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The Eurasian Leaks in the West’s Russia Sanctions

While exports from the European Union and the United Kingdom to Russia have plummeted since the Ukraine war began, exports from the EU and the UK to Armenia, Kazakhstan, and Kyrgyzstan have increased sharply. This suggests that sanctions are working, but far from perfectly.

LONDON – Changes to the global trade system, not least because of the deepening Sino-American rivalry, have been making headlines in recent years. Yet while most of the attention has focused on trends like “friend-shoring,” “near-shoring,” and “reshoring” of supply chains, recent changes in the patterns of cross-border Eurasian trade have gone largely unnoticed, despite their implications about the effectiveness of Western sanctions on Russia.

Those sanctions cover goods that could “contribute to the enhancement of Russian industrial capacities,” including quantum-computing technologies, advanced semiconductors, sensitive machinery, goods related to transportation, and chemicals. They also cover arms, goods for use in the oil industry and maritime navigation, and luxury products.

Some goods are considered “partly” sanctioned, because the list of sanctioned goods is not perfectly aligned with the product codes – more than 6,000 in total – in the standard trade classification. For example, sanctions may cover only products with a value above a certain threshold – say, a ski suit that costs more than €300 ($330) – or only some products belonging to a particular category, such as sparkling wine. (Champagne is subject to sanctions, but prosecco is not, presumably because Russian oligarchs are expected to be fonder of the former.)