InformNapalm volunteer intelligence community received from the Cyber Resistance hacktivist group unique documents showing that European sanctions are disrupting a state contract of the Russian Ministry of Defense for the supply of the Granat-4 UAV system. The contract was awarded to Izhevsk Unmanned Systems Research and Production Association LLC (NPO IZHBS) in June 2023. The contract expires on December 15, 2023, but it is already known that the contractor would default because it cannot source components from the EU. 

Public information

In September 2023, The Insider, with reference to the Telegram channel of the public movement Udmurtia Against Corruption, reported that the third shopping center in Izhevsk was being closed and floors being taken away from lease holders in order to house the production of military drones for the Russian Army.

At the same time, it was reported that NPO IZHBS, a subsidiary of the Kalashnikov Group relocated to the Novy Dom shopping center. In September, the company called for a recruitment of design and process engineers, as well as workers. Their newly minted social media page on VK (started in August) announced the development of the Granat-4 drone.

The news did not go unnoticed in Ukraine and was interpreted by many analysts as a sign of a dramatic increase in drone production by Russia, supported at the state level.

Russian government is certainly making large-scale efforts to provide its armed forces with an uninterrupted supply of drones. At the same time, the media and propaganda are publicly claiming that sanctions cannot impede this process in any way, and the import substitution policies help to successfully bypass the sanctions.

We know from the open sources that Izhevsk Unmanned Systems Research And Production Associated LLC [Rus: ООО «НПО Ижевские беспилотные системы»] was legally registered in 2006 at the following legal address: Moscow, 2a Trofimova st., room. 221. Mikhail Korchigin [Rus.: Корчигин Михаил Михайлович] has been the CEO of the company since May 15, 2023.

The official website of the Ukrainian National Agency on Corruption Prevention sanctions.nazk.gov.ua lists NPO IZHBS as subject to sanctions from the UK, USA, Canada, Switzerland, Australia, Japan, New Zealand and Ukraine.

This open-source information will be useful for analyzing the documents not available to the public.

Restricted information and documents

The public information suggests that sanctions do not work, since the company continues its activities and entire shopping centers are being vacated for the sake of its expansion in Izhevsk.

However, the real state of affairs looks very different if we analyze the non-public documents.

In the array of documents exclusively obtained from Cyber Resistance hackivists, InformNapalm analysts found an interesting correspondence about government military contracts. We will not disclose the source email addresses, as the work on the data array continues, and hacktivists continue to control the hacked source systems. However, we can show a document that is of purely analytical interest and has no operational significance. The document answers the question “how do European sanctions actually work?” That is why we decided to make it public (PDF).

This is a response dated October 16, 2023 from the Chamber of Commerce and Industry of the Udmurt Republic to the force-majeure application of NPO IZHBS ref. No. 525/k dated October 09, 2023, referring to the impossibility of performing a state contract with the Ministry of Defense of the Russian Federation (dated 06/06/2023, No. 2323187940521412466233133) for the manufacture and supply of an unmanned aerial vehicle system Granat-4, equipped with a gyro-stabilized optical-electronic target designation and surveillance system. The contract expires on December 15, 2023.

Further, the official letter provides an extensive list of sanctions and restrictions preventing NPO IZHBS from purchasing components in the EU which is affecting the performance of the contract. The Chamber of Commerce and Industry of the Udmurt Republic concludes that these circumstances give grounds to amend the terms or cancel the contract.

Conclusions

It is obvious that, contrary to the claims of Russian propaganda about “import substitution”, sanctions against the supply of components and dual-use goods are working and disrupting military contracts. They slow down the Russian military-industrial complex and effectively impede the rapid increase in the supply of weapons and advanced technology to the Russian army which is waging a war of aggression and occupation against Ukraine.

However, Russia is constantly looking for new ways to circumvent sanctions, requiring constant monitoring and introduction of new effective restrictions from the United States, the EU and other countries. Sanctions give Ukraine and EU time to build up their own forces and equipment to repel Russian aggression.

But sanctions alone do not cover the urgent need to supply weapons and hardware to increase the capabilities of the Ukrainian army. In Ukraine, after almost two years of full-scale war, factories and shopping centers are still not being switched to a war footing to organize the mass production of drones.

The political leadership and government of Ukraine should adapt the legislation in order to quickly increase capabilities in the production of drones for the Ukrainian army, deregulate, facilitate and thus speed up the supply of components. The precious time bought for Ukraine by European sanctions must be multiplied by efficiency, and not divided by endless bureaucracy.

Read more publications based on the data from Cyber Resistance hacktivists

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