If the sanctions are not working the way they ought to, it is because we are actively undermining them. A recently released report by Norway-based risk consultancy Corisk reveals how that is done.
Its analysis of customs data from 12 EU countries, Norway, the UK, the US and Japan shows that the circumvention of export sanctions on Russia amounted to an astonishing 8 billion euros ($8.5bn) in 2022.
Of the countries studied, Germany appears to be the largest exporter of sanctioned goods to Russia; the second largest is Lithuania. The two provide half of the Western goods Moscow should not have access to.
The research reveals that European businesses, and especially German ones, use third countries to sell their products to Russia. This is apparent from the analysis of the export data for sanctioned goods, including luxury items such as jewellery and perfumes, typically enjoyed by the elites in Moscow, cutting-edge technology, like advanced semiconductors and quantum computers, machinery and transportation equipment.
In early 2022, Western exports of these goods to Russia plummeted, but to its neighbours, they skyrocketed. Nearly half of this “parallel export” is channelled through Kazakhstan and the rest is divided between Georgia, Armenia, Kyrgyzstan and others.
Importantly, the list of sanctioned products includes dual-use goods that can be used for both civilian and military purposes, such as drones, vehicles and certain chemicals.
In a war zone, mid-sized trucks are crucial for transporting supplies to the front line, which is why such vehicles were put on the sanctions list. As a result, Germany’s export to Russia of diesel trucks in this weight class dropped to zero by May 2022. However, the sales of these same trucks to Armenia increased exponentially and reached levels five times what Germany sold to Russia previously by September.
Polyamides are another dual-use product that has made its way to Russia, breaking the sanctions regime. These chemicals are used in the manufacturing of body armour, military pilot flight vests and many other military and civilian items. Until June 2022, Germany exported virtually no polyamides to Kazakhstan. After the sanctions were introduced, Kazakhstani demand for these chemicals exploded and by October it was importing 200 tonnes from German producers.
Lithuania has also been exporting sanctioned goods to Russia, but through another route –Belarus. Despite hosting the Belarusian opposition and opposing President Alexander Lukashenko’s regime in Minsk, Vilnius seems to have increased its sales of vehicles to its neighbour 10-fold between May and September last year. Given that exports to Russia have dropped to zero and Belarusian demand for cars is unlikely to have increased so dramatically, it appears these goods are going to Russia.
