The European Bank for Reconstruction and Development (EBRD) economists have analysed trade flows between Western countries, Russia and its neighbours.
According to a newly working EBRD paper ‘The Eurasian roundabout: Trade flows into Russia through the Caucasus and Central Asia’, intermediated trade through a number of countries neighbouring Russia may be used to circumvent economic sanctions on a limited scale.
The paper documents the dramatic reduction of exports from the EU, UK and US to Russia following the introduction of economic sanctions in March 2022, in the aftermath of Russia’s invasion of Ukraine.
At the same time, it notes the increase of exports to Armenia, Kazakhstan and the Kyrgyz Republic (all members of the Eurasian Economic Union). Goods exported to these economies could potentially be shipped to Russia with minimum checks. The study also documents the increase of trade flows between these Central Asian and the Caucasus countries and Russia.
The paper argues that with the re-routing of trade to Russia , it flows consistently, noticeably with the product groups where goods are at least partially subject to sanctions and for goods that are similar to sanctioned ones.
At the same time it notes that the increase in exports of sanctioned goods to Central Asian and the Caucasus countries represents a small fraction of the reduction in direct exports of sanctioned goods to Russia (around 5 per cent) but can be large for specific product groups.
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