February 6, 2024

Institute for the Study of War: Russia unfreezes North Korean assets, pays Iran $4.5 billion a year for drones

Institute for the Study of War

America’s European and Asian allies have significantly ramped up their efforts to support Ukraine. European Council President Charles Michel stated on February 6 that the European Council and Parliament reached a provisional agreement on the creation of a new single dedicated instrument – the Ukraine Facility – to pool the EU’s recently announced support package of 50 billion euros (about $54 billion) for Ukraine for 2024-2027.[1] European Commission President Ursula von der Leyen stated that the EU aims to start payments to the Ukraine Facility in March 2024.[2] German arms manufacturer Rheinmetall stated on February 5 that it plans to send tens of thousands of 155mm artillery shells, dozens of Marder infantry fighting vehicles, 25 Leopard 1A5 tanks, and an unspecified number of Skynex air defense systems to Ukraine in 2024.[3] South Korea’s Defense Acquisition Program Administration (DAPA) stated on February 6 that it plans to sign a contract with ammunition producer Poongsan in 2024 to mass produce 155mm shells that have an extended range of 60 kilometers.[4] South Korea reportedly began indirectly supplying artillery shells to Ukraine in early 2023, and these shells may go to European allies for indirect transfer to Ukraine.[5]

The EU and its member states have made available 138 billion euros (about $148.5 billion) – including its recently announced support package of 50 billion euros (about $54 billion) – to Ukraine since Russia’s full-scale invasion in February 2022.[6] In comparison, the US has appropriated $113 billion to Ukraine since the full-scale invasion, of which over $75 billion was directly allocated to Ukraine for humanitarian, financial, and military support.[7] The US government allocated the other $38 billion to security assistance-related funding, which the US government spent largely in the US and on US companies or personnel.[8]

As European partners continue to increase their support for Ukraine, US aid provision in the near to medium-term remains vital to help Ukraine build its defense industrial base (DIB). ISW continues to assess that the US will not need to send large security assistance packages to Ukraine indefinitely if Ukraine successfully continues to actively pursue measures aimed at domestically producing its own weapons, building bilateral and international defense industrial partnerships, and creating industrial joint ventures with Western enterprises aimed at co-producing defense materials.[9] The US will need to continue supporting Ukraine for several years as Ukraine builds its own DIB, but Ukraine’s international security requirements will decrease in the long run as it builds out its own capabilities to become self-sufficient. The ultimate success of Ukraine’s efforts to build its DIB, however, depends on Ukraine’s ability to liberate strategically vital areas currently occupied by Russian forces. US and partner military aid to Ukraine in the near term therefore continues to be crucial as the US remains the main source of sufficiently large quantities of essential military equipment, such as M1 Abrams tanks, armored personnel carriers, advanced air defense systems such as Patriots, and long-range strike systems – equipment which previous US aid packages prioritized.[10]

The US Army plans to significantly increase US domestic production of 155mm artillery shells and shell components for Ukraine in 2024 and 2025, should the proposed Congressional supplemental appropriations bill pass. US Assistant Secretary of the Army for Acquisition, Logistics, and Technology Doug Bush stated on February 5 that the US Army aims to double the US monthly production of 155mm artillery shells from 28,000 shells per month in October 2023 to about 60,000 shells per month in October 2024 – if the Congressional bill passes.[11] The US Army hopes to further increase production to 75,000 shells per month in April 2025 and 100,000 shells per month in October 2025. Bush stated that the construction of a new factory in Texas, which will “have an entirely new way” of using technology to make artillery shells, will contribute to the Army’s increased production goals. Bush noted that US shell production in part depends on US domestic production of explosive materials. Bush stated that the proposed supplemental bill includes $600 million for increasing the production of explosives at the Holsten Army Ammunition Plant in Tennessee from five million pounds of explosives a year to 13 million pounds.[12] The proposed bill would also include $93 million to reestablish the production of M6 propellant (used to fire artillery shells but no longer in production in the US) at the Radford Army Ammunition Plant in Virginia, and $650 million would go to constructing a facility (likely also at the Radford Army Ammunition Plant) to domestically produce TNT, which the US currently does not produce. Bush stated that the proposed bill also includes $14 million to construct and recommission a black powder explosive production line in Louisiana. Such investments in US manufacturing are necessary to help support US strategic readiness by rebuilding America’s atrophied defense industrial base, separate and apart from the need to support Ukraine in its fight against Russia.

Russian authorities are reportedly paying Iran roughly $4.5 billion per year to import Iranian Shahed drones to use in Ukraine. A group of hackers from a hacking organization called the Prana Network claimed to have hacked into the servers of purported Iran Revolutionary Guard Corps (IRGC) front company Sahara Thunder on February 4 and published the costs per drone that Russia purchases from Iran.[13] The leaked documents suggest that Russia pays $193,000 per Shahed-136 drone in batches of 6,000 drones, which would total about $1.1 billion for all 6,000 Shahed-136 drones.[14] Russia reportedly pays $1.4 million per unit for one type of Shahed-238 drone and plans to purchase 677 of these upgraded Shahed drones per year, which would total about $947 million.[15] Another type of Shahed-238 reportedly cost about $900,000 per drone, and Russia reportedly plans to purchase 2,310 per year for just under $2.1 billion.[16] The documents claimed that the reconnaissance and attack Shahed-107 drones cost $460,000 each and that Russia plans to purchase 2,310, which would total about $1.5 billion.[17] A Russian milblogger justified the high cost due to the risk that Iran assumes by selling these drones to Russia and noted that the documents indicate that Russia plans to further localize production of Shaheds in Russia, which will reduce acquisition costs over time.[18] ISW is unable to confirm the authenticity of the purported leaked documents, but a milblogger’s claim that the documents refer to Iran as a ”friendly country” and refer to the Shahed drones in code as ”boats” is consistent with previously observed language about Iran and Iranian drone production in Russia.[19] Russian forces routinely use Shahed drones, which serve as both loitering munitions and as decoys to distract Ukrainian air defenses, and the massive expenditure on such systems is noteworthy.

Russia is reportedly unfreezing North Korean assets and helping North Korea evade international sanctions in exchange for missiles and artillery ammunition for Russia to use in Ukraine. The New York Times (NYT) reported on February 6 that unnamed “US-allied” intelligence officials told the NYT that Russia unfroze $9 million of $30 million worth of North Korean assets in an unspecified Russian financial institution, which the intelligence officials assess North Korea will use to buy crude oil.[20] The intelligence official stated that a North Korean front company recently opened a new account at a Russian bank in Russian-occupied South Ossetia that North Korea may use to evade UN sanctions. An unnamed senior US government official told the NYT that Russia is likely unfreezing North Korean assets and helping North Korea evade international sanctions in exchange for North Korean weapons transfers to Russia. Russian President Vladimir Putin met with North Korean dictator Kim Jong Un in Russia in September 2023 and met with North Korean Foreign Minister Choe Son-hui in January 2024.[21] Ukrainian Main Military Intelligence Directorate (GUR) Deputy Chief Major General Vadym Skibitskyi stated that North Korea delivered one million rounds of artillery ammunition to Russia from September to November 2023, and US officials have stated that Russian forces have launched at least nine North Korean ballistic missiles against Ukraine.[22] ISW continues to assess that Russia may be open to financial, technological, and defense cooperation with North Korea in return for the provision of artillery ammunition and ballistic missiles to use in Ukraine.[23] North Korea would also benefit from this cooperation by collecting technical data from its weapons’ performance in Ukraine to use in North Korean research and development among other things.

Key Takeaways:

  • America’s European and Asian allies have significantly ramped up their efforts to support Ukraine. As European partners continue to increase their support for Ukraine, US aid provision in the near to medium-term remains vital to help Ukraine build its defense industrial base (DIB).
  • The US Army plans to significantly increase US domestic production of 155mm artillery shells and shell components for Ukraine in 2024 and 2025, should the proposed Congressional supplemental appropriations bill pass.
  • Russian authorities are reportedly paying Iran roughly $4.5 billion per year to import Iranian Shahed drones to use in Ukraine.
  • Russia is reportedly unfreezing North Korean assets and helping North Korea evade international sanctions in exchange for missiles and artillery ammunition for Russia to use in Ukraine.
  • Russian Security Council Secretary Nikolai Patrushev emphasized on February 6 that Russia needs to protect its strategic facilities as Russian authorities continue to voice concerns about external and internal threats to Russian infrastructure.
  • The Kremlin continues to set informational conditions for possible hybrid provocations against the Baltic states and Georgia.
  • Russian-Israeli relations are likely continuing to decline against the backdrop of Russia’s increasingly anti-Israel stance on the Israel-Hamas war.
  • Russian forces recently made confirmed advances near Bakhmut, Avdiivka, and southwest of Donetsk City amid continued positional engagements along the entire frontline.
  • Russian authorities are reportedly paying roughly $4.5 billion per year to import Iranian Shahed drones to use in Ukraine.
  • The Russian Ministry of Foreign Affairs (MFA) continues efforts to integrate occupied Ukraine into Russia and to seek international recognition of Russia’s illegal occupation of Ukraine.
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