“They are representatives of European countries – Italy, Germany – and Eastern European countries, as well as the United States, and they do not want their names to be published because of the sanctions.” With this phrase in November 2018, Andrei Kulik, then the chief economic development adviser to the authorities appointed by Moscow in Crimea, was referring to the trade and business activity that Western countries still supported on the peninsula – about 4 years after the annexation of Crimea by Russia. .

At the time, Russian officials often referred to this activity of the European economies, which had “passed out of sight.” And the IMF also analyzed reports at the same time that the Russian economy defied Western forecasts that it would buckle under the weight of sanctions and revised its forecasts for Russian GDP growth upwards. Today, there seems to be a clearly more complex system in place, channeling to Russia all the products the EU is trying to deprive it of. and the US, through third countries friendly to Vladimir Putin’s country and possibly to the Russian president himself.

In the summer, Armenia announced a literal jump in the export of smartphones to Russia. At the same time, other neighboring Asian countries, from Belarus, Kyrgyzstan and Kazakhstan to Turkey and China, exported large volumes of household electrical appliances to Russia.

During the week, the European Bank for Reconstruction and Development (EBRD) assessed that Russia is circumventing sanctions with the help of these countries, which have dramatically increased their imports from European countries, mainly from Germany, but also from the United States.

From May to July 2022, German exports to Armenia nearly doubled and to Kyrgyzstan more than tripled.

German exports to Russia have fallen sharply over the past year, falling to 38% of the three-year average from 2017 to 2019, the EBRD said. However, over the same period, especially from May to July 2022, German exports to Armenia almost doubled and to Kyrgyzstan more than tripled.

Something similar is happening with the exports not only of Germany, but also of other EU countries. and Great Britain, but also the USA in the countries of the Caucasus and Central Asia. These countries can serve as gateways for European exports to Russia, since there are no restrictions on trade relations with them, although their ties with Moscow are known.

In particular, Armenia, Kyrgyzstan and Kazakhstan are linked through a customs union with Russia and Belarus as members of the Eurasian Economic Union, the closest analogue of the EU. for the countries of the region.

And, as EBRD Polish Chief Economist Beata Jaworczyk points out, a change in the volume of trade relations between these countries and the EU. and the US is clear.

Russian oil flows from Turkey

If the countries of Central Asia and the Caucasus act as intermediaries in the import of European goods to Russia, then Turkey allegedly renders the greatest “services” to the country of Vladimir Putin. The neighboring country acts as a kind of intermediary in the trade of Russian hydrocarbons, which it imports and re-exports to Europe and the United States, but with a different “marker of origin”. Recent studies by the Research Center for Energy and Clean Air (CREA) showed that in the last months of last year, and especially from September to November, the export of oil products from Turkey to EU ports decreased. but the US also increased by 85%. However, it was preceded by a more than twofold increase in Turkey’s imports of Russian oil.

Turkey imported more than 200,000 bpd of Urals oil from Russia, as well as Siberian light oil, for almost the entirety of last year, according to Refinitiv Eikon, while its corresponding imports in 2021 did not exceed 98,000 bpd.

The same study by Refinitiv Eikon showed that Turkey’s most important refinery, Tupras, as well as Azerbaijan’s Socar’s Star, significantly increased imports of two grades of Russian oil, while significantly reducing purchases of oil from the North Sea, from Iraq. and oil producing countries in Africa. Speaking to Reuters, the Mediterranean oil contract negotiator, who requested anonymity, stressed that “the choice of Turkish refineries to import unlimited amounts of oil from Russia is obvious.”

In addition, according to CREA estimates, despite the EU embargo on oil transportation and insurance, at least 50% of Russian oil and oil products are exported by Turkey to the EU. and in the US it has, at least until recently, been transported by European, Norwegian, British, American and European vessels. and 90% from ships insured in the UK, Norway and the USA.
And, of course, since the fall of 2022, Vladimir Putin and Tayyip Erdogan have been considering the idea he proposed of a gas hub in Turkey to transport fuel from the Nord Stream damaged by the explosion and export it to European markets. .

International giants remain on the Russian market

Russia’s allies are crowding out much of its trade, but many European companies remain in the country and still offer their products to Russian consumers. According to a study by Simon Evenet, Professor of International Trade and Economic Development at the University of St. Gallen, Switzerland, the percentage of companies based in the EU. or in the G7 countries and subsidiaries withdrawn from Russia, does not exceed 9%. International giants still operating in Russia include Colgate, Procter & Gamble and L’Oreal. They often try to justify their choice, which is sometimes dictated by the benefits, and sometimes by the difficulties of leaving.

Significantly, about two weeks ago, Unilever warned its investors about the financial risks associated with its possible exit from Russia, and British American Tobacco raised its forecasts of possible losses in the event of its exit.

In addition, Matthew Klein, author of economics books and one of the authors of the now famous book Trade Wars Are Class Wars, studied this issue and concluded in November that the value of exports from all countries to Russia is only 15% less than at the pre-war level in Ukraine. Speaking recently in the New York Times, he called it “probable” that by December they would be fully back to pre-invasion levels. “Most of their recruitment comes entirely from China and Turkey,” he told a US newspaper. Indeed, according to the non-profit organization Silverado Policy Accelerator, in September the cost of goods imported into Russia from the rest of the world exceeded the pre-war level. As this organization emphasizes, after the invasion, companies such as Samsung and Apple left Russia, supplying their mobile phones to the market.

Imports of extremely popular Chinese phones such as Xiaomi have also been halted. But soon Chinese companies again began to increase exports to Russia and hit a record high in December, as well as Samsung and Apple, which also seem to have returned through the channels of friendly neighboring countries.

After all, according to Bloomberg Economics, countries that maintain trade relations with Russia and have not condemned its invasion of Ukraine, together make up 30% of world GDP. Thus, they give it the opportunity to have an alternative supply chain and avoid the economic isolation that the EU has tried to bring it into. and USA.

Liz Truss

Noting that “the amount of money is still flowing into the country” and “how many countries the Kremlin is still backing”, former British Prime Minister Liz Truss recently noted that Washington’s belief that “Putin has turned his country into a pariah on a global level. at least not yet.”

15% global exports to Russia were lower than before the invasion of Ukraine in November.

Chrisianis Karins

The Prime Minister of Latvia, Krisjanis Karins, with a request to investigate loopholes in the relevant rules, stressed a few days ago that “negotiators are clearly finding ways to legally trade Russian goods with Turkey, Kazakhstan or Armenia, and from there send goods to Russia.”

80% part of Turkey’s oil imports came from Russia in November, and it is estimated that the upward trend has continued since then.

Oleg Ustenko

Oleh Ustenko, a key economic adviser to the Ukrainian president, while still pushing for a ceiling on Russian oil prices, stressed that “it’s almost ridiculous that Russia still collects more than $700 million a day from its fossil resources every day.” fuel.”