At the G7 summit in Évian-les-Bains, France, in June, the leaders of the world's most powerful states again declared their intent to help Ukraine and to pressure Russia economically: "We commit to increase the pressure on the Russian war economy. In this context, we will strengthen our sanctions." But while G7 governments negotiate another round of political statements, the assembly lines of Russia's military-industrial complex keep turning out missiles and drones—from Western components and electronics.

A new analysis of Rostec—the giant of Russia's military-industrial complex—by the Independent Anti-Corruption Commission (NAKO) shows that the strategy of targeted strikes has reached a dead end. To make restrictive measures more effective, allies should consider wider use of export-control mechanisms against structures tied to Russia's defense-industrial complex. In many cases, export control can be a faster and more flexible instrument than full sanctions regimes.

Sanctions against Rostec

Hitting the tip of the iceberg is not enough. Sanctions have been placed on Rostec itself, on its best-known holdings, and on individual plants caught manufacturing weapons. But this giant has many branches, visible and hidden, and the sanctioning process itself takes years. The result is that sanctions policy often looks ineffective—and it is easy to see why.

NAKO's analysts traced and identified 482 key legal entities within Rostec's structure. This is the most complete map of the conglomerate that currently exists, and even it covers only part of the concern. A vast network of subsidiaries operates in total secrecy: they hide financial reporting, classify tenders, and mask beneficial owners behind chains of fictitious founders.

And while the West spends months assembling evidence against a single plant, Rostec quickly spins up new "clean" shell firms or brings new enterprises and factories under its control.

Ukraine has imposed sanctions on 72% of the identified Rostec enterprises. The United States covers 45%. And here it gets interesting: the European Union has managed to sanction only 23% of the conglomerate's companies. The United Kingdom takes an even more "selective" approach.

The analysis also found a huge asymmetry between jurisdictions. The US, the EU, the UK, Switzerland, and Asian states apply entirely different approaches. What is blocked in the EU can operate freely under British or Japanese law. And while sanctions from even one jurisdiction are a significant red flag for banks, manufacturers, and regulators, the legal gap itself lets Russia keep access to technology.

How Russia gets around the sanctions

This lack of coordination among allies, combined with a complex, multi-layered corporate structure, keeps feeding Russian weapons with Western microelectronics. A vivid example is KRET (Radio-Electronic Technologies Concern), which produces the electronic-warfare systems Russia uses to jam Ukrainian drones at the front. London has sanctioned not a single enterprise in this holding—and there are at least 40 of them.

The result? Legally, these smaller companies fall under restrictions purely by belonging to Rostec. In practice? British manufacturers or distributors are unlikely to spend time tracing the link between Rostec and one of its hundred-odd enterprises buried in corporate layers; seeing no risk, they simply sign the deal with an unremarkable plant.

Another example is the Shvabe holding, whose sights and thermal imagers sit on Russian equipment. It ships its products to international exhibitions in the UAE without difficulty.

Other enterprises and whole holdings are frequent guests at exhibitions in China and India—steadily present and visible to a range of countries that could be subject to secondary sanctions. With those same countries Russia signs deals to sell another batch of helicopters, or shows off upgraded drones that have "proven their effectiveness on the battlefield against Ukraine." And it is through such countries that Western components keep reaching Russia.

This matters because Russia's import-substitution program—including in microelectronics—has never worked. Not yet, at least. Ukrainian military institutes examining captured missiles and downed drones report that Russian high-tech electronics simply are not there, sources that study the missiles have told NAKO. What they find are chips from American, European, and Japanese giants.

What is more, even these foreign components are usually nothing remarkable technologically. Yet as of today Russia still cannot produce even these—certainly not at scale—so it works the gaps in sanctions, export control, and "business as usual" with great finesse.

The next step: strengthening export control

The direction is already shifting. On 23 July 2026, the European Union adopted its 21st sanctions package—its largest batch of individual listings in four years. Fifty-six of them target Russia's military-industrial complex, 37 tied directly to long-range drones, and 51 more entities, many in China, Kyrgyzstan, Türkiye, and the United Arab Emirates, were placed under tighter export controls for feeding Russia the microelectronics and CNC machine tools its weapons depend on. It is the right target. The limit is that it still proceeds one entity at a time—and Rostec is built to outrun exactly that.

Banning the supply of certain critical goods to Kyrgyzstan—where such exports suddenly grew by more than 800%—or issuing regular financial warnings to intermediaries in the UAE and China are the right steps, and they force Russia to pay more. More than that: over four years, sanctions policy has repeatedly caused delays in the production and delivery of weapons and military equipment. But it has not stopped that production—as Ukraine keeps seeing with its own eyes during every mass strike.

The main conclusion that follows from our map of 482 key Rostec entities is the need to change the very logic of restrictive measures against Russia's defense-industrial complex.

Sanctions remain an important instrument, but they often prove slow, selective, and politically difficult to implement. A far wider use of export-control mechanisms, by contrast, could cut off access to international technology, equipment, and components faster and more effectively.

There should no longer be any need to prove separately the role of every nominal LLC somewhere near Chelyabinsk in Russian military production.

If an enterprise is part of Rostec's production, procurement, or technological chains—or those of other structures in Russia's defense-industrial complex—it should automatically become a candidate for export-restriction lists.

This approach would make it substantially harder for Russian defense enterprises to reach Western technology and would narrow the room to evade restrictions through subsidiaries, intermediaries, or formally civilian structures. Western banks, exporters, and compliance teams should not have to identify each new shell firm on their own. Instead, they should get a clear signal: involvement in the production or supply chains of Russia's military-industrial complex means elevated regulatory risk and the need to apply restrictive measures.

Economic pressure on Russia's defense sector must stop being fragmentary and reactive. It has to become systematic, predictable, and capable of outpacing the adaptive mechanisms of Russia's war economy.

Viktoriia Vyshnivska

Viktoriia Vyshnivska is a Senior Researcher at the Independent Anti-Corruption Commission (NAKO). Her work mainly focuses on supply chains delivering critical components to Russia, the use of foreign technologies in weapons production, and the impact of sanctions regimes on the defence capabilities of aggressor states. Her additional focus also includes Ukraine’s state-owned defense industry and democratic resilience.

Kateryna Biesiedina

Kateryna Biesiedina is Communications Manager at the Independent Anti-Corruption Commission (NAKO), specialising in strategic communications and media with a professional background in journalism and television production.

The European Union has transferred an additional €30 million to the Ukraine Energy Support Fund, raising its total contribution to the mechanism to €279 million, First Deputy Prime Minister and Energy Minister Denys Shmyhal wrote on Telegram.

The transfer is the latest in a series of contributions to the fund from Ukraine's partners. Luxembourg also added funds to the same mechanism recently, and Denmark contributed more than €10 million, European Pravda reported.

What the funding supports

In his Telegram post, Shmyhal described how the fund is used:

"The funds coming in through this financial instrument help us restore the energy infrastructure damaged by Russian attacks, purchase critically needed equipment for our energy companies, and ensure a reliable energy supply, above all for critical infrastructure," Shmyhal wrote.

Ukraine's Ministry of Agrarian Policy and Food has asked the European Commission for €220 million ($253 million) in grants to keep its small and medium farmers afloat, after Russian strikes on the Greater Odesa ports severed the sea route that carries most of the country's agricultural exports. The money would cover interest on loans issued under the state "Affordable Loans 5-7-9%" program, the ministry's press service said.

The request marks the point where Russia's Black Sea campaign stopped being a shipping story and became a farm-finance one. With the corridor all but stalled, the ministry projects exports for the 2026/2027 season could fall by almost half, from 64.4 million to about 29.6 million tonnes. Grain the farmers have already harvested is piling up in silos the ministry expects to be full by October, and without cash from those sales, producers cannot finance the autumn sowing that plants next year's crop.

How €220 million turns into €4 billion in loans

The grant is small next to the hole it is meant to plug. Ukraine estimates its farm sector will take in roughly €6.4 billion this season against €11.2 billion in operating costs, and will need about €4 billion in working capital just to keep running. The €220 million would not cover that gap directly. Instead, by subsidizing interest, it is designed to unlock a credit portfolio of up to €4 billion ($4.6 billion) at a rate to farmers of no more than 10%, open to small and medium producers that meet the program's environmental and social criteria. Wheat exports alone could otherwise drop from 17.6 million to 8.3 million tonnes.

The blockade behind the request

Through July, Russia intensified strikes on civilian cargo ships in the Black Sea corridor, killing crew members and, on 22 July, halting traffic entirely — not a single vessel passed that day, at the height of the harvest. Ukraine's government called it "deliberate economic and humanitarian terror." Around 90% of Ukraine's farm exports normally move through three Odesa Oblast ports, and Agriculture Minister Taras Vysotskyi has said the rail, road, and Danube routes that remain can carry only about half the lost volume.

The squeeze is already reaching the fields. Oilseed and grain prices have fallen about 30% as unsold stock backs up inside the country, and the ministry puts direct losses to the sector this year at between $1.5 billion and $3 billion. The government has lowered minimum export prices on some products to keep trade moving, and Prime Minister Serhii Koretskyi has said it is expanding a separate program of grain-backed loans so farmers can borrow against stored crops rather than sell them cheap.

Whether Brussels funds the €220 million request, and how fast, will help decide how much of this year's harvest gets planted — and how much stays stranded in silos while the ports stay shut.