The Financial Times reported that the European Union and its allies are examining the surge in exports to Russia’s neighboring countries to prevent firms from circumventing Western sanctions imposed on Russia. David O’Sullivan, an EU sanctions spokesperson, noted that the significant increase in trade with Russia’s neighbors raises questions about whether sanctioned goods are entering Russia through a back door. He further stated that there is a marked decline in trade flows from the EU to Russia and unusual spikes in trade with other third countries, particularly those in close proximity to Russia. O’Sullivan did not mention specific nations, stating that he would give them the benefit of the doubt as he investigated changes in trade flows.

The European Bank for Reconstruction and Development (EBRD) has conducted an analysis indicating a significant increase in Western imports and exports to the Russian Federation in countries such as Armenia and Kyrgyzstan. Turkey has also experienced a sharp increase in exports to Russia. In contrast, between May and July 2021, inflation-adjusted exports from the EU, the U.S., and the UK to Russia fell by over 50% compared to the 2017-2019 average, demonstrating the impact of sanctions. However, during the same period, exports from Europe and the U.S. to Armenia and Kyrgyzstan increased by over 80%, and these two countries more than doubled their exports to Russia, suggesting a possible redirection of trade along new routes. The EU, the U.S., and the UK, together with their partners, including the UK and the U.S., plan to exchange intelligence on potential sanctions evasion and improve control measures.

The EU experienced a surge in exports of goods like vehicles, electronics, agricultural machinery, and pumps to Central Asia, particularly to Kazakhstan. This could be due to Western companies’ willingly refraining from selling directly to Russia, even for goods that are not under sanctions. Nevertheless, EBRD Chief Economist Beata Javorczyk pointed out that the flow of goods that could potentially be sanctioned has also increased.

To prevent any possible circumvention of sanctions, the Armenian government claimed to have taken all necessary measures. Meanwhile, Turkey, which replaced some of Russia’s old trade partners after the war, saw a 97-percent increase in exports to Russia from May to July 2022 compared to 2017-2019, as per the EBRD study.

Javorczyk clarified that the EBRD data does not indicate if the rise in Turkish exports to Russia was due to sanctioned products.

“Turkey’s exports to Russia have significantly increased,” Javorczyk said.

It is possible that some imported goods have a double purpose. The Ukrainian army reported that some microchips found in captured Russian military equipment had been “repurposed” from household appliances. Meanwhile, there has been a noticeable rise in the export of household appliances from the EU to Russia’s neighbors.

According to Eurostat data, in December 2022, Kazakhstan imported one million euros worth of washing machines from the EU, which is four times more than the amount imported in December before Russia’s full-scale military engagement in Ukraine.

“We have not found any evidence that specific companies in Kazakhstan are being used to circumvent Western sanctions, but we will continue to monitor this and take swift and decisive action if any wrongdoing is detected,” a Kazakh spokesman stated.

China has also filled the void left by Western exports, including by increasing the supply of semiconductors to Russia, according to Silverado Policy Accelerator.

This week, EU ambassadors will likely agree to the tenth package of sanctions against Russia, which includes measures aimed at closing loopholes in the current sanctions regime, such as banning the transit of goods that can be repurposed for military use through Russia.