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10 I Companies & Markets bne August 2023
994%, according to data from the Federal Statistical Office in Berlin.
According to the German Eastern Business Association, car and auto parts exports from Germany to Kazakhstan surged by 507% and to Armenia by 761% in 2022.
Vladimir Anderzhanov, chief executive of a Moscow-based logistics company, said Chinese household appliance producers are already taking up the slack and are beginning to top the sales for washing machines, refrigerators and personal laptops.
“Many of us are now already buying Haval cars from China and they are run ok”
“Many of us are now already buying Haval cars from China and they are run ok,” said Anderzhanov. “We may just have to wean ourselves off Dysons and Miele and buy Chinese vacuum cleaners.”
Shagina, a senior research fellow specialising in sanctions, believes the appetite in Brussels and Washington to expand hard-hitting sanctions isn’t there anymore, so the main focus is to make sure the existing sanctions are working.
She cites the number red flag alerts and guidance on potential evasive tactics by Russian individuals and companies by both the US Treasury’s Office of Foreign Assets Control (OFAC) and the UK’s Office of Financial Sanctions Implementation (OFSI)
“The sheer inter-agency collaboration has been unprecedented,” said Shagina.
After adopting 10 sanctions packages against Russia, several EU countries have pushed the European Commission to change its focus from adopting new sanctions against Russia to enforcing the existing ones.
This will be the main responsibility for David O'Sullivan, the EU's special representative on sanctions.
The Irishman, a former secretary-general of the European Commission and EU Ambassador to the US, has already travelled to some countries that Russia may be using to circumvent sanctions.
Speaking at a meeting of the EU-UK Parliamentary Partnership Assembly in Brussels earlier this month, O’Sullivan said that countries through which sanctioned products previously transited to reach Russia "have moved to make it more difficult, if not impossible, for the re-export of these goods."
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"They do not wish to be platforms for circumvention,” he said. “They do not wish their jurisdictions to be used as a means
of allowing the Russian military to continue to access these lethal products.”
O’Sullivan said that Western allies including the EU, US, UK and Japan have pinpointed 38 key products suspected of being exported in large quantities to third countries and then re-exported to Russia, including so-called "battlefield products" used in Russian missiles and drones.
Teams from the EU, UK and the US have travelled to the United Arab Emirates, Kyrgyzstan, Turkey, Kazakhstan, Uzbekistan, Armenia and Serbia in recent months to enlist governments’ support in tackling sanctions evasion.
The EU's 11th sanction package against Russia, introduced late last month, seeks to close loopholes and stop circumvention. It included an anti-circumvention tool
to be used as a last resort measure to restrict the sale, supply, transfer and export of sanctioned goods and technology to certain third countries.
“By tackling sanctions circumvention, we will maximise pressure on Russia by depriving it further of the resources it so desperately needs to allow it to pursue its illegal war against Ukraine,” said Josep Borrell, the EU High Representative for Foreign Affairs and Security Policy.
Despite the increased bilateral and multilateral approach, diplomats have conceded that attempting to stop circumvention is akin to trying to win a game of whack-a-mole.
O’Sullivan stressed the need for vigilance to make sure other countries do not become channels for circumvention and pointed to the lack of co-operation from China and India, who have declined to condemn the war or impose economic sanctions.
“We may just have to wean ourselves off Dysons and Miele and buy Chinese vacuum cleaners”
Kommersant reported on May 10 that electronics distributors have responded to the tightening of controls via Kazakhstan by switching routes to go through China, Kyrgyzstan and the United Arab Emirates.
"We will need to look at the evolution of the sanctions evasion, because the experience is once you shut off one channel, a new one pops up," said Sullivan.