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| Russia Trade |
"Trade simply flows through different channels."
Despite comprehensive sanctions imposed on Russia following its invasion of Ukraine in February 2022, Russia appears to have suffered little impact.
The British daily, The Guardian, quoted a Middle Eastern expert on the 12th (local time) who remarked that "sanctions are easily bypassed through numerous loopholes."
Alarmingly, these loopholes are widespread even in Western European countries enforcing the sanctions.
Robin Brooks, a senior fellow at the Brookings Institution, noted that exports of Mercedes-Benz cars from Germany to Kyrgyzstan have surged by 5,100% since the onset of sanctions.
Brooks explained, "It's not because people in Kyrgyzstan love Mercedes-Benz cars; they are bound for Russia. Kyrgyzstan is merely listed on the invoice, and most vehicles don't even reach Kyrgyzstan."
He added, "This trend is happening in all European countries, with about half of the decrease in direct exports to Russia being offset by these rerouted exports."
Internal data from the Russian customs office indicates that while import prices have risen, import volumes have rebounded to pre-war levels.
Observers point out that everything from semiconductors to aircraft parts and iPhones are being exported to Russia via companies in China or the UAE, or rerouted through Armenia, Kazakhstan, and other former Soviet states, creating significant 'sanctions holes.'
These rerouted exports help sustain vulnerable sectors like Russia's aviation and automotive industries and include precision components like microchips used in the war.
Products from Texas Instruments and Intel have also been purchased by companies in Hong Kong or China and re-exported to Russia.
Over 450 foreign-made components have been found in Russian weapons recovered in Ukraine.
The United States and the European Union are trying to tighten sanctions on intermediary companies and banks that trade with Russia.
In a recent interview with the Financial Times, Hamad Buamim, chairman of Dubai Multi Commodities Centre, said sanctions on Russia have little impact outside Western regions.
He mentioned that attempts to block business flows merely redirect them elsewhere. "Since sanctions are not entirely controlled by any one side, their effectiveness is inherently limited," he stated.
An example is the 'dark ships' exporting oil from Greece.
Western nations have tried to control Russian oil exports by capping the price at $60 per barrel.
In response, Russia purchased hundreds of old ships from Greek shipping magnates who rejected Western sanctions, using them to transport crude oil.
According to trade magazine TradeWinds, Greek shipowners have sold 125 ships worth over $4 billion to strengthen Russia's 'dark fleet.'
As G7 leaders gather to discuss sanction strategies against Russia, larger 'loopholes' are forming behind the scenes, undermining the effectiveness of these sanctions.
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