Organisation for the Prohibition of Chemical Weapons confirmed the UK’s findings that Novichok was used to target the former Russian double agent Sergei Skripal and his daughter Yulia in the English city of Salisbury.
While the statement from the OPCW does not specifically name Novichok, it says technical experts “confirm the findings of the United Kingdom relating to the identity of the toxic chemical that was used in Salisbury and severely injured three people.”
The UK government says its scientists have identified the agent as a military-grade Novichok nerve agent.
The Bell was able to find and speak with Vladimir Uglev, one of the scientists who was involved in developing the nerve agent referred to as “Novichok”. According to British authorities, a nerve agent from the “Novichok” series was used to poison former Rusian intelligence agent Sergei Skripal and his daughter, Yulia. Vladimir Uglev, formerly a scientist with Volsk branch of GOSNIIOKHT (“State Scientific-Research Institute for Organic Chemistry and Technology”), which developed and tested production of new lethal substances since 1972, spoke for the first time about his work as early as the 1990s. He left the institute in 1994 and is now retired.
The attack on former spy Sergei Skripal thrust the nerve agent Novichok into the spotlight. For many, it was the first time they had heard of the poison, but it has long been a bone of contention between Moscow and the West.
No problem, says Andrew Weber, I can show you the pictures. The weapons expert, formerly a high-ranking official in the U.S. Defense Department, is sitting in a Berlin hotel. He swipes through his smartphone and quickly finds the photos.
One image depicts a reactor constructed of metal, inside of which the deadly chemical agent was produced. Another shows devices lined up in the basement that look not unlike gas masks designed for dogs. Still another is of an elongated, four-story complex that is light beige in color. The area around the structure is undeveloped and there is trash and scrap metal strewn on the ground.
The British government claims that ‘Novichok’ poisons, developed 30 years ago in the Soviet Union, affected a British double agent. But such substances may not exist at all. The British government further says that the Russian government is responsible for the incident and has announced penalties against the country.
A comparable incidents happened in 2001 in the United States. Envelopes with Anthrax spores were sent to various politicians. Some people died. The White House told the FBI to blame al-Qaeda but the Anthrax turned out to be from a U.S. chemical-biological weapon laboratory. The case is still unsolved.
Gary Aitkenhead is the Head of the Military Laboratory for Science and Technology of Porton Down (United Kingdom). On 3 April 2018, he declared speaking for himself and on behalf of his colleagues, that his services identified that the substance used on Sergei and Yulia Skripal was an agent belonging to the Novichok programme but made it clear that they had never determined where it was made.
He declared in an exclusive interview given to Sky News on 3 April 2018:
“We were able to identify this substance as a Novichok and to establish that it is an nerve-poisoning agent of military grade (…) We were not been able to establish the exact source but we provided scientific reports to the government which led it to other sources before reaching the conclusions that it has today”.
The following briefing note is developed from ongoing research and investigation into the use of chemical and biological weapons during the 2011-present war in Syria conducted by members of the Working Group on Syria, Media and Propaganda. The note reflects work in progress. However, the substantive questions raised need answering, especially given the seriousness of the political crisis that is now developing. We welcome comments and corrections.
MOSCOW/AMSTERDAM – The British government says Russia is to blame for poisoning former spy Sergei Skripal with a nerve agent, and most chemical weapons specialists agree.
But they also say an alternative explanation cannot be ruled out: that the nerve agent got into the hands of people not acting for the Russian state.
The Soviet Union’s chemical weapons program was in such disarray in the aftermath of the Cold War that some toxic substances and know-how could have gotten into the hands of criminals, say people who dealt with the program at the time.
While nerve agents degrade over time, if the precursor ingredients for the nerve agent were smuggled out back then, stored in proper conditions and mixed recently, they could still be deadly in a small-scale attack.
The United States and Uzbekistan have quietly negotiated and are expected to sign a bilateral agreement today to provide American aid in dismantling and decontaminating one of the former Soviet Union’s largest chemical weapons testing facilities, according to Defense Department and Uzbek officials.
Earlier this year, the Pentagon informed Congress that it intends to spend up to $6 million under its Cooperative Threat Reduction program to demilitarize the so-called Chemical Research Institute, in Nukus, Uzbekistan. Soviet defectors and American officials say the Nukus plant was the major research and testing site for a new class of secret, highly lethal chemical weapons called ”Novichok,” which in Russian means ”new guy.”
Latvian Forest BrothersRecently declassified documents from the archive of the Central Intelligence Agency detail financial and material support given by the United States to groups of armed guerrillas in Soviet Latvia in the 1950s. The documents, initially marked ‘Top Secret’ but now declassified, show that the CIA was aware and supported the activities of an anti-Soviet guerrilla army known as ‘the Forest Brothers’. Known also as ‘the Forest Brethren’, the group was formed in the Baltic States in 1944, as the Soviet Red Army established Soviet control over the previously German-occupied states of Estonia, Latvia and Lithuania. The Soviet Union had previously occupied and annexed the three Baltic countries, in a failed attempt to pre-empt Germany’s eastward military expansion. Groups like the Forest Brothers consisted of the most militant members of anti-Soviet groups in the Baltic States, many of whom were ideologically opposed to Soviet Communism.
The role of the CIA in funding and helping to organize anti-Soviet groups inside the USSR has been known for decades. But the recently released documents, unearthed by Russian-language service of Latvian state television, shed light into the CIA’s early understanding of the identity, strength and operations of these groups. They also contain new information about the background and structure of underground anti-Soviet groups like the Forest Brothers in Latvia.
The first declassified CIA document that contains information on anti-Soviet resistance in Latvia is dated November 29, 1949, and is titled “The Organization of the Underground Resistance Movement in Eastern Europe”. It was soon followed by two other documents, entitled “Latvian Resistance to Russian Occupation” and “Request for [Support] to the Latvian Resistance Movement”. The latter document was produced in mid-1950, after the CIA was able to establish contact with anti-Soviet Latvian expatriates living in Germany and Sweden. From these contacts, the CIA was able to determine that active (and possibly armed) resistance to the Soviet Red Army in Latvia was limited to approximately 5,000 individuals, many of whom conducted periodic guerrilla attacks against Soviet troops or installations. However, the CIA report said that, as of 1950, the majority of these armed guerrillas remained dormant, “waiting for a more opportune moment” to return to action. The CIA memorandum also stated that clandestine radio communication existed between the leadership of Latvia’s anti-Soviet underground in Riga and exile Latvian communities in Sweden.
Part II
Latvia Forest BrothersThe role of the CIA in funding and helping to organize anti-Soviet groups inside the USSR has been known for decades. But, as intelNews explained in part I of this article, a batch of recently released documents, unearthed by Russian-language service of Latvian state television, sheds light into the CIA’s early understanding of the identity, strength and operations of these groups. They also contain new information about the background and structure of underground anti-Soviet groups like the Forest Brothers in Latvia.
Judging that Latvia’s anti-Soviet underground movement could be “of considerable operational value”, the CIA initiated project ZRLYNCH in the summer of 1950. Operated out of the CIA’s Munich station in Germany, ZRLYNCH was intended as a long-term project supervised by the Office of Policy Coordination, an early Cold War covert operations outfit that in 1952 was absorbed into the CIA’s Directorate of Operations. The Latvia operation was part of a wider effort by the CIA, which was aimed at subverting Soviet power in Eastern Europe.
For the first year of ZRLYNCH, the CIA’s Office of Policy Coordination asked for —and received— a budget of $30,000. The top-secret document unearthed recently by Latvian state television states that the budget was to be used primarily for intelligence collection inside Soviet territory, as well as for covert operations by the Forest Brothers (for information about the group, see part I of this post). The latter were to conduct sabotage activities as part of organized guerrilla warfare. These activities are not specified in the CIA documents. By the end of the first year, it appears that the CIA had recruited three Latvian agents in Europe (one in Sweden and two in Germany), who were acting as mediators between the CIA and the Forest Brothers inside the USSR. Less than three years later, the ZRLYNCH budget had risen to $134,000, with $52,000 going toward covert —mostly psychological— operations and the rest being used to fund intelligence collection efforts. The CIA was also funding the travel expenses of leading Latvian émigré figures in the US, and was diverting tens of thousands of dollars toward Latvian émigré conferences in America, which aimed to unite the various political factions of the fragmented Latvian community in the States.
But the CIA officers behind ZRLYNCH were extremely concerned about operational security. They did not want the Kremlin finding out that the Agency was behind efforts to stir up armed resistance against Soviet power in the Baltic region. One CIA document states that there would be no tolerance for “any breaches of security” that compromised ZRLYNCH. Consequently, any action that uncovered the link between the US government and the Forest Bothers would lead “to an immediate cessation of financial support” for ZRLYNCH, states the memo.
Ultimately, ZRLYNCH failed to seriously challenge Soviet power in Latvia. Most of the members of the Forest Brothers were killed during Red Army counterinsurgency operations, and much of the organization’s structure was penetrated by agents of Soviet intelligence. Eventually, the Forest Brothers became extinct in 1957, when their last members emerged from the forest and surrendered to Latvian and Soviet authorities.
The question of whether political operative Roger Stone helped Russian hackers break into the email of Democratic politicians, to some people, invites another: Who says the hackers were Russian?
The FBI does, and so do several U.S. intelligence agencies, as they’ve declared repeatedly over the past five months. But among private-sector computer security companies, not everybody thinks the case is proven.
“I have no problem blaming Russia for what they do, which is a lot,” said Jeffrey Carr of the international cybersecurity company Taia Global Inc. “I just don’t want to blame them for things we don’t know that they did. It may turn out that they’re guilty, but we are very short on evidence here.”
As Carr notes, the FBI never examined the servers that were hacked at the Democratic National Committee. Instead, the DNC used the private computer security company CrowdStrike to detect and repair the penetrations.
“All the forensic work on those servers was done by CrowdStrike, and everyone else is relying on information they provided,” said Carr. “And CrowdStrike was the one to declare this the work of the Russians.”
The CrowdStrike argument relies heavily on the fact that remnants of a piece of malware known as AGENT-X were found in the DNC computers. AGENT-X collects and transmits hacked files to rogue computers.
“AGENT-X has been around for ages and ages, and its use has always been attributed to the Russian government, a theory that’s known in the industry as ‘exclusive use,’” Carr said. “The problem with exclusive use is that it’s completely false. Unlike a bomb or an artillery shell, malware doesn’t detonate on impact and destroy itself.
“You can recover it, reverse-engineer it, and reuse it. The U.S. government learned a lesson about that when it created the Stuxnet computer worm to destroy Iran’s nuclear program. Stuxnet survived and now other people have it.”
Carr said he is aware of at least two working copies of AGENT-X outside Russian hands. One is in the possession of a group of Ukrainian hackers he has spoken with, and the other is with an American cybersecurity company. “And if an American security company has it, you can be certain other people do, too,” he said.
There’s growing doubt in the computer security industry about CrowdStrike’s theories about AGENT-X and Russian hackers, Carr said, including some critical responses to a CrowdStrike report on Russian use of the malware to disable Ukrainian artillery.
“This is a close-knit community and criticizing a member to the outside world is kind of like talking out of turn,” Carr said. “I’ve been repeatedly criticized for speaking out in public about whether the hacking was really done by the Russians. But this has to be made public, has to be addressed, and has to be acknowledged by the House and Senate Intelligence Committees.”
Russia, we are told, breached the servers of the Democratic National Committee (DNC), swiped emails and other documents, and released them to the public, to alter the outcome of the U.S. presidential election.
How substantial is the evidence backing these assertions?
Hired by the Democratic National Committee to investigate unusual network activity, the security firm Crowdstrike discovered two separate intrusions on DNC servers. Crowdstrike named the two intruders Cozy Bear and Fancy Bear, in an allusion to what it felt were Russian sources. According to Crowdstrike, “Their tradecraft is superb, operational security second to none,” and “both groups were constantly going back into the environment” to change code and methods and switch command and control channels.
On what basis did Crowdstrike attribute these breaches to Russian intelligence services? The security firm claims that the techniques used were similar to those deployed in past security hacking operations that have been attributed to the same actors, while the profile of previous victims “closely mirrors the strategic interests of the Russian government. Furthermore, it appeared that the intruders were unaware of each other’s presence in the DNC system. “While you would virtually never see Western intelligence agencies going after the same target without de-confliction for fear of compromising each other’s operations,” Crowdstrike reports, “in Russia this is not an uncommon scenario.” [1]
Those may be indicators of Russian government culpability. But then again, perhaps not. Regarding the point about separate intruders, each operating independently of the other, that would seem to more likely indicate that the sources have nothing in common.
Each of the two intrusions acted as an advanced persistent threat (APT), which is an attack that resides undetected on a network for a long time. The goal of an APT is to exfiltrate data from the infected system rather than inflict damage. Several names have been given to these two actors, and most commonly Fancy Bear is known as APT28, and Cozy Bear as APT29.
The fact that many of the techniques used in the hack resembled, in varying degrees, past attacks attributed to Russia may not necessarily carry as much significance as we are led to believe. Once malware is deployed, it tends to be picked up by cybercriminals and offered for sale or trade on Deep Web black markets, where anyone can purchase it. Exploit kits are especially popular sellers. Quite often, the code is modified for specific uses. Security specialist Josh Pitts demonstrated how easy that process can be, downloading and modifying nine samples of the OnionDuke malware, which is thought to have first originated with the Russian government. Pitts reports that this exercise demonstrates “how easy it is to repurpose nation-state code/malware.” [2]
In another example, when SentinalOne Research discovered the Gyges malware in 2014, it reported that it “exhibits similarities to Russian espionage malware,” and is “designed to target government organizations. It comes as no surprise to us that this type of intelligence agency-grade malware would eventually fall into cybercriminals’ hands.” The security firm explains that Gyges is an “example of how advanced techniques and code developed by governments for espionage are effectively being repurposed, modularized and coupled with other malware to commit cybercrime.” [3]
Attribution is hard, cybersecurity specialists often point out. “Once an APT is released into the wild, its spread isn’t controlled by the attacker,” writes Mark McArdle. “They can’t prevent someone from analyzing it and repurposing it for their own needs.” Adapting malware “is a well-known reality,” he continues. “Finding irrefutable evidence that links an attacker to an attack is virtually unattainable, so everything boils down to assumptions and judgment.” [4]
Security Alliance regards security firm FireEye’s analysis that tied APT28 to the Russian government as based “largely on circumstantial evidence.” FireEye’s report “explicitly disregards targets that do not seem to indicate sponsorship by a nation-state,” having excluded various targets because they are “not particularly indicative of a specific sponsor’s interests.” [5] FireEye reported that the APT28 “victim set is narrow,” which helped lead it to the conclusion that it is a Russian operation. Cybersecurity consultant Jeffrey Carr reacts with scorn: “The victim set is narrow because the report’s authors make it narrow! In fact, it wasn’t narrowly targeted at all if you take into account the targets mentioned by other cybersecurity companies, not to mention those that FireEye deliberately excluded for being ‘not particularly indicative of a specific sponsor’s interests’.” [6]
FireEye’s report from 2014, on which much of the DNC Russian attribution is based, found that 89 percent of the APT28 software samples it analyzed were compiled during regular working hours in St. Petersburg and Moscow. [7]
But compile times, like language settings, can be easily altered to mislead investigators. Mark McArdle wonders, “If we think about the very high level of design, engineering, and testing that would be required for such a sophisticated attack, is it reasonable to assume that the attacker would leave these kinds of breadcrumbs? It’s possible. But it’s also possible that these things can be used to misdirect attention to a different party. Potentially another adversary. Is this evidence the result of sloppiness or a careful misdirection?” [8]
“If the guys are really good,” says Chris Finan, CEO of Manifold Technology, “they’re not leaving much evidence or they’re leaving evidence to throw you off the scent entirely.” [9] How plausible is it that Russian intelligence services would fail even to attempt such a fundamental step?
James Scott of the Institute for Critical Infrastructure Technology points out that the very vulnerability of the DNC servers constitutes a muddied basis on which determine attribution. “Attribution is less exact in the case of the DNC breach because the mail servers compromised were not well-secured; the organization of a few hundred personnel did not practice proper cyber-hygiene; the DNC has a global reputation and is a valuable target to script kiddies, hacktivists, lone-wolf cyber-threat actors, cyber-criminals, cyber-jihadists, hail-mary threats, and nation-state sponsored advanced persistent threats; and because the malware discovered on DNC systems were well-known, publicly disclosed, and variants could be purchased on Deep Web markets and forums.” [10]
Someone, or some group, operating under the pseudonym of Guccifer 2.0, claimed to be a lone actor in hacking the DNC servers. It is unclear what relation – if any – Guccifer 2.0 has to either of the two APT attacks on the DNC. In a PDF file that Guccifer 2.0 sent to Gawker.com, metadata indicated that it was it was last saved by someone having a username in Cyrillic letters. During the conversion of the file from Microsoft Word to PDF, invalid hyperlink error messages were automatically generated in the Russian language. [11]
This would seem to present rather damning evidence. But who is Guccifer 2.0? A Russian government operation? A private group? Or a lone hacktivist? In the poorly secured DNC system, there were almost certainly many infiltrators of various stripes. Nor can it be ruled out that the metadata indicators were intentionally generated in the file to misdirect attribution. The two APT attacks have been noted for their sophistication, and these mistakes – if that is what they are – seem amateurish. To change the language setting on a computer can be done in a matter of seconds, and that would be standard procedure for advanced cyber-warriors. On the other hand, sloppiness on the part of developers is not entirely unknown. However, one would expect a nation-state to enforce strict software and document handling procedures and implement rigorous review processes.
At any rate, the documents posted to the Guccifer 2.0 blog do not necessarily originate from the same source as those published by WikiLeaks. Certainly, none of the documents posted to WikiLeaks possess the same metadata issues. And one hacking operation does not preclude another, let alone an insider leak.
APT28 relied on XTunnel, repurposed from open source code that is available to anyone, to open network ports and siphon data. The interesting thing about the software is its failure to match the level of sophistication claimed for APT28. The strings in the code quite transparently indicate its intent, with no attempt at obfuscation. [12] It seems an odd oversight for a nation-state operation, in which plausible deniability would be essential, to overlook that glaring point during software development.
Command-and-control servers remotely issue malicious commands to infected machines. Oddly, for such a key component of the operation, the command-and-control IP address in both attacks was hard-coded in the malware. This seems like another inexplicable choice, given that the point of an advanced persistent threat is to operate for an extended period without detection. A more suitable approach would be to use a Domain Name System (DNS) address, which is a decentralized computer naming system. That would provide a more covert means of identifying the command-and-control server. [13] Moreover, one would expect that address to be encrypted. Using a DNS address would also allow the command-and-control operation to easily move to another server if its location is detected, without the need to modify and reinstall the code.
One of the IP addresses is claimed to be a “well-known APT 28” command-and-control address, while the second is said to be linked to Russian military intelligence. [14] The first address points to a server located in San Jose, California, and is operated by a server hosting service. [15] The second server is situated in Paris, France, and owned by another server hosting service. [16] Clearly, these are servers that have been compromised by hackers. It is customary for hackers to route their attacks through vulnerable computers. The IP addresses of compromised computers are widely available on the Deep Web, and typically a hacked server will be used by multiple threat actors. These two particular servers may or may not have been regularly utilized by Russian Intelligence, but they were not uniquely so used. Almost certainly, many other hackers would have used the same machines, and it cannot be said that these IP addresses uniquely identify an infiltrator. Indeed, the second IP address is associated with the common Trojan viruses Agent-APPR and Shunnael. [17]
“Everyone is focused on attribution, but we may be missing the bigger truth,” says Joshua Croman, Director of the Cyber Statecraft Initiative at the Atlantic Council. “[T]he level of sophistication required to do this hack was so low that nearly anyone could do it.” [18]
In answer to critics, the Department of Homeland Security and the FBI issued a joint analysis report, which presented “technical details regarding the tools and infrastructure used” by Russian intelligence services “to compromise and exploit networks” associated with the U.S. election, U.S. government, political, and private sector entities. The report code-named these activities “Grizzly Steppe.” [19]
For a document that purports to offer strong evidence on behalf of U.S. government allegations of Russian culpability, it is striking how weak and sloppy the content is. Included in the report is a list of every threat group ever said to be associated with the Russian government, most of which are unrelated to the DNC hack. It appears that various governmental organizations were asked to send a list of Russian threats, and then an official lacking IT background compiled that information for the report, and the result is a mishmash of threat groups, software, and techniques. “PowerShell backdoor,” for instance, is a method used by many hackers, and in no way describes a Russian operation.
Indeed, one must take the list on faith, because nowhere in the document is any evidence provided to back up the claim of a Russian connection. Indeed, as the majority of items on the list are unrelated to the DNC hack, one wonders what the point is. But it bears repeating: even where software can be traced to Russian origination, it does not necessarily indicate exclusive usage. Jeffrey Carr explains: “Once malware is deployed, it is no longer under the control of the hacker who deployed it or the developer who created it. It can be reverse-engineered, copied, modified, shared and redeployed again and again by anyone.” Carr quotes security firm ESET in regard to the Sednit group, one of the items on the report’s list, and which is another name for APT28: “As security researchers, what we call ‘the Sednit group’ is merely a set of software and the related infrastructure, which we can hardly correlate with any specific organization.” Carr points out that X-Agent software, which is said to have been utilized in the DNC hack, was easily obtained by ESET for analysis. “If ESET could do it, so can others. It is both foolish and baseless to claim, as Crowdstrike does, that X-Agent is used solely by the Russian government when the source code is there for anyone to find and use at will.” [20]
The salient impression given by the government’s report is how devoid of evidence it is. For that matter, the majority of the content is taken up by what security specialist John Hinderaker describes as “pedestrian advice to IT professionals about computer security.” As for the report’s indicators of compromise (IoC), Hinderaker characterizes these as “tools that are freely available and IP addresses that are used by hackers around the world.” [21]
In conjunction with the report, the FBI and Department of Homeland Security provided a list of IP addresses it identified with Russian intelligence services. [22] Wordfence analyzed the IP addresses as well as a PHP malware script provided by the Department of Homeland Security. In analyzing the source code, Wordfence discovered that the software used was P.A.S., version 3.1.0. It then found that the website that manufactures the malware had a site country code indicating that it is Ukrainian. The current version of the P.A.S. software is 4.1.1, which is much newer than that used in the DNC hack, and the latest version has changed “quite substantially.” Wordfence notes that not only is the software “commonly available,” but also that it would be reasonable to expect “Russian intelligence operatives to develop their own tools or at least use current malicious tools from outside sources.” To put it plainly, Wordfence concludes that the malware sample “has no apparent relationship with Russian intelligence.” [23]
Wordfence also analyzed the government’s list of 876 IP addresses included as indicators of compromise. The sites are widely dispersed geographically, and of those with a known location, the United States has the largest number. A large number of the IP addresses belong to low-cost server hosting companies. “A common pattern that we see in the industry,” Wordfence states, “is that accounts at these hosts are compromised and those hacked sites are used to launch attacks around the web.” Fifteen percent of the IP addresses are currently Tor exit nodes. “These exit nodes are used by anyone who wants to be anonymous online, including malicious actors.” [24]
If one also takes into account the IP addresses that not only point to current Tor exits, but also those that once belonged to Tor exit nodes, then these comprise 42 percent of the government’s list. [25] “The fact that so many of the IPs are Tor addresses reveals the true sloppiness of the report,” concludes network security specialist Jerry Gamblin. [26]
Cybersecurity analyst Robert Graham was particularly blistering in his assessment of the government’s report, characterizing it as “full of garbage.” The report fails to tie the indicators of compromise to the Russian government. “It contains signatures of viruses that are publicly available, used by hackers around the world, not just Russia. It contains a long list of IP addresses from perfectly normal services, like Tor, Google, Dropbox, Yahoo, and so forth. Yes, hackers use Yahoo for phishing and maladvertising. It doesn’t mean every access of Yahoo is an ‘indicator of compromise’.” Graham compared the list of IP addresses against those accessed by his web browser, and found two matches. “No,” he continues. “This doesn’t mean I’ve been hacked. It means I just had a normal interaction with Yahoo. It means the Grizzly Steppe IoCs are garbage.” Graham goes on to point out that “what really happened” with the supposed Russian hack into the Vermont power grid “is that somebody just checked their Yahoo email, thereby accessing one of the same IP addresses I did. How they get from the facts (one person accessed Yahoo email) to the story (Russians hacked power grid)” is U.S. government “misinformation.” [27]
The indicators of compromise, in Graham’s assessment, were “published as a political tool, to prove they have evidence pointing to Russia.” As for the P.A.S. web shell, it is “used by hundreds if not thousands of hackers, mostly associated with Russia, but also throughout the rest of the world.” Relying on the government’s sample for attribution is problematic: “Just because you found P.A.S. in two different places doesn’t mean it’s the same hacker.” A web shell “is one of the most common things hackers use once they’ve broken into a server,” Graham observes. [28]
Although cybersecurity analyst Robert M. Lee is inclined to accept the government’s position on the DNC hack, he feels the joint analysis report “reads like a poorly done vendor intelligence report stringing together various aspects of attribution without evidence.” The report’s list “detracts from the confidence because of the interweaving of unrelated data.” The information presented is not sourced, he adds. “It’s a random collection of information and in that way, is mostly useless.” Indeed, the indicators of compromise have “a high rate of false positives for defenders that use them.” [29]
Among the government’s list of Russian actors are Energetic Bear and Crouching Yeti, two names for the same threat group. In its analysis, Kaspersky Lab found that most of the group’s victims “fall into the industrial/machinery building sector,” and it is “not currently possible to determine the country of origin.” Although listed in the government’s report, it is not suggested that the group played a part in the DNC hack. But it does serve as an example of the uncertainty surrounding government claims about Russian hacking operations in general. [30]
CosmicDuke is one of the software packages listed as tied to Russia. SecureList, however, finds that unlike the software’s predecessor, CosmicDuke targets those who traffic in “controlled substances, such as steroids and hormones.” One possibility is that CosmicDuke is used by law enforcement agencies, while another possibility “is that it’s simply available in the underground and purchased by various competitors in the pharmaceutical business to spy on each other.” In either case, whether or not the software is utilized by the Russian government, there is a broader base for its use. [31]
The intent of the joint analysis report was to provide evidence of Russian state responsibility for the DNC hack. But nowhere does it do so. Mere assertions are meant to persuade. How much evidence does the government have? The Democratic Party claims that the FBI never requested access to DNC servers. [32] The FBI, for its part, says it made “multiple requests” for access to the DNC servers and was repeatedly turned down. [33] Either way, it is a remarkable admission. In a case like this, the FBI would typically conduct its own investigation. Was the DNC afraid the FBI might come to a different conclusion than the DNC-hired security firm Crowdstrike? The FBI was left to rely on whatever evidence Crowdstrike chose to supply. During its analysis of DNC servers, Crowdstrike reports that it found evidence of APT28 and APT29 intrusions within two hours. Did it stop there, satisfied with what it had found? Or did it continue to explore whether additional intrusions by other actors had taken place?
In an attempt to further inflame the hysteria generated from accusations of Russian hacking, the Office of the Director of National Intelligence published a declassified version of a document briefed to U.S. officials. The information was supplied by the CIA, FBI, and National Security Agency, and was meant to cement the government’s case. Not surprisingly, the report received a warm welcome in the mainstream media, but what is notable is that it offers not a single piece of evidence to support its claim of “high confidence” in assessing that Russia hacked the DNC and released documents to WikiLeaks. Instead, the bulk of the report is an unhinged diatribe against Russian-owned RT media. The content is rife with inaccuracies and absurdities. Among the heinous actions RT is accused of are having run “anti-fracking programming, highlighting environmental issues and the impacts on health issues,” airing a documentary on Occupy Wall Street, and hosting third-party candidates during the 2012 election.[34]
The report would be laughable, were it not for the fact that it is being played up for propaganda effect, bypassing logic and appealing directly to unexamined emotion. The 2016 election should have been a wake-up call for the Democratic Party. Instead, predictably enough, no self-examination has taken place, as the party doubles down on the neoliberal policies that have impoverished tens of millions, and backing military interventions that have sown so much death and chaos. Instead of thoughtful analysis, the party is lashing out and blaming Russia for its loss to an opponent that even a merely weak candidate would have beaten handily.
Mainstream media start with the premise that the Russian government was responsible, despite a lack of convincing evidence. They then leap to the fallacious conclusion that because Russia hacked the DNC, only it could have leaked the documents.
So, did the Russian government hack the DNC and feed documents to WikiLeaks? There are really two questions here: who hacked the DNC, and who released the DNC documents? These are not necessarily the same. An earlier intrusion into German parliament servers was blamed on the Russians, yet the release of documents to WikiLeaks is thought to have originated from an insider. [35] Had the Russians hacked into the DNC, it may have been to gather intelligence, while another actor released the documents. But it is far from certain that Russian intelligence services had anything to do with the intrusions. Julian Assange says that he did not receive the DNC documents from a nation-state. It has been pointed out that Russia could have used a third party to pass along the material. Fair enough, but former UK diplomat Craig Murray asserts: “I know who the source is… It’s from a Washington insider. It’s not from Russia.” [36]
There are too many inconsistencies and holes in the official story. In all likelihood, there were multiple intrusions into DNC servers, not all of which have been identified. The public ought to be wary of quick claims of attribution. It requires a long and involved process to arrive at a plausible identification, and in many cases the source can never be determined. As Jeffrey Carr explains, “It’s important to know that the process of attributing an attack by a cybersecurity company has nothing to do with the scientific method. Claims of attribution aren’t testable or repeatable because the hypothesis is never proven right or wrong.” [37]
Russia-bashing is in full swing, and there does not appear to be any letup in sight. We are plunging headlong into a new Cold War, riding on a wave of propaganda-induced hysteria. The self-serving claims fueling this campaign need to be challenged every step of the way. Surrendering to evidence-free emotional appeals would only serve those who arrogantly advocate confrontation and geopolitical domination.
Notes.
[1] Dmitri Alperovitch, “Bears in the Midst: Intrusion into the Democratic National Committee,” Crowdstrike blog, June 15, 2016.
[2] Josh Pitts, “Repurposing OnionDuke: A Single Case Study Around Reusing Nation-state Malware,” Black Hat, July 21, 2015.
[3] Udi Shamir, “The Case of Gyges, the Invisible Malware,” SentinelOne, July 2014.
[4] Mark McArdle, “’Whodunnit?’ Why the Attribution of Hacks like the Recent DNC Hack is so Difficult,” Esentire, July 28, 2016.
[5] “The Usual Suspects: Faith-Based Attribution and its Effects on the Security Community,” October 21, 2016.
[6] Jeffrey Carr, “The DNC Breach and the Hijacking of Common Sense,” June 20, 2016.
[7] “APT28: A Window into Russia’s Cyber Espionage Operations?” FireEye, October 27, 2014.
[8] Mark McArdle, “’Whodunnit?’ Why the Attribution of Hacks like the Recent DNC Hack is so Difficult,” Esentire, July 28, 2016.
[9] Patrick Howell O’Neill, “Obama’s Former Cybersecurity Advisor Says Only ‘Idiots’ Want to Hack Russia Back for DNC Breach,” The Daily Dot, July 29, 2016.
[10] Janes Scott, Sr., “It’s the Russians! … or is it? Cold War Rhetoric in the Digital Age,” ICIT, December 13, 2016.
[11] Sam Biddle and Gabrielle Bluestone, “This Looks like the DNC’s Hacked Trump Oppo File,” Gawker, June 15, 2016.
Dan Goodin, “’Guccifer’ Leak of DNC Trump Research Has a Russian’s Fingerprints on It,” Ars Technica, June 16, 2016.
[12] Pat Belcher, “Tunnel of Gov: DNC Hack and the Russian XTunnel,” Invincea, July 28, 2016.
[13] Seth Bromberger, “DNS as a Covert Channel within Protected Networks,” National Electric Sector Cyber Security Organization, January 25, 2011.
[14] Thomas Rid, “All Signs Point to Russia Being Behind the DNC Hack,” Motherboard, July 25, 2016.
[18] Paul, “Security Pros Pan US Government Report on Russian Hacking,” The Security Ledger, December 30, 2016.
[19] “Grizzly Steppe – Russian Malicious Cyber Activity,” JAR-16-20296, National Cybersecurity & Communications Integration Center, Federal Bureau of Investigation, December 29, 2016.
[20] Jeffrey Carr, “FBI/DHS Joint Analysis Report: A Fatally Flawed Effort,” Jeffrey Carr/Medium, December 30, 2016.
[21] John Hinderaker, “Is “Grizzly Steppe’ Really a Russian Operation?” Powerline, December 31, 2016.
[23] Mark Maunder, “US Govt Data Shows Russia Used Outdated Ukrainian PHP Malware,” Wordfence, December 30, 2016.
[24] Mark Maunder, “US Govt Data Shows Russia Used Outdated Ukrainian PHP Malware,” Wordfence, December 30, 2016.
[25] Micah Lee, “The U.S. Government Thinks Thousands of Russian Hackers May be Reading my Blog. They Aren’t,” The Intercept, January 4, 2017.
[26] Jerry Gamblin, “Grizzly Steppe: Here’s My IP and Hash Analysis,” A New Domain, January 2, 2017.
[27] Robert Graham, “Dear Obama, from Infosec,” Errata Security, January 3, 2017.
[28] Robert Graham, “Some Notes on IoCs,” Errata Security, December 29, 2016.
[29] Robert M. Lee, “Critiques of the DHS/FBI’s Grizzly Steppe Report,” Robert M. Lee blog, December 30, 2016.
[30] “Energetic Bear – Crouching Yeti,” Kaspersky Lab Global Research and Analysis Team, July 31, 2014.
[31] “Miniduke is back: Nemesis Gemina and the Botgen Studio,” Securelist, July 3, 2014.
[32] Ali Watkins, “The FBI Never Asked for Access to Hacked Computer Servers,” Buzzfeed, January 4, 2017.
[33] “James Comey: DNC Denied FBI Direct Access to Servers During Russia Hacking Probe,” Washington Times, January 10, 2017.
[34] “Assessing Russian Activities and Intentions in Recent Activities and Intentions in Recent US Elections,” Office of the Director of National Intelligence, January 6, 2017.
[35] “Quelle für Enthüllungen im Bundestag Vermutet,” Frankfurter Allgemeine Zeitung, December 17, 2016.
[36] RT broadcast, January 7, 2017. https://www.youtube.com/watch?v=w3DvaVrRweY
[37] Jeffrey Carr, “Faith-based Attribution,” Jeffrey Carr/Medium, July 10, 2016.
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Gregory Elich is on the Board of Directors of the Jasenovac Research Institute and the Advisory Board of the Korea Policy Institute. He a member of the Solidarity Committee for Democracy and Peace in Korea, a columnist for Voice of the People, and one of the co-authors of Killing Democracy: CIA and Pentagon Operations in the Post-Soviet Period, published in the Russian language. He is also a member of the Task Force to Stop THAAD in Korea and Militarism in Asia and the Pacific. His website is https://gregoryelich.org
