Manufacturers from Belgium, Germany, Switzerland, France, and the U.S. continue operating in the Alabuga Special Economic Zone, where Russia produces thousands of Shahed drones capable of reaching the EU.

A huge industrial site in Tatarstan, a region in central Russia, has gained notoriety for its outsized role in Russia's war against Ukraine.

The site, known as the Alabuga Special Economic Zone (SEZ), is Russia's main facility for producing Shaheds, its primary long-range attack drones used in the war against Ukraine.

Launched after the Kremlin invaded Ukraine in 2022, the drone plant has produced tens of thousands of Shaheds, known in Russia by the domestic name Geran.

The Russian army launches waves of Shaheds across Ukraine nearly every night, targeting power plants, trains, residential buildings, hospitals, kindergartens, and other civilian facilities. Most of them are made in the Alabuga zone.

When Russia bought the Shahed drone technology from Iran, the agreement was made directly by the Alabuga SEZ's management company. It was revealed by the leaked emails from the Iranian company Sahara Thunder, analyzed by C4ADS, a Washington-based research organization focused on illicit networks and global conflicts.

This production hub that powers Russia’s assaults on Ukrainian civilians has unlikely neighbors: Western companies continue operating nearby.

German ceilings and pipeline fittings, Swiss polymers, Belgian hygiene products, and American refractory ceramics are still produced within the Alabuga SEZ, along with Russian military drones.

Western companies set up operations in the Alabuga SEZ long before Russia's full-scale invasion of Ukraine, tempted by the low taxes offered by the economic zone.

Some of them proactively divested their operations in Russia following Moscow's assault on Kyiv in February 2022. European and American authorities later imposed several rounds of sanctions on the Alabuga SEZ and its leadership.

Under recent European Union sanctions, EU-linked companies had to leave the Alabuga SEZ by Jan. 25, 2026.

However, as the Kyiv Independent found, they remain in place even after the deadline.

This investigation reveals that one American and six European companies continue to operate alongside the mass production of Russia's long-range attack drones in 2026. In 2025, two additional European companies were operating there until the Kremlin seized control of their Russian subsidiaries.

Their Alabuga-based divisions paid over $34 million in taxes last year, contributing to Russia's military budget during its war against Ukraine.

Western companies offered only vague explanations when asked why they remained, even though sanctions circumvention is a crime.

The Kyiv Independent also found that the Russian management of at least one European company operating in the Alabuga SEZ openly supported the Russian military fighting against Ukraine.

`A Belgian company thanks Russian soldiers`

Andrey Pavlov, a Russian national, has been heading Belgian Drylock Technologies' two Russia-based plants for over 13 years. One is in the Alabuga Special Economic Zone.

The Belgian hygiene products manufacturer has not left Russia, and its Russian subsidiary, Drylock Technologies, remains a resident of the Alabuga SEZ for the fifth year of Russia's full-scale war against Ukraine.

Beyond maintaining production in Russia, the Belgian manufacturer has been expanding its Russian factories.

After publicly promising expansion in his New Year's address to employees at the end of 2023, Drylock's CEO in Russia, Andrey Pavlov has continued to report annually on the implementation of those plans.

While the management of the Alabuga SEZ expanded the production of long-range drones around industrial sites of Western companies, Drylock Technologies installed a new production line and built a warehouse there.

The company's page on the Russian social network VKontakte shared an image of new equipment delivered to its Alabuga-based factory in 2025.

A screenshot of a post by Russia-based, Belgian-owned Drylock Technologies highlighting the expansion of production in Alabuga SEZ, Russia, with a new production line installed in the summer of 2025, years after the zone became a hub for producing attack drones for Russia's war against Ukraine. The post was automatically translated from Russian. (Post: Drylock Technologies' VKontakte page; Collage: Irynka Hromotska / The Kyiv Independent)

Satellite images of the Drylock Technologies site in Alabuga SEZ, Russia, taken between 2021 and 2024, highlight two new buildings constructed during the Kremlin's full-scale war against Ukraine. (Satellite imagery: Google Earth; Collage: Irynka Hromotska / The Kyiv Independent)

That steady growth was not the only change. Another aspect of the current Western business presence in Russia is that some companies have employees participating in Russia's war against Ukraine, and Drylock Technologies is no exception.

The head of Belgian Drylock Technologies' Russian factories publicly thanked the company's employees who joined the Russian army and fought against Ukrainians.

"Today, I would like to congratulate our guys, who are on the front line now, and wish them a speedy return to peacetime duties and affairs. You are doing a great job for the country, we are proud of you!" said Andrey Pavlov in a written statement on the company's social media page in February 2026.

Promoting Russian patriotism as part of Russia's invasion of the neighboring country, the Russian division of Belgian Drylock Technologies launched a separate section on its page on the Russian social network VKontakte, featuring stories about participants in the war against Ukraine.

L: Screenshot of a post by Andrey Pavlov, CEO of Russia-based, Belgian-owned Drylock Technologies, thanking the Russian military on Feb. 23, 2026. R: A corporate post by Drylock about an employee fighting against Ukraine in what the Kremlin calls a "special military operation" (SVO), published on June 18, 2024. The posts are automatically translated from Russian. (Posts: Drylock Technologies VKontakte page; Collage: Irynka Hromotska / The Kyiv Independent)

"We've decided to launch a new section introducing the families of our fellow SVO (a Russian acronym for 'special military operation') participants to you," announced the Russia-based Drylock Technologies in June 2024.

In that post, the Belgian-owned company spoke about its employee, Alexander Shebukhov, who has been fighting against Ukraine in the Russian-occupied Ukrainian city of Donetsk since October 2022.

"Upon arrival, I felt patriotism and confidence that all assigned tasks would be carried out to a high standard," the company quoted its employee.

"I have always been ready to defend my homeland and its interests," said Shebukhov in the company post, without mentioning that Russia was not defending itself, but had launched the invasion.

The company's post ends with another quote from Shebukhov: "Now, I really want this spirit of patriotism to grow in our society," he says.

Belgian Drylock Technologies and its CEO, Bart Van Malderen, have not responded to the Kyiv Independent's requests for comment.

There was, however, a reaction.

After the Kyiv Independent contacted the Belgian company and shared our findings, its Russian subsidiary deleted all posts supporting the Russian military — likely in an attempt to conceal its pro-war activities.

`At the center of weapons production`

Belgian Drylock Technologies is not the only Western company that continues to operate in Russia, alongside the production of long-range strike drones used for daily attacks on Ukrainian civilian infrastructure.

A number of other companies, including the divisions of three German producers — SARIA (processing of animal waste), Knauf (ceiling production) and RMA (pipeline equipment) — as well as the American Allied Mineral Products (refractory materials), have continued operating in Alabuga SEZ throughout the years of Russia's full-scale invasion of Ukraine.

A French glass producer, Saint-Gobain, which holds a minority stake in an Alabuga-based joint project with Turkish manufacturer Şişecam, has also not announced its exit from the enterprise. Instead, Saint-Gobain only promised to halt investments and suspend exports and imports keeping local operations in Russia "in autonomous mode."

The Russian subsidiary of Swiss EFTEC AG, which produces coatings for the automotive industry, although not a resident of the Alabuga SEZ, continues to operate nearby at an industrial site in the city of Yelabuga.

Danish Rockwool Group, a mineral wool manufacturer, kept operating its Russian factory in the Alabuga Special Economic Zone, along with three other plants in Russia, until January 2026. On the last day of 2025, Russian President Vladimir Putin forcibly placed Rockwool's local assets under the "temporary management" of a Russian company — a measure Russia sometimes uses against local assets of the companies originating in what the Kremlin deems “unfriendly” countries.

The French industrial gases producer, Air Liquide, met the same fate. In August 2025, the Kremlin handed over the management of Air Liquide's Russian plants to external administration.

Prior to that, the French company adjusted its Russian factories to function "autonomously" while still maintaining ownership. Since September 2022, Air Liquide has not received dividends from its Russian subsidiaries, the company stated in a comment to the Kyiv Independent.

Based on tax returns filed in Russia for 2025, the Kyiv Independent estimated that, in the fourth year of Russia's full-scale war against Ukraine, subsidiaries of Western companies situated at the center of Russia's long-range drone production contributed over $34 million in taxes to the Russian budget. See the chart below for details.

Western companies that continue to contribute to Russia's budget by operating in the Alabuga economic zone, the site of Shahed drones production. Slide 1 of 2. (Nizar al-Rifai/The Kyiv Independent)

Western companies that continue to contribute to Russia's budget by operating in the Alabuga economic zone, the site of Shahed drones production. Slide 1 of 2. (Nizar al-Rifai/The Kyiv Independent)

The Kyiv Independent has identified the relevant Shahed production sites with the help of sources in the parts of Ukrainian military investigating Russian drone production in Alabuga SEZ.

"They have launched drone production right next to the factories of Western manufacturers," said a Ukrainian officer who requested anonymity for security reasons.

Taken together, military evidence and satellite imagery indicate that, throughout the years of Russia's full-scale invasion of Ukraine, facilities producing Russian analogues of the Iranian Shahed drones were being built next to factories of Western producers in the Alabuga SEZ.

Numerous buildings associated with the Shahed production have been constructed around the Knauf, RMA, and Allied Mineral Products factories since 2022.

Next to the Drylock Technologies factory, the Russian drone producer has built dormitories to house thousands of new workers involved in drone production.

The other European plants are also located nearby.

Production of Russian Shahed drones concentrated next to divisions of Western companies. (Nizar al-Rifai/The Kyiv Independent)

The newly constructed buildings, along with numerous journalistic investigations into local drone production, and Ukrainian drone strikes in the Alabuga Special Economic Zone, suggest that European producers were likely aware that Russia had launched weapons production adjacent to their facilities.

This conclusion is further supported by the EU and the U.S. sanctions imposed from 2023 to 2025 on the SEZ's legal entity, its leadership, and several local companies involved in drone manufacturing.

As of Jan. 25, 2026, European companies are prohibited from maintaining ownership or control in companies operating within the Alabuga Special Economic Zone, according to the EU restrictions adopted in October 2025 as part of the 19th sanctions package.

"The EU obliged its companies to exit this special economic zone as of Jan. 25, 2026," said Roman Steblivskyi, director of policy and advocacy, at the Economic Security Council of Ukraine (ESCU).

EU Sanctions Envoy David O'Sullivan, in a written commentary to the Kyiv Independent, confirmed that the EU had banned the continuation of current business relations in Alabuga SEZ and had required any company with EU links to divest by Jan. 26, 2026.

"Alabuga is well known as the center of manufacturing for the Shahed drones, which have been heavily used by Russia in its terror campaign against civilian infrastructure in Ukraine," David O'Sullivan added.

"Some exceptions allow for the trade of oil, gas and metals, as well as activities necessary for humanitarian purposes,” Steblivskyi explained. “But if a company does not fall under the exceptions, then it should leave this economic zone."

The production of ceilings, automotive polymers, or glass does not qualify for these exceptions, and it appears that the companies have simply ignored the exit deadline imposed by EU sanctions. Though the cut-off date has long passed, a handful of European companies are still there.

`Vague excuses`

"We are aware of the sanctions package to which you refer," said Rasmus Windfeld, head of Rockwool Group's Media Relations in a comment to the Kyiv Independent on Jan 13.

With only two weeks remaining before the EU deadline for exiting the Alabuga SEZ, it seemed Rockwool lacked a clear plan for its Alabuga-based plant.

"Together with the Danish authorities and the EU, we are in the process of examining what consequences it may potentially have for us. We naturally comply with the applicable sanctions, including those in the most recent sanctions package," added Rasmus Windfeld.

A few hours later, on the same day, it became clear that Rockwool would no longer be able to leave Russia of its own accord, as Vladimir Putin placed Rockwool's Russian factories under external administration.

"Rockwool calls it indisputably illegal," the company responded in a public statement.

Marina Potoker, then-CEO of Russia-based Rockwool (L), met with Alexander Drozdenko, governor of Leningrad Oblast, Russia (R), on June 20, 2025, to discuss "promising projects and new products" — six months before being forcibly dismissed by President Vladimir Putin. (Drozdenko's Telegram channel)

Although the Danish manufacturer formally remains the owner of its shares in Russian subsidiaries, they are currently managed by an obscure Russian company. In February, the head of the external administration reported that Rockwool was offered to sell its Russia-based assets with a 60% discount — or lose them to nationalization.

Soon afterward, Rockwool's Russian plants under external management donated 600 million rubles ($7.7 million) to the Russian military to procure drones, vehicles, electronic warfare systems, and communications equipment.

The new administration also announced the resumption of supplies of Rockwool's products to Russia's military-industrial complex, which had been suspended in 2022.

Unlike Rockwool, several other Western companies could still voluntarily leave Russia and comply with the EU sanctions.

"The Knauf Group continues to pursue its announced withdrawal from Russia. We are taking all reasonable and feasible measures to achieve a solution that complies with applicable sanctions, while navigating a complex environment," the German company said on Jan. 20 in a written response to the Kyiv Independent.

Satellite imagery and a photo of the director of Knauf's Alabuga-based subsidiary indicate that the company was carrying out construction work on its site in 2024 and likely built a new warehouse.

A collage of a satellite image of the site as of June 2, 2024 (L) and a photo of Alexey Evdokimov, CEO of Knauf Ceiling Solutions in Russia, taken at the factory site in Alabuga SEZ, Russia, and published on March 19, 2024 (R). Both images indicate construction work. (Post: Evdokimov's VKontakte page; satellite image: Google Earth; collage: Irynka Hromotska / The Kyiv Independent)

Knauf announced its plan to exit Russia in April 2024 following reports of their involvement in construction projects in Russia-occupied Mariupol. Since then, Knauf has stopped import and export operations with the country. Its factory in Alabuga SEZ, however, continues to operate.

"The Russian business is currently managed locally and kept separate from the Knauf Group’s global operations,“ the company added in the same response to the Kyiv Independent in January. Since then, there has been no indication of the closure or sale of the Knauf subsidiaries in Russia.

U.S. manufacturer Allied Mineral Products told the Kyiv Independent that the company "is committed to conducting operations around the globe ethically and in compliance with all applicable laws". The response did not explain how Allied's operations in Alabuga SEZ align with U.S. sanctions.

"We have implemented significant compliance measures to keep pace with directives both in the U.S. and abroad. We will continue to monitor this situation," said Allied Mineral Products's spokesperson in a written response, without further explanations.

The other Western manufacturers have not responded to repeated requests for comment from the Kyiv Independent.

`Breaking sanctions?`

Over the years of Russia's full-scale invasion on Ukraine, the decision for European companies to exit the Alabuga SEZ shifted from an ethical consideration to a requirement under EU legislation.

Yet the measure has proved to be ineffective — some European manufacturers failed to meet the requirement.

"I believe that most EU companies have phased out their business relations with these Special Economic Zones, but of course national competent authorities of Member States are responsible for ensuring that this measure is effectively implemented," O’Sullivan, EU sanctions envoy, told the Kyiv Independent in the written response.

"Sanctions circumvention is a crime so I am confident that authorities will take relevant enforcement actions if there is verified evidence of sanctions violations," he said.

The Shahed manufacturing plant in the Alabuga Special Economic Zone, Russia, was shown on video released by the Russian Defense Ministry's TV channel on July 20, 2025. (Screenshots from a Russian television segment titled “Defense acquisition. MilTech”; Collage: Irynka Hromotska/The Kyiv Independent)

As for the U.S. sanctions, the management company of Alabuga SEZ and its director have been included in the Specially Designated Nationals (SDN) List since February 2024, barring American citizens and companies from engaging in financial transactions with anyone on the list.

The question is whether companies can continue to operate in the Alabuga SEZ while avoiding financial deals with the management company.

"I believe Western companies are savvy, and it is unlikely that there have been any documented relationships between Western companies operating in Alabuga Special Economic Zone and sanctioned entities within the SEZ," said Steblivskyi from the Economic Security Council of Ukraine.

That suggests a loophole in U.S. sanctions legislation, one that could allow companies to remain in the Alabuga SEZ without formalizing their relationship with its management company.

While U.S. producers like Ford Motor and 3M, German HAVI Global Logistics, and Finnish Huhtamaki sold off their Russian assets, some of those who chose to stay in Alabuga SEZ described it as the best of the worst options. They said Russia would seize their assets if they left.

In the end, for some, that scenario came true even without leaving Russia.

Aerial survey conducted over a portion of Alabuga SEZ, Russia, published on Dec. 18, 2024. (Nikita Maykov / Video Travel)

Note from the author:

Hello, this is Alisa, the author of this story. Thank you for reading.

From Kyiv's perspective, it is obvious that the Kremlin is not merely fighting Ukraine; it is also waging a hybrid war against the West. In light of this, it makes little sense for European businesses to support Russia through taxes and technology. Earnings cannot prevail over national security.

If you agree that stories like this should be uncovered, please consider supporting our investigations by becoming a member of the Kyiv Independent. Together, we can do more.

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