Unsanctioned supply

Nowhere has access to the Starlink satellite internet network, developed by Elon Musk’s company SpaceX, been in quite as much demand as in the war zone in Ukraine, as it has proven to be a lifeline for Ukrainian forces in the war, after Russia disrupted internet and telephone services in the regions near the front line. 

Despite its CEO’s questionable stance on the war, SpaceX donated hundreds of portable satellite internet terminals to Ukraine in 2022, which allow anyone to access the internet from anywhere in the world, simply by connecting the terminal and pointing it skyward.

However, since May there have been reports in the international press that the Russian military has been using Starlink terminals in the war zone itself.

The “enormously valuable” terminals, according to US Senator Elizabeth Warren, “provide Russia with secure communications that they sorely need, which would significantly erode Ukraine’s advantage on the battlefield,” urging the Department of Defence to hold SpaceX accountable for Russia’s illegal use of Starlink.

Asked how the US-made terminals, which serve both civilian and military purposes, could have ended up in Russian hands, US Deputy Assistant Secretary of Defence for Space and Missile Defense John D. Hill pointed to Russia’s “long-standing experience operating black markets”. 

Describing the allegations as “categorically false” in February, Musk stressed that “no Starlinks have been sold directly or indirectly to Russia”. Yet an investigation by Novaya Gazeta Europe demonstrates that not all licensed Starlink suppliers have taken the necessary precautions to ensure that they are not unwittingly part of that very “black market” Russians have allegedly learnt to leverage so well.

Indeed, by contacting several official Starlink dealers who resell terminals acquired directly from the manufacturer, Novaya Europe has found that many agreed to supply them to companies based in countries bordering Russia, without any concern about who the end customer would be, or for what purposes these bulk orders would be used.

Red flags

Novaya Europe contacted official Starlink suppliers, claiming to be a potential buyer from Kazakhstan acting as an agent for an online store that served customers in multiple post-Soviet countries. When asked who the end users of the terminals would be, Novaya Europe was evasive, and expressed interest in purchasing around 100 terminals, but without a subscription or technical support, and using an email address with a visibly Russian domain.

“That should have raised a number of questions for any ethical retailer,” according to Ella Skybenko of the London-based Business & Human Rights Resource Centre. The SpaceX management was reminded of those “red flags” in May, when two US congressmen wrote to SpaceX President Gwynne Shotwell to express their concern that the company did “not have appropriate guardrails and policies in place to ensure” their technology was “neither acquired directly or indirectly, nor used illegally by Russia”.

In a tri-seal compliance note dated March 2023, the US Department of Commerce, Department of the Treasury, and Department of Justice outlined the most common “red flags” indicating that a third-party intermediary may be engaged in efforts to evade sanctions or export controls, among them “reluctance to share information about the end use of a product”, “use of shell companies to conduct international wire transfers”, “declining customary installation, training, or maintenance of the purchased items”, “use of personal email accounts instead of company email addresses”, and, finally, “routing purchases through certain transshipment points commonly used to illegally redirect restricted items to Russia or Belarus”.

Declining to purchase a subscription should have been a “red flag” for the supplier as well, as sellers within Russia usually activate counterfeit Starlinks themselves, making payments using foreign bank cards and registering them outside of Russia, analysts from the Kyiv-based Institute of Cyber Warfare Research revealed. 

In a separate document, the US Department of Commerce’s Bureau of Industry listed Armenia, China, Georgia, Kazakhstan, Kyrgyzstan, Serbia, the UAE, and Uzbekistan, as transshipment points that should cause concern, while noting that the list was not exhaustive.

Yet, despite the restrictions, there are dozens of Russian websites offering Starlink terminals for sale for the “special military operation” and Russian pro-war Telegram channels often raise money to purchase terminals, making no secret of their intention to deliver them to Russian military units on the front line. The Wall Street Journal reported in April that middlemen often buy the hardware “on the black market in Central Asia, Dubai or Southeast Asia, then smuggle it into Russia”.

The experiment

While some suppliers contacted by Novaya Europe refused to cooperate, explaining that they only sold Starlink terminals for use at sea or did not work in the Eurasian region, three official resellers did discuss specific delivery details when contacted.

The first company Novaya Gazeta Europe contacted, UK-registered Bentley Telecom, showed an interest in selling to Kazakhstan, despite the sales manager saying from the outset that Starlink terminals were not licensed there. 

“I am aware that some clients have attempted to circumvent the licensing restrictions,” he said, warning us however that “any subscribers doing this should be aware that Starlink may cease service if they identify any equipment operating outside of their terms of supply”. He then emailed a presentation with prices and Starlink’s terms of delivery.

In another email, the sales agent said that he had been “advised by Starlink” not to sell equipment in unlicensed areas, including Kazakhstan, and declined to assist us with the order. “As an authorised partner, I needed to request advice on this by Starlink and have been advised that selling equipment for use in unlicensed areas is prohibited. As a result I am currently unable to assist until the licensing situation changes in Kazakhstan.” 

But he was willing to look for workarounds to complete a sale, confirming that we could place an order via Georgia, where Starlink is licensed. When asked if an individual can make a bulk order, he explained that “it would be harder to justify the requirement of an individual to have multiple systems and would require some questioning”, while a business could justify it by “advising that they are purchasing the service for multiple business locations or for remote staff working”.

To verify the authenticity of their customers, Bentley Telecom requested the company send a purchase order. The Novaya Europe correspondent stopped the experiment at that point.

In response to Novaya Gazeta Europe’s request for comment, Bentley Telecom said that “while Starlink is not specific about export control processes, they are clear on provision”. The company was therefore open to discussing sales with any third party but would inform them of current licensing restrictions and would not proceed with supplying equipment to unlicensed countries, it said.

The official Starlink dealer in Latvia, Hansael, said in the first phone call that he had about 100 terminals in his warehouse which he was ready to send anywhere in the world. “Send your details, we will issue an invoice and send them to the airport. You’ll have to take care of customs procedures yourselves. And customs will ask you to sign a form on these sanctions, as is now the custom. But that’s it.” 

When asked to clarify, the company representative said the form was a formality. “You take responsibility for not violating the sanctions, and we do not,” the salesman said, sending an estimate of the cost of 80 terminals along with delivery to a Russian email address.

Hansael did not respond to Novaya Gazeta Europe’s request for comment following the interaction.

A representative of the official Starlink supplier in Asia — KVH Industries in Hong Kong — told Novaya Gazeta Europe that he was “not sure” about deliveries to Kazakhstan, but that he would probably be able to “handle this” as well, suggesting however that setting up an office in Mongolia would expedite the process.

“As long as we follow the Starlink rules of engagement. Depends how we play with that,” he said, adding that he was ready to “do business” if a legal entity in Mongolia could be set up.

When asked what requirements the company had for its partners in Mongolia, the sales manager said that it “would not be a problem” if the company had just one employee.

The company did not respond to Novaya Gazeta Europe’s subsequent request for comment.

Vague liability

The fact that some suppliers are willing to look for loopholes suggests that the legal liability of companies willing to circumvent restrictions remains complex. 

“If dual-use items that are barred from export to Russia end up in Russia, it is a violation of those restrictions that exist,” Maximilian Hess, a fellow at the Foreign Policy Research Institute, explained. “But some lawyers may make an argument that the violation is with the authorised distributor rather than the parent company itself,” he noted, adding that in his view, policy makers needed to “make explicitly clear” that responsibility lay with “the top of the food chain” — the intellectual property owner.

The redistributors are like “the heads of the hydra”, he added. “Sure, you can go after the heads every time, right? But a new one will pop up somewhere. The only way to effectively target it is to go for the hydra,” Hess said.

“Ultimately, it is the responsibility of parent companies to control their authorised resellers and distributors and to make it clear that they will cut them off if they are caught violating the restrictions,” he concluded.

When asked, large international companies tend to say they cannot monitor goods they have produced once they are on sale, but manufacturers do have effective ways of monitoring the supply chain, Hess said. “The primary issue is certainly the lack of effort and resources from global companies. … The solution is to make it the right business decision for them to engage in that effort … foregoing high risk sales,” he noted.

Of all the official Starlink suppliers Novaya Gazeta Europe contacted posing as a potential customer from Kazakhstan, only one explicitly cited ethical reasons when refusing to do business. After being unable to find the “company” online, the sales manager stressed that any Starlinks sold to Kazakhstan would be shut off within a month due to it being illegal to deliver them there. “Be careful selling anything that you don’t have permission to sell,” he added.

When asked if setting up a legal entity in another country such as Georgia would be sufficient to circumvent the ban, the sales agent said it would make no difference to him and that he was unwilling to lose his licence to conduct such a sale. “I don’t do business like that. I appreciate that other people do, but I won’t.”

He added that he would be happy to do business with Kazakhstan as soon as it’s licenced, but suggested that it would not be legal to sell Starlinks to Kazakhstan for “quite some time” due to its proximity to Russia. “You may have people, due to your proximity to the area, that are buying and then taking them back across the border,” he explained, adding that he received plenty of requests from countries bordering Russia.

He pointed out that it would be “stupid” to expect that Russians wouldn’t just “walk across the border” and pick up the Starlinks from Kazakhstan. “You’re essentially using Starlinks for warfare — whether you say you are or not doesn’t matter. Everyone’s a little bit smarter than that,” he said.

SpaceX did not respond to Novaya Europe’s request for comment.