BERLIN, PALERMO, BEIJING, MOSCOW, HELSINKI EU countries’ trade with Russia has decreased by less than half since February 2022, when Russia began its attack on Ukraine. At the same time, the Union’s trade with Russia’s Central Asian neighborhood has jumped to a whole new level.
Exports to Central Asia have increased by tens, even hundreds of percent. In particular, the products that have been sold have been banned from being exported to Russia by the EU.
This is suspected to be a way to circumvent sanctions against Russia. Even more so when Armenia, Belarus, Kyrgyzstan and Kazakhstan are in a customs union with Russia.
Every EU country’s exports to Central Asia jumped due to the Russian sanctions, and there has been an increase in all Central Asian countries, writes the economist Robin Brooks message service in X.
Brooks has investigated the matter for example at the financial services industry association International Institute of Finance, where he worked as chief economist. Today, Brooks works at the Brookings Institution.
High demand for German cars and car parts
German cars and car parts in particular have historically strong sales in Russia’s neighboring countries.
While German exports to Russia have collapsed, exports to Armenia, Kazakhstan and, for example, Tajikistan have multiplied since the start of the war.
The export of German cars to Tajikistan has increased more than tenfold. Germans sold cars and car parts to Armenia for almost 110 million euros between January and October last year. It means a thousand percent increase compared to the sales of the entire year 2021, reports the Welt magazine.
German luxury cars, on the other hand, are sold to Russia on the black market through Belarus. German car factories tell trying to control their dealers. However, monitoring all trades is impossible.
The EU has tried train authorities of transit countries to identify trade against sanctions until the end of last year.
You can view the statistics of different countries by pressing the graphic buttons.
Italian luxury is now exported to poor Central Asia
Russia has traditionally been a large market for Italian fashion and craftsmanship. Clothes, shoes, accessories and furniture have been imported to the country from Italy. Italian cars, machines and foodstuffs have also been in demand in Russia.
The sanctions imposed on Russia are reduced exports lustily. At the same time, the export of Italian cars, leather and clothes to Central Asian countries such as Kazakhstan and Kyrgyzstan has grown enormously.
Italian exports to Kazakhstan have almost doubled after 2021. Export of Kyrgyzstan to Italy has increased almost tenfold.
Senior researcher at the Italian Foreign Policy Institute Eleonora Tafuro Ambrosetti says that Italy has invested in trade relations with Central Asian countries, which is one of the reasons for the increase in exports. However, this by no means explains such a large increase in numbers.
According to Tafuro Ambrosetti, it is clear that some of the export products end up in Russia via Central Asia.
– Especially for poor Kyrgyzstan, the pattern is clear.
Finland is no exception
already reported a year ago that Finland’s exports of goods to Kyrgyzstan, Kazakhstan and Uzbekistan also grew suspiciously strongly at the end of 2022.
Exports of goods to Kyrgyzstan grew by as much as 812 percent from 2021 to 2022. Kazakhstan’s exports also grew by 143 percent, says Tulli.
In particular, products that are subject to sanctions, such as machinery and equipment and means of transport, were exported to these countries.
The growth continued at the beginning of last year, says someone who helps companies internationalize Eastcham Finland.
However, exports to Central Asian countries will not replace previous exports to Russia, as Finland’s combined exports to Central Asian countries and Russia have shrunk by 69 percent since 2021, Customs tells.
A fraction of the previous export to Russia
Senior economist at the Bank of Finland Heli Simola points out to over the phone that although the growth of EU countries’ trade with Central Asian countries has been staggering, it only corresponds to a fraction of the decrease in exports to Russia.
The export of key dual-use products, i.e. goods also suitable for military use, to Central Asia in January–June last year was 13 percent of what the export to Russia was before the war.
Simola states that based on statistical analysis alone, it cannot be confirmed that sanctions against Russia would be violated, but the statistics point to it and raise doubts. Violations of sanctions have also come to light, also in Finland.
The EU has tried to eradicate the evasion of sanctions by, among other things, limiting the export of products through Russia, increasing the product names covered by the sanctions and criminalizing the evasion of sanctions.
Russian fuel flows to China
Trade between Russia and China started to rise strongly immediately after the war of aggression in Ukraine started. The total value of the transaction was 240 billion dollars last year, or just under 222 billion euros. The increase from 2022 was 26 percent.
The main part of Russian exports to China is crude oil and natural gas. At the end of 2023, China bought about 40 percent of Russia’s total fuel exports, and the amount is believed to increase further this year.
Russia’s economy is largely based on raw materials and weapons. China, with its 1.4 billion inhabitants, is such a large market that if China does not increase its purchases and international sanctions do not extend to them, Russia does not seem to have a day of distress in the next few years.
In addition to fuels More and more foodstuffs and textiles are flowing from Russia to China. Russian groceries and clothes seem to sell out in stores in Beijing. The Russians do not compete in China with luxury, but with cheap prices.
For Russia, China is the most important partner
Russia had to quickly revolutionize its foreign trade when the Western countries hit it with large-scale sanctions after the start of the war of aggression.
Russia still manages to import vital microchips. Financial news office Bloomberg reportsthat in January–September last year, more than half of the semiconductors and microcircuits imported to Russia were manufactured by Western companies.
China is now the most important trading partner. It is a key importing country for cars and home electronics. Products that can be used in both civilian and military industries are also imported from China to Russia.
The Bell news site has gone downthat almost half of Russia’s imports now come from China, while the share before the war was about a quarter.
In addition to China as well India has strongly increased its oil imports from Russia. At the same time, imports of petroleum products from India to Europe have increased to record levels, suggesting that India is buying Russian oil and refining it for the European market.
As a whole, however, Russia’s export earnings decreased last year.
Central Asian countries act as a detour route for Western products to the Russian market, but also some of China’s exports to Russia have been recycled through these countries. The purpose is probably to protect Chinese companies from possible Western sanctions.
For Central Asian countries, the situation is a tightrope walk. They want to keep good relations with Russia, but on the other hand, they don’t want to incur the punishments of Western countries for helping in the round of sanctions.