Russia bypasses $1 billion in Western sanctions with the help of neighboring countries - FT

Over the past year, Russia has circumvented Western sanctions with the help of its partners in the Eurasian Economic Union (EEU) – Armenia, Kazakhstan and Kyrgyzstan. The problem is that these countries have significantly increased purchases of dual-use goods that were subject to anti-Russian sanctions, but in Russia they "evaporated," meaning they did not reach their original destination.

According to the Financial Times, out of approximately $2 billion worth of dual-use goods, about $1 billion worth of products have "evaporated" in Russia.

American and European authorities believe that these goods may have been intended to help the Russian authorities continue to meet the needs of the army in the war against Ukraine.

They could have entered Russia from the EU only under the pretext that Russia would not receive these goods. The final recipients were to be companies in Kazakhstan, Armenia, and Kyrgyzstan.

The publication concluded that Russia simply used fake customs declarations, which allowed it to "intercept" a significant part of the goods from its EAEU partners.

"Where else could these goods have gone? Why did these countries suddenly need these goods at this time? Who in the region needs these goods the most? Obviously, Russia," Erki Kodar, Minister of Sanctions in the Estonian government, is indignant, commenting on the unprecedented increase in imports to Russia's EAEU partners.

The publication notes that some products, the shortage of which is extremely acute in Russia, did not reach their "official" buyers in third countries at all. We are talking about gas turbines, metallurgical and broadcasting equipment.

However, the European authorities expect that increasing the responsibility of third countries for helping to circumvent sanctions should help solve this problem – these countries face secondary sanctions.

At the same time, the real figures of "shadow imports" to Russia may be much higher. The FT cites data on the discrepancy between the EU's export declaration and Kazakhstan's import report, which shows that the gap between goods shipped from the EU and those received in Kazakhstan is about $2.9 billion.

Moreover, in 2021, the total volume of imports from the EU to Kazakhstan amounted to about $450 million. The publication hints that this is not only about "shadow imports" but also about Kazakhstan helping Russia by reselling European products to it.

In general, the volume of such trade that does not reach official buyers can be estimated at several billion dollars.

Background. As a reminder, Western countries are preparing an embargo against Russian diamonds.