A Reuters investigation has identified five Russian chemical companies that have played a pivotal role in sustaining Moscow’s production of explosives during its ongoing war in Ukraine. Despite Western sanctions targeting key individuals linked to these firms, the companies themselves have largely avoided significant financial penalties, allowing them to continue supplying critical materials to Russia’s defence sector.
The investigation highlights the reliance of Russia’s military-industrial complex on a network of chemical enterprises owned or controlled by some of the nation’s wealthiest individuals. These five companies—EuroChem, Uralchem, UGMK, Lukoil, and Evraz—have collectively provided over 75% of the essential chemicals transported by rail to major Russian explosives factories since the start of the war in February 2022.
Billionaire Connections
Reuters notes that these firms are tied to prominent Russian billionaires, including Roman Abramovich, Vagit Alekperov, and Dmitry Mazepin, all of whom are under Western sanctions. However, their companies have largely escaped direct restrictions, enabling them to continue producing and supplying critical chemicals.
Western sanctions have primarily targeted the personal assets and financial activities of these oligarchs. Yet, the chemical companies they control often deal in products that serve dual purposes—civilian and military—creating legal and logistical challenges for sanctions enforcement.
Strategic Loopholes in Sanctions
The investigation underscores a significant loophole in the West’s sanctions strategy. While sanctions have aimed to cripple Russia’s economy and restrict its access to military resources, many chemical companies remain exempt from comprehensive restrictions. This is partly due to their production of agricultural fertilisers, which are critical to global food supply chains. Western governments have long sought to shield food and agricultural products from sanctions to avoid exacerbating global hunger or alienating developing countries.
This policy has allowed Russian chemical producers to maintain their operations, even as their products indirectly bolster the Kremlin’s military capabilities. Fertilisers and other chemicals from these companies are reportedly being diverted or repurposed to manufacture explosives for use in the war.
Explosives Production Amid Escalation
Russia has significantly ramped up its military production in response to the protracted conflict in Ukraine. According to a representative of Ukraine’s Security Service (SBU), Russia manufactured approximately 2.4 million artillery shells in 2024 alone. Additionally, Moscow imported an estimated three million shells from North Korea, indicating a concerted effort to replenish its munitions stockpiles.
The role of domestic chemical producers is critical in this context. Chemicals supplied by EuroChem, Uralchem, and others are essential for manufacturing explosives, further fuelling the conflict. Despite Western sanctions, these companies have continued operations with little disruption, contributing to Russia’s ability to sustain its war effort.
Implications for Western Sanctions Policy
The findings of the Reuters investigation raise questions about the effectiveness of current sanctions policies. While targeting individual oligarchs has symbolic value, the continued operation of their companies highlights the limited impact of such measures on Russia’s broader war economy.
Critics argue that a more comprehensive approach is needed, focusing on the industries and supply chains that underpin Russia’s military-industrial complex. However, balancing such measures against the risk of global food shortages remains a significant challenge.
The Humanitarian Dilemma
A key reason for the West’s reluctance to impose stricter sanctions on chemical producers is the humanitarian need to ensure food security. Fertilisers produced by Russian firms like EuroChem and Uralchem are vital for global agriculture, particularly in developing countries.
Restricting the export of these products could lead to rising food prices and shortages, disproportionately affecting vulnerable populations. This potential fallout has made Western policymakers cautious about extending sanctions to include chemical producers, even as these companies indirectly contribute to Russia’s military capabilities.
A Call for Strategic Adjustments
As the war in Ukraine continues, the investigation by Reuters provides critical insight into the resilience of Russia’s war economy. It underscores the need for a reassessment of sanctions strategies to address the dual-purpose nature of certain industries.
Experts suggest that targeted sanctions, coupled with enhanced monitoring of supply chains, could help limit the flow of critical materials to Russia’s military sector. Additionally, international cooperation is essential to address the challenges posed by dual-use goods and to close existing loopholes in sanctions enforcement.
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