November 15, 2023

Institute for the Study of War: Ukraine reaches grain deal with international insurers 

Institute for the Study of War

The European Union (EU) appears poised to ban the export of precision machine tools and key weapons manufacturing equipment components to Russia. The ban, if enacted and effectively enforced, could deal a significant blow to Russia’s defense industrial base (DIB) given precision machine tools’ importance in industrial manufacturing. Bloomberg reported on November 15 that the EU’s 12th sanctions package proposes a ban on the export of precision machine tools and machinery parts that Russia uses to make weapons and ammunition, such as welding machines, lithium batteries, thermostats, motors, and drone motors. Bloomberg reported that Russia has been importing precision machines and precision machine tools from Europe to sustain its ammunition production and other DIB production efforts. Bne Intellinews reported in June 2021 that Russia’s near total reliance on European- and US-produced precision machine tools makes Russia particularly vulnerable to such sanctions and noted that at the time Russia imported almost all of the precision machines it required.

Russia has been increasingly attempting to develop import substitution solutions for sourcing Western-made precision machine tools in 2023, likely in preparation for Western sanctions targeting this vulnerability. The Russian government approved in May 2023 the “Concept of Technological Development until 2030,” which encourages domestic production of high-tech products such as precision machine tools and mandates that domestic enterprises produce at least 75 percent of Russia’s high-tech products by 2030. Russian state-owned defense conglomerate Rostec reported in August 2023 that Russia’s STAN group, the country’s largest domestic precision machine manufacturer, which Rostec purchased in 2019, is a major element of Russia’s import substitution program. Rostec subsidiary RT-Capital’s head, Semyon Yakubov, told Kommersant on October 26 that Rostec hopes to use the STAN Group to meet Russia’s “great need” for modern precision machines in the absence of Western imports. Yakubov stated that Western sanctions and the war in Ukraine have sharply increased Russia’s military and civilian demand for domestically produced machine tools. Yabukov noted that STAN was unable to meet even a third of the total volume of Russia’s orders for precision machines in 2023, worth around six billion rubles (approximately $67.1 million). Yabukov stated that Russia’s demand for precision machines is “much greater” than its current production abilities.

Key Takeaways:

  • The European Union (EU) appears poised to ban the export of precision machine tools and key weapons manufacturing equipment components to Russia.
  • Denmark will reportedly start inspecting and potentially blocking Russian oil tankers in an effort to enforce a price cap on Russian oil and the European Union’s (EU) insurance regulations.
  • The Ukrainian government reached a deal with international insurers that will provide affordable coverage to vessels carrying grain and other critical food supplies through the Black Sea corridor for civilian vessels, amid continued Russian efforts to deny navigation through the corridor.
  • Russian President Vladimir Putin stated during a meeting with Russian election commission representatives on November 15 that the Russian government will suppress any foreign or domestic election interference.
  • Recent Russian opinion polls indicate that roughly half of Russians maintain support for the war in Ukraine and for Russia to engage in peace negotiations.
  • Yandex NV – the Dutch holding company of Russian internet technology company Yandex – reportedly aims to sell all its Russian assets by the end of 2023, allowing the Russian government to further increase its hold over the Russian information space.
  • Russian forces conducted offensive operations along the Kupyansk-Svatove-Kreminna line, near Bakhmut, near Avdiivka, west and southwest of Donetsk City, in the Donetsk Zaporizhia Oblast border area, and in western Zaporizhia Oblast and advanced in some areas.
  • A Russian insider source claimed that Kremlin-created Defenders of the Fatherland Foundation, which presented a limited number of former Wagner fighters with the certificates of their combat veteran status, is coercing former Wagner fighters into signing contracts with the Russian Ministry of Defense (MoD).
  • Russian and occupation authorities continue efforts to indoctrinate Ukrainian students in occupied Ukraine.
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