The founder of Raspberry Pi has bolstered the policing of its global distribution network after discovering millions of dollars worth of its mini-computers were being sold into Russia despite international sanctions.
Eben Upton said he was shocked by data from the Kyiv School of Economics (KSE) Institute that revealed about $5 million of Raspberry Pi products entered Russia last year.
After working with the think tank, Upton discovered that third-party distributors, largely in China, would buy the company’s products and then ship them to Russia without its knowledge. This was despite the company receiving assurances from its global network of partners that they adhered to its stringent export guidelines.
“It was good in that it suggests that our partners are taking their obligations seriously,” Upton said. “Though it does complicate trying to cut off supply.”
Released in 2012 to introduce schoolchildren to coding, the devices, which are the size of credit cards and sell for as little as £15, can be used in everything from gaming and home automation to industrial engineering and satellite technology. Some of these applications — such as supporting computer vision systems within drones — also have a role on the battlefield.
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Raspberry Pi has worked with the KSE Institute to compile a list of redistributors connected to sales in Russia and now prohibits its partners from trading with them. The company continues to work to ensure its products do not end up in the wrong hands, blocks new third-party distributors as they are discovered and is upgrading the traceability of its products.
The problems faced by Raspberry Pi are not unique to the company. The Times reported previously that of $100 million worth of British technology exported to Russia last year, only $15 million worth came directly from UK warehouses.
Between January and October last year, Russia imported hundreds of millions of semiconductors and other technologies from some of America’s largest electronics manufacturers, according to the institute, which would go on to be used in military systems requiring high-performance processing power.
Almost half of all Russia’s imports of battlefield items in the first ten months of last year ultimately came from manufacturers based in jurisdictions that have imposed sanctions, the institute found, implying that these goods found their way to Russia through more amenable third countries.
Upton accepts that there are limits to what it can do by itself to police the supply chain, particularly when distributors can easily conceal themselves. Further complicating the picture is that only some of these distributors are deliberately set up to avoid sanctions: others are simply operating in jurisdictions, such as China, where exports to Russia are not restricted.
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“We actually recognised one name,” Upton said, speaking of the list of third-party distributors he compiled. “We had met them at a Maker Faire [DIY convention] in Shenzhen last year. They didn’t seem like villains, they seemed like kids actually, very young, probably naive people. When we spoke with them recently, they expressed remorse and committed to stop exporting our products.”
Analysis by The Times has found that the United States has been the most active in imposing sanctions on third parties. Through its Office of Foreign Assets Control (Ofac), it has put sanctions on a total of 366 entities outside Russia for fuelling its war. These include 62 companies based in the United Arab Emirates, 57 in Cyprus and 50 in China.
Under the UK’s regime, 58 companies have been placed under sanctions including nine from the UAE, 14 from Turkey and 16 from China.
The European Union, on the other hand, has been markedly slower to put sanctions on any of these third-party suppliers. It has acted against only 29 companies, three of which are in Hong Kong, four on the Chinese mainland and two from the UAE.
There are various reasons for the discrepancies between the three jurisdictions’ use of sanctions.
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Jason Hungerford, a partner at the law firm Mayer Brown who leads its London-based international trade team, said: “The US has been doing this for longer. It’s been a bigger part of their foreign policy toolkit for longer, and they’ve just got a bigger apparatus than the EU or the UK.
“You can see why the UK and EU are going to be slower to respond. It’s much easier to challenge those governments on designations than it is in the United States. Ofac can essentially do what it wants… there is a much higher standard in the EU and UK.”
Since Russia’s full-scale invasion of Ukraine in February 2022, America, Britain and the EU, along with countries including Australia, Canada and Japan, have imposed more than 16,500 sets of sanctions. These have targeted foreign currency reserves and technology imports aimed at weakening Moscow’s ability to wage war by cutting off its access to semiconductors, which are vital components in missiles, tanks, drones and military aircraft.
But Russia has continued to acquire chips through circuitous routes, with investigations suggesting a large proportion are flowing through small traders in Hong Kong and mainland China.
Enforcement against such third-party distributors has been described as “whack a mole”, though researchers from Ukraine have noted their effect, even if products do at times leak into Russia. The KSE think tank has found that for certain goods, such as some semiconductors, the mark-up Russia is paying is significant, up to two and a half times the original price.
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Benjamin Hilgenstock, a senior economist at the institute, said: “We actually think this can have a pretty meaningful impact on Russia’s ability to import war-related goods and battlefield items, largely by driving up the price because everyone in this distribution network will want to be compensated for the risk they are taking.”
The Department for Business and Trade was contacted for comment.
