How Russia circumvents sanctions – Economy

The export of German goods to Russia has declined significantly since the introduction of economic sanctions in 2022. Last year the decline was 38.8 percent to 8.9 billion euros. At first glance, this is very painful for the companies affected. But it looks like some companies are benefiting from a sudden pull in demand from other countries, including India, Azerbaijan, Armenia, the United Arab Republic, Kyrgyzstan, Kazakhstan, Georgia and Turkey.

Over the last two years, German companies have exported exactly the same volume of goods in euros to these eight countries as they did at the same time Sanctions lost to Russia, as the data analysis company Barkow Consulting did in one Investigation calculated. “You can’t prove it, but the suspicion is that there is a lot of fraud going on here because the export figures have shifted one to one,” says managing director Peter Barkow. By chance, which is probably not a coincidence, these countries are at least not hostile towards Russia, which suggests the following suspicion: “The ‘suspect’ eight states import goods from Germany that are no longer allowed to be delivered to Russia because of the sanctions then sell them on to Russia.”

It has long been considered certain that Russia is circumventing the sanctions with the help of third countries. But the current figures, according to Barkow Consulting, show for the first time that practically nothing has changed overall for the German export sector as a result of the sanctions against Russia.

The Ifo Institute recently found in a study that Russia circumvents sanctions on Western goods primarily through the CIS countries in Central Asia and Turkey. “Armenia, Kazakhstan, Uzbekistan, Kyrgyzstan and Turkey exported 50 times more goods critical to the Russian economy or important to the military industry to Russia in 2022 than they exported general goods to all destination countries in 2019,” said Feodora Teti, deputy director of the Ifo Center for Foreign Trade. This indicates a very high probability of evasion of sanctions. For Russia, China is the most important alternative country of origin for sanctioned products: 61 percent of all sanctioned products come from China, followed by Turkey with 13 percent. Experts at the Atlantic Council think tank write: “The People’s Republic of China is still not supplying weapons directly to Russia, but it is supplying materials and equipment that help support Russia’s war and occupation of Ukrainian territory.”