On February 24, 2022, Russia invaded Ukraine in a so-far failed attempt to amalgamate it by force under Moscow rule. Whether the intention was to insulate his gangster state from the West or simply to feed a distorted fantasy of national greatness, Russia President Vladimir Putin’s actions have left many thousands of people dead, more than ten million internally or externally displaced and many millions more plunged into food insecurity, not least in Africa, a continent where he also happens to be consolidating military coups.
In order to undertake these violences, Putin has had to rely on a clique of enablers across the globe, especially since his botched lightning attack on Kyiv at the start of the war bogged him down into a protracted conflict. These enablers, who include luminary despotic states like Iran and North Korea, either directly provide him weapons or supply dual-use technologies that can be converted into such. They also buy up his energy exports at generous prices, which cements his rule and provides the cash to keep the killing machine rolling. In this manner, Moscow is able to reduce the impact of sanctions that have been placed upon it by several countries that wish to discourage its expansionist behavior.
Chief among these enablers is China, which has ratcheted up Sino-Russian trade by 64% to $240 billion since 2022. Via numerous routes, including through Kazakhstan and Kyrgyzstan, it is also overseeing the transfer to Russia of equipment like computer chips and drones that can be deployed for the purpose of killing Ukrainians and depriving them of their territory. Many of these are Western-made components and subject to sanction, yet are being rerouted to Putin’s pleasure.
Undeterred by the screeching moral warning siren of being on the same side of a conflict as Kim Jong-un and Ali Khamenei, Hong Kong has leapt in to become a critical node in this web. In the first six months of 2023 alone, microelectronics worth $528 million were shipped from the city to Russia, where they are believed to embed in the defense-industrial sector, according to the nonprofit C4ADS, which tracks networks that facilitate war. The volume even surpassed that from China proper in May of the same year.
Hong Kong had been working towards that grim milestone for a while. Throughout 2022, it was contributing significantly to a 1,000% explosion in the value of chip exports to Russia from China, often through entities that suddenly sprang up after the invasion, which placed coveted high-end components from companies like Intel, Advanced Micro Devices and Texas Instruments in Putin’s hands. They can be used for missile systems, and, the more that get through, Russia’s ability to develop complex weapons both expands and becomes cheaper.
Some supplies have also been obfuscated through intermediary countries, often by taking advantage of so-called transshipments, which enable goods to be rerouted to an onward destination, often without passing customs. For instance, as reported by Nikkei Asia, a Hong Kong firm named Pixel Devices has been sending semiconductors to Russia via the China-friendly Maldives, seemingly using this method. Such flows do not always show up in statistics, so the full amounts may well be unknown. Hong Kong itself has been a hub for transshipments with Russia as the terminal location, too.
Weaponry that may ultimately end up on the Ukraine battlefield has other pathways that feature Hong Kong as well. Iran’s unmanned aerial vehicle industry, of which Russia is a client, has been receiving antennas, inertial measurement units and servometers from Hong Kong front companies, according to the U.S. Department of the Treasury, which has sanctioned at least three such entities.
The Treasury has also stepped up the pressure on both local and foreign financial institutions operating in Hong Kong to improve their screening of financial and other transactions that are benefitting Russia, with meetings in the city both last June and this January.
There are some indications that this message may be hitting home, as the Biden administration threatens to impose a wider regime of secondary sanctions, i.e. those that affect companies outside of Washington’s jurisdiction. This may eventually discourage the more discrete helping hands that Hong Kong lends to Russian entities and individuals, such as access to its courts and marinas to enforce their contracts and moor their luxury yachts.
Nonetheless, as long as China plays its double game, hiding its hand in Russia’s dirty war while posturing as a peace advocate, Hong Kong will certainly follow suit. As a junior geopolitical party to a repressive giant like Vladimir Putin, its chief executive John Lee Ka-chiu (李家超) should feel right at home.
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