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Analytical report (Updated)

The countries of Central Asia and other members of the Eurasian Economic Union (EAEU) and the Commonwealth of Independent States (CIS) as a tool to circumvent sanctions against the Russian Federation, its legal entities and individuals

Free­dom for Eurasia 

Janu­ary 2023

After the begin­ning of the large-scale aggres­sion of the Rus­si­an Fed­er­a­tion (RF) against Ukraine, a num­ber of demo­crat­ic states, imposed sanc­tions against Rus­sia, its fin­an­cial insti­tu­tions, leg­al entit­ies and indi­vidu­als. The pur­pose of eco­nom­ic sanc­tions is to make it dif­fi­cult for Rus­sia to fin­ance the war in Ukraine and deprive the Rus­si­an Fed­er­a­tion of the abil­ity to con­tin­ue aggres­sion, as well as to demon­strate to rep­res­ent­at­ives of the Rus­si­an polit­ic­al and eco­nom­ic elite that the inva­sion of Ukraine has eco­nom­ic and polit­ic­al con­sequences. Sanc­tions have also been imposed on Belarus for sup­port­ing the Rus­si­an inva­sion. Indi­vidu­al sanc­tions are dir­ec­ted against those respons­ible for sup­port­ing, fin­an­cing or car­ry­ing out actions that under­mine the ter­rit­ori­al integ­rity, sov­er­eignty and inde­pend­ence of Ukraine, as well as those who bene­fit from these actions. After the intro­duc­tion of sanc­tions, the author­it­ies of the Rus­si­an Fed­er­a­tion and Belarus, state and private com­pan­ies, as well as olig­archs who fell under sanc­tions, began to use vari­ous mech­an­isms to cir­cum­vent sanc­tions. In the cur­rent sanc­tions’ envir­on­ment, Rus­sia still has enough room for free man­euvers. There is a wide range of loop­holes for evad­ing sanc­tions. The Rus­si­an author­it­ies use part­ners of Rus­sia – indi­vidu­als, leg­al entit­ies, and the gov­ern­ments of the states — stra­tegic part­ners of the Rus­si­an Fed­er­a­tion who are not sanctioned.

Leg­al and con­sult­ing com­pan­ies in Rus­sia, Cent­ral Asia and West­ern coun­tries offer ser­vices for the relo­ca­tion of busi­ness from Rus­sia to the mem­ber states of the Euras­i­an Eco­nom­ic Uni­on (EAEU) and the Com­mon­wealth of Inde­pend­ent States (CIS).

The Euras­i­an Eco­nom­ic Uni­on (EAEU) includes Armenia, Belarus, Kaza­kh­stan and Kyrgyz­stan, as well as Rus­sia. The Rus­si­an Fed­er­a­tion con­trols the EAEU. The EAEU is a free trade bloc that has inter­na­tion­al trade treat­ies with Iran, Ser­bia, Singa­pore and Viet­nam and nego­ti­ates with many oth­ers, most not­ably India and China. The CIS also includes Azerbaijan, Geor­gia, Mol­dova, Tajikistan, Turk­menistan and Uzbek­istan. This inter­state uni­on func­tions some­what dif­fer­ently than the EAEU, but it provides for par­tial free trade between all mem­bers. For many goods that move to the CIS, there are no export and import duties.

The pur­pose of the ana­lyt­ic­al report is a com­pre­hens­ive study of the issues of cir­cum­ven­tion of sanc­tions by Rus­sia with the help of the Cent­ral Asi­an states, leg­al entit­ies (organ­iz­a­tions) and indi­vidu­als (cit­izens) of these coun­tries and the present­a­tion to the world com­munity of recom­mend­a­tions to improve the effect­ive­ness of sanc­tions and block the abil­ity of the Rus­si­an Fed­er­a­tion to cir­cum­vent sanctions.

The ter­rit­ori­al focus of the study is the states of Cent­ral Asia: Kaza­kh­stan, Kyrgyz­stan, Turk­menistan, Tajikistan, Uzbek­istan. This choice is determ­ined by the act­ive use of these states to cir­cum­vent sanc­tions and the use of the same type of schemes by the Rus­si­an regime in this region. In cases where the mech­an­ism for cir­cum­vent­ing sanc­tions includes not only the states of Cent­ral Asia, but also oth­er coun­tries of the EAEU and the CIS, the authors of the report con­sider the entire range of par­ti­cip­at­ing states. The authors of the report believe that in the future it is neces­sary to study oth­er region­al groups of states in order to identi­fy mech­an­isms for cir­cum­vent­ing sanc­tions and block­ing these mech­an­isms. The report was pre­pared on the basis of inform­a­tion from pub­licly avail­able open sources. When work­ing on the report, the authors used a sys­tem of meth­ods for mon­it­or­ing pub­lic sources and qual­it­at­ive and quant­it­at­ive meth­ods for ana­lyz­ing inform­a­tion. Wherever pos­sible, inform­a­tion from one source has been veri­fied against oth­er sources.

Descrip­tions of sanc­tions against the Rus­si­an Fed­er­a­tion, its leg­al entit­ies and indi­vidu­als are pub­licly avail­able. For this reas­on, the authors do not describe them in detail in the present report.

The report cov­ers the peri­od from the begin­ning of the Rus­si­an aggres­sion in Feb­ru­ary 2022 to the end of Decem­ber 2022.