A shipyard in the Far East belonging to Russia's largest state-owned shipbuilding company, United Shipbuilding Corporation (USC), has been forced to shut down due to financial difficulties and a lack of foreign equipment, making it the first Russian shipyard to collapse after being subject to Western sanctions.

According to Ukrinform, after the international sanctions due to the Russian-Ukrainian crisis, the Main Directorate of Intelligence of the Ministry of Defence of Ukraine obtained an internal document of the Ministry of Defence of the Russian Federation.

From the contents of the document, it can be seen that the Vostochnaya Verf JSC (formerly known as Vladivostok shipyard) located in Vladivostok, Far East, has recently been completely shut down since April this year due to financial difficulties and a lack of key components, and employees have been laid off. The shipyard has reluctantly informed the Ministry of Defence of the Russian Federation that the scheduled shipbuilding program has been aborted.

The enterprise was founded in 1952 for the construction of low-tonnage ships from non-magnetic materials for the needs of the Pacific Fleet and the border forces of the Far Eastern region of the USSR, such as minesweepers. In 1994, the plant was transformed into a joint stock company. From the 1950s to the 2000s, the enterprise built more than 400 ships for the Navy, border forces and fishing organizations. More than 30 units of military equipment were supplied for export to eight countries of the world (Vietnam, Cuba, China, Indonesia, Ethiopia, Guinea, Iraq, Yemen): torpedo and missile boats were built at this shipyard.

Vostochnaya Verf JSC (Vladivostok) is to carry out state orders worth 35 billion rubles, according to the report. It comprises the building and delivery of two sea tankers, two small rocket ships, two mobile offshore berths, and the repair and maintenance of different vessels and boats. At the same time, according to a letter from a military representative of the Defense Ministry, all work had been ceased by early April 2022 owing to the severe budgetary circumstances. Personnel is being laid off, and contract deadlines are being pushed back. Specifically, the businesses are getting ready to file for bankruptcy.

Another letter from the military representative suggests a complete shortage of foreign components for the continuation of work on the building of warships and their systems, according to the Defense Ministry's Main Intelligence Directorate. Steering columns, navigation systems, and radios are among the items on the list of equipment whose manufacture had to be discontinued. The letter's writers claim that Russian or Asian alternatives for imported components are hard to come by.

Industry insiders say Russia is still dependent on imported high technology, and key components are restricted, so Russia cannot continue producing modern equipment.

German Chancellor Olaf Scholz said at a joint briefing with British Prime Minister Boris Johnson on April 8 that sanctions against Russia are effective. They will profoundly affect all sectors of the Russian economy, making it virtually uncompetitive.