By: Dr Erica Marat (NDU) and Dr Alexander Kupatadze (KCL).

This paper examines the practices used to evade sanctions imposed on Russia after its invasion of Ukraine in 2022, focusing on the import–export operations of Russia, Belarus, Georgia, and Kazakhstan. The research finds that sanctions have not cut supplies to Russia but have instead empowered informal trade networks and intermediaries. Georgia and Kazakhstan have indirectly benefited from the increased transiting trade; however, the impact on the shadow economy and traditional organised crime has been minimal because sanctions-busting is not illegal in these countries. In the aftermath of Russia’s invasion in Ukraine, a conspicuous surge in trade anomalies and import- and export-related red flags has been observed. In many instances, these irregularities can be definitively attributed to strategies employed to circumvent sanctions. The Western focus has been on restricting the re-exports of sanctioned goods to undermine Russia’s military apparatus. However, third-party states, such as Georgia and Kazakhstan, play a significant role in enabling Russia to sustain its international trade activities, yielding substantial financial gains for the country’s military expenditure.

Our research underscores the complexity and challenges of enforcing international sanctions and preventing sanctions evasion. It shows that the sanctions have not been as effective as hoped in cutting off Russia from the global economy, and that Russia has been able to find ways to circumvent them. The paper highlights the need for more concerted efforts and cooperation among Western states, private companies based in the West, and third-party states, to mitigate and prevent sanctions-busting activities.

Future research could expand to include more countries and examine the broader implications of sanctions. It could also examine the extent to which organized crime, such as cybercrime and trade-based money laundering, are linked to sanctions evasion. This research would build on the recommendations of this paper by developing more specific strategies for detecting and preventing sanctions evasion, including the use of new technologies and data analysis techniques.

Research Paper No. 18 University of Birmingham. 2023. 47p.