Home Analysis Banned goods find way to Russia via Central Asian States

Banned goods find way to Russia via Central Asian States

Banned goods find way to Russia via Central Asian States

EU and USA have imposed several sanctions against Russia but abnormally increased exports to Central Asia    

Monitoring Desk

The European Union has introduced 11 packages of sanctions against Russia, hundreds of restrictions have been introduced by the United States and a number of its partners, yet banned goods continue to enter Russia, according to international trade data, Forbes says.

According to the publication, on the night of August 15, Russia fired Kh-101 missiles, manufactured in 2023, on Ukraine. Despite the imposed sanctions, about 30 foreign microcircuits are built into these missiles, Andriy Yermak, head of the office of the President of Ukraine, said on his Telegram channel.

Russia imports high-tech and other goods through third countries, independent analysts from Europe and Asia polled by Forbes, as well as representatives of the Yermak-McFaul international working group on sanctions against Russia, confirm.

Export statistics to Russia analyzed by Forbes show that Turkey, Kazakhstan, Armenia, Uzbekistan and Kyrgyzstan increased the largest trade flows there in 2022. In parallel with this, there was a significant increase in exports to these countries from Western countries.

How Russia circumvents sanctions

Russia’s largest trading partner is China, which increased exports to Russia by $8.5 billion in 2022 compared to 2021 (plus 13%), according to UN Comtrade data. But in percentage terms, this is not the biggest increase. Here, the first five places in terms of export volume are occupied by:

Turkey: $3.568 billion in 2022, up 62% from 2021

Kazakhstan: $1.762 billion, up 25%

Armenia: $1.571 billion, up 2.98 times;

Uzbekistan: $896 million, up 53%

Kyrgyzstan: $571 million, up 2.46 times.

Is this evidence of the circumvention of sanctions and the re-export of prohibited goods in Russia?

“Of course, what is this, if not a circumvention of sanctions?” says Vladislav Vlasyuk, secretary of the Yermak-MakFaul group. “We see this both from public information on trade and from other sources.”

According to the publication, it is precisely the countries of Central Asia, Armenia and Turkey that are used for this, since they are geographically close to Russia, notes Ikka Korhonen, an expert on international trade and transition economies at the Bank of Finland.

According to statistics, in 2022, Western countries increased their exports to these markets at a very significant pace. This is how, for example, the statistics of countries that increased exports to Kyrgyzstan in 2022 compared to 2021 look like.

China: $7.948 billion, up 2.06 times

Lithuania: $296 million, up 9.16 times

Germany: $293 million, up 5.94 times

South Korea: $260 million, up 3.31 times

Türkiye: $153 million, up 20%.

In addition, Kazakhstan increased imports from Italy (66%), France (64%), Japan (94%), and the Netherlands (60%). In Uzbekistan, imports from Lithuania increased by 79%, from Belgium by 119% (or 2.29 times), and from Mexico – by 7090% (from $2 million to $144 million, or 71.9 times). Examples in Kyrgyzstan are Poland (4.27 times), the Netherlands (2.51 times), Great Britain (6.81 times), Czech Republic (4.43 times), and Finland (8.13 times).

“Often gray imports to Kazakhstan, Uzbekistan or Kyrgyzstan are handled by Russians themselves, who have recently left the country and are now doing business from Central Asia,” says an analyst from the region, who asked not to be named. Although he does not deny that locals also earn “The so-called white-collar workers who open their own companies have resettled. As an example, a supposedly Kyrgyz company trades in Russian fuels and lubricants. In fact, it is registered in Hong Kong, but has now moved to Kyrgyzstan.”

It is more convenient to circumvent sanctions in Kyrgyzstan, because it is a rather small economy, and they often used to work with smuggling from China to Russia and Kazakhstan, the analyst adds.

“And there are fewer bribes in this country. Conventionally, in Kazakhstan you need $10000, and in Kyrgyzstan – $1000,” he says.

At the same time, transport from Kyrgyzstan to Kazakhstan cannot be checked, because these countries are members of the Customs Union. Therefore, there is actually no customs on the border between Russia and Kazakhstan. High-tech imports are of the greatest interest to smugglers or gray importers, the economist points out.

“They open an assembly shop in Kazakhstan, Kyrgyzstan, import dual-use components,” he says. “Local authorities check whether the number of imported goods matches the number of established ones. But you can’t check everyone – the Russians have opened several thousand companies in Central Asia,” the expert noted.

Are they trying to close these loopholes?

“The scale is such that the Russians get all the goods they need and re-export from neighboring countries almost completely bypasses all sanctions bans,” complained Vlasyuk from the Yermak-McFaul group. “The process of closing loopholes is difficult, and Ukraine is often unhappy with its speed, but it still happens, and the partners have the political will to close the ways of circumventing the sanctions.”

Thus, the EU Special Representative for sanctions David O’Sullivan visited Turkey, Kazakhstan, the UAE, Uzbekistan, Armenia, Georgia and Serbia this year, where he spoke about the need to close channels for circumventing sanctions in these countries. Such visits are also made by US and British officials.

Some of these countries openly say they will not help Russia. Thus, Timur Suleimanov, First Deputy Head of the Presidential Administration of Kazakhstan, assured in March 2022 in an interview that the country would comply with the sanctions regime. Since that time, this policy has not changed, Rasul Rismambetov notes.

“We do not have such that the state stimulated the re-export of prohibited goods to Russia,” says the financier. “There is condemnation from both society and the state.”

In Uzbekistan, the authorities also assured that the country does not want to be a platform for bypassing anti-Russian sanctions.

Earlier, the United States imposed sanctions on four companies based in Kyrgyzstan due to their supply of sanctioned goods to Russia. Later, US Senator Bob Menendez appealed to Kyrgyz President Sadyr Japarov to stop helping Russia evade the sanctions measures imposed against Moscow. To this, the president of Kyrgyzstan called the senator’s statement an attempt to “put pressure” on the republic.


Courtesy: Central Asian Light (Posted on Aug 21, 2023)


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