Russia’s Rosatom Fuels Putin’s War Machine

Western sanctions against Moscow have so far failed to effectively curb Russian President Vladimir Putin’s ability to wage his illegal war against Ukraine. Much of the weakness of the sanctions regime centers on energy. One still unsanctioned but critical target should be the network of companies associated with Rosatom, Russia’s state-owned nuclear corporation, which continues to expand its reach despite the ongoing war. U.S. operators of nuclear power plants purchase approximately $1 billion in nuclear fuel from Rosatom annually—or about 20 percent of U.S. demand for enriched uranium. That number would likely be even higher, were it not for a cap on U.S. uranium imports from Russia imposed in 2020. Many U.S. allies also rely at least partially on Russian fuel. Because of this continued dependence, Rosatom has so far been exempt from any attempts to sanction Russia.

Moscow clearly believes that Rosatom will continue to get a free pass and is now using the company as a Trojan horse to circumvent Western sanctions. According to Rosatom Director-General Alexey Likhachev, the company’s military contracting has grown significantly. In January 2023, the Washington Post published information obtained by Ukrainian intelligence detailing Rosatom’s involvement in supplying the military industry with components, equipment, and raw materials, including aluminum oxide for rocket fuel, chemical compounds for aviation and rocketry, lithium-ion batteries for tanks and air defense systems, and 3D-printing technologies. Evidence strongly suggests that Rosatom is a full-fledged and growing partner of the Russian military machine.

Rosatom is also expanding its reach into other sectors, which allows the Kremlin to tighten state control over companies that can help circumvent restrictions. For example, Rosatom recently acquired Fesco, one of Russia’s largest shipping companies, which accepts payments from customers in Chinese yuan in order to avoid sanctions affecting U.S. dollar and euro transactions. In November 2023, Putin signed a decree transferring state-owned shares of Fesco to Rosatom, granting the nuclear giant control over an extensive array of assets, including terminal complexes across the country—in Novosibirsk, Khabarovsk, Tomsk, and Vladivostok—as well as 37 ships, more than 170,000 shipping containers, and 11,000 platforms for container transportation.

Rosatom’s expansion has become a hallmark of its activities in recent years, helping Moscow to reroute trade from sanctioned companies and goods. Renera, Rosatom’s energy storage subsidiary, has acquired the machinery to assemble high-quality lithium-ion batteries using cells and modules imported from a South Korean plant, despite a ban on the export of modules from South Korea. Under the umbrella of unsanctioned Rosatom entities, it is much easier for Russia to acquire the necessary technology to strengthen Rosatom’s dominance in the global market. The Ukrainian think tank DiXi Group has compiled open-source data on Rosatom’s new assets, including companies such as Security Code, one of Russia’s largest developers of hardware and software for certified information protection; Tomsk MPE Ilmenite, a major producer of titanium and zirconium; and Kirov-Energomash, a large Russian manufacturer of industrial equipment. As Rosatom and its subsidiaries continue to diversify into sectors beyond the nuclear industry, the company has become an unsanctioned funnel for high-tech products, not to mention for additional revenues, to strengthen Putin’s war machine.

These activities are particularly intensive relating to the production of weapons, as they allow Russia to obtain, for example, microchips and other electronic components that go into missiles, aircraft, battlefield communications, and other things that it needs to keep fighting.

Meanwhile, Rosatom’s core business continues to expand, with nearly 20 new agreements and memorandums of cooperation signed in 2023, primarily focusing on Asian and African countries interested in affordable nuclear technologies. All nuclear power plant construction projects initiated since the start of Russia’s full-scale invasion of Ukraine in February 2022 are progressing successfully. Last month, media reported that the Akkuyu plant in Turkey is on schedule with its first unit over 90 percent ready; the extension of the Paks plant in Hungary has entered a new stage; another batch of equipment for the Kudankulam plant in India has been manufactured and shipped; and Rosatom has signed a contract to supply nuclear fuel components for a research facility in Egypt. All these relationships serve Russian strategic interests by maintaining its political influence and building dependencies in various parts of the globe. The further Rosatom intertwines itself with developing countries, the more it increases Russia’s international support, the easier it is for Moscow to bypass restrictions, and the harder it becomes for the United States and its allies to enact tougher, more comprehensive sanctions.

What’s more, Rosatom is also working to advance its interests in key members of the sanctions coalition, France and Germany. The French company Framatome Advanced Nuclear Fuels still intends to use a Rosatom subsidiary’s license to globally produce nuclear fuel assemblies at a plant in Lingen, Germany. Nor should Washington ignore Rosatom’s cooperation with China and Iran to help develop their nuclear energy programs, where the extent to which Russian technology powers these countries’ nuclear weapons programs is unclear.

By keeping silent as Russia circumvents sanctions and globally sources what it needs for its military, the United States and its partners are helping Moscow even as they support Kyiv. In Washington, congressional momentum is building for a ban on Russian uranium imports, which the House passed unanimously last year. Although there is general support for such a ban, the bill has been stalled in the U.S. Senate over an unrelated matter. While the Biden administration has imposed some sanctions on the Russian nuclear industry, the list of sanctioned entities includes only about 20 of the nearly 460 companies that make up the Rosatom conglomerate.

Restraining Russia’s capabilities requires much more comprehensive action, such as automatic sanctions against all Rosatom assets acquired after Feb. 24, 2022; sanctions against Rosatom-linked research organizations in order to restrict Russia’s access to modern technologies; and working with the EU and G-7 to ensure that sanctions have the highest possible impact. Without further intervention, Rosatom’s dominance in the global market for nuclear power plants—where the company already supplies more than 70 percent of worldwide exports—will continue to provide Russia with an edge in funding its war and advancing its interests.

U.S. President Joe Biden and Congress can also do much more to eliminate U.S. dependence on Russia for nuclear fuel. In 2022, the Inflation Reduction Act included $500 million for the Energy Department to advance uranium production in the United States to fuel a new generation of nuclear reactors. Last month, another $2.7 billion was allocated to fund U.S.-based uranium processing and enrichment.

Sanctions are effective only if the United States, along with the G-7+ coalition, demonstrates unity, strength, and resilience. Closer trans-Atlantic cooperation can create opportunities to reduce dependence on Russia and increase pressure on Moscow. If Russia’s nuclear industry remains sanctions-free, it will not only undermine clear U.S. foreign-policy goals but also risk failure in U.S. efforts to support Ukraine’s essential fight for freedom.

Olena Lapenko, an energy security expert at the DiXi Group, contributed to this article.