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No more iPhones for Russians?

April 7, 2022

Western sanctions and corporate boycotts have severely impaired Russia's tech sector. As IT talent flees abroad, the country's technological future is on the line.

President of Russian Cross-Country Skiing Federation Elena Vyalbe speaks on a smartphone at a sport event in Syktyvkar, Russia
Sanctions and corporate boycotts are making it difficult for Russian people and firms to access tech devices and servicesImage: Pavel Bednyakov/SNA/IMAGO

Anastasia Mirolyubova's business is booming. The co-founder of Immigram, a platform that helps tech workers immigrate to the UK, says web traffic has increased 1,000% since Russia invaded Ukraine. The number of clients that signed up in the first quarter of the year was the same as their annual total in 2021. Most of the new users are IT specialists trying to relocate out of Russia and Ukraine.

"The business is growing," the 28-year-old Russian told DW. "But it's so sad."

As millions of Ukrainians flee a country under siege, next door tens of thousands of tech workers are believed to have left Russia as Western sanctions begin to bite the industry.

An estimated 70,000 IT specialists fled Russia in February and March, according to the Russian Association for Electronic Communications (RAEK). The industry group predicts that another 100,000 specialists could leave in April.

Sanctions seek long-term damage

Russia has a history of educated people leaving the country following war and conflicts, Mirolyubova says. The poet Joseph Brodsky and novelist Vladimir Nabokov come to mind.

"Today, the poets and writers are replaced with technical workers — IT specialists and innovators," she said. "We can see now that a lot of the biggest brains in Russia, who could have created new economies and new innovation clusters, are currently fleeing to different destinations."

Since Russia invaded Ukraine, tech workers and tech companies in Russia have found their activities ever more hampered by sanctions imposed by the US, EU and other NATO-aligned countries, which strive to block access to vital components like semiconductors that are usually sourced abroad.

"We're going to impair their ability to compete in a high-tech 21st-century economy," US President Joe Biden said in late February, announcing what would be the first of several rounds of sanctions. "Some of the most powerful impacts of our actions will come over time as we squeeze Russia's access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come."

No tanks without tech

The technology sanctions are also meant to cripple Russia's military.

"If you want to build new tanks, you need microchips, because there's going to be a computer that calculates stuff," Niclas Poitiers, a trade and digital economy expert at Bruegel, a Brussels-based think tank, told DW. "If you want to build precise missiles, there's going to be chips. Russia doesn't build chips that are competitive in any way … If you're cut off from international supply chains, your life becomes much more difficult."

On top of government sanctions, Google, Apple, Samsung, Microsoft, SAP and Meta are among dozens of international tech firms that have voluntarily restricted or suspended business in Russia over its invasion of Ukraine. US tech giant Apple blocked its payment service Apple Pay in Russia and a self-imposed ban on the sale of new products there means the country could run out of both Apple and Samsung smartphones as early as June, according to a report by Germany's Federal Intelligence Service (BND), seen by German news outlet The Pioneer.

There will "almost certainly be a significant step backward in the digitization of everyday life, as perceived by Russian society," the BND wrote in the report.

Russia worries as experts exit

That change will be felt all the more by technology professionals, whose line of work is severely hindered by the restrictions. With IT specialists in demand pretty much everywhere, the decision to relocate outside of Russia is an easy one for many.

"A Russian software engineer, just in the nature of where the technology comes from, is almost guaranteed to have at least a working knowledge of English, which facilitates the ability to find work elsewhere," J. Scott Marcus, an economist and tech expert, also at Bruegel, told DW.

Russian President Vladimir Putin has called this new trend of Russians leaving the country a "self-cleansing of society that will only strengthen our country."

But Moscow's actions tell a different story. In March, Putin waived income taxes for IT companies and made it possible for young tech workers to defer their obligatory military conscription. There are also reports of tech workers getting held at the border when they try to leave Russia.

"Being a technological power is a power," said Poitiers, who suggests that centering the country's economy around hydrocarbons has left Russia overly dependent on foreign technology.

"If you want to be a superpower, it's not enough just to have ships and tanks," he said. "You also want to be a big economy and be producing high-end goods and have leverage over other countries."

Russian exiles flee to Germany

Cybercapabilities called into question

The threat of cyberattacks and cyberwarfare out of Russia had been one such piece of leverage in the country's arsenal in recent years.

The latest exodus of talent is unlikely to defuse that threat any time soon, says Marcus. But much as the country's military action on the ground in Ukraine has turned out to be more of a paper tiger than many had anticipated, at least for now the same appears to be true for their cyberwarfare capabilities.

"Given that they're sort of scraping the bottom of the barrel trying to rescue their kinetic warfare, I can't believe that they're just voluntarily holding back," he said. "I have to assume that the [cyber]capabilities were just not as good as a lot of people thought."

Edited by: Hardy Graupner

Kristie Pladson
Kristie Pladson Business reporter, editor and moderator with a focus on technology and German economy.@bizzyjourno