Reading media reports, one could get the impression that Moscow is easily skirting Western sanctions. Articles abound describing how murky firms in Kazakhstan, Turkey, or the United Arab Emirates are funneling shipments of technology and other sanctioned goods to Russia. Trade statistics also show unusual spikes of shipments from several European Union countries to Armenia in 2022, suggesting that this country may have turned into a hub for sanctioned trade. Moscow agrees: The Kremlin has long denied that sanctions are even having an impact on the Russian economy.
Reading media reports, one could get the impression that Moscow is easily skirting Western sanctions. Articles abound describing how murky firms in Kazakhstan, Turkey, or the United Arab Emirates are funneling shipments of technology and other sanctioned goods to Russia. Trade statistics also show unusual spikes of shipments from several European Union countries to Armenia in 2022, suggesting that this country may have turned into a hub for sanctioned trade. Moscow agrees: The Kremlin has long denied that sanctions are even having an impact on the Russian economy.
Yet a sober look at the data paints a more nuanced picture. Russia is certainly managing to evade some sanctions, but on a scale that is probably more limited than media reports and Kremlin statements claim. Here are eight key takeaways from what we really know about Moscow’s sanctions-dodging.
1. Not all Russian trade is sanctions evasion. Only the United States, the European Union, and some of their allies are imposing sanctions on Russia. This means that only Western companies need to respect sanctions, both in their direct dealings with Russia and their business with third countries. (If a European firm records a jump in sanctioned high-tech exports to Kazakhstan, it is required to investigate whether something fishy is going on). Conversely, countries not participating in sanctions are mostly free to do business with Russia as they please.
Even in Western economies, many firms can still trade with Russia. EU sanctions, for example, cover just 49 percent of the bloc’s exports to Russia, based on 2021 trade data. Western governments have not imposed sanctions on food, medical supplies, and other civilian goods in order to avoid harming ordinary Russians. As a result, sanctions did not prevent Europe’s exports of food and medicine to Russia from increasing in 2022. Also up are Russia’s wheat exports, which boomed to record levels last year, although part of the increase may be due to illegal shipments coming from occupied Ukraine.
2. Evasion is as old as sanctions. In 1806, French Emperor Napoleon Bonaparte imposed an embargo against British trade: Ships coming from Britain could not unload cargo in French ports or those of French-controlled Europe. The British quickly adapted to what became known as the Continental Blockade, providing one of the first modern examples of sanctions evasion. London reoriented trade routes towards the United States and established smuggling routes to continental Europe.
Fast-forward to the 21st century, and all sanctions regimes are being circumvented in some way. North Korea is illegally importing oil, thanks to ship-to-ship transfers between untracked oil tankers in the East China Sea. Iran periodically manages to send oil cargoes to Greece. As long as sanctions exist, various actors—from murky entities to respected European banks—will cash in by helping sanctioned countries or firms skirt these measures. This does not mean that sanctions do not work. Quite the opposite: If sanctions had no impact, demand for complex, risky, and time-consuming schemes to dodge them would be far lower.
3. Evading sanctions is hard for a big country like Russia. Western sanctions against Russia are comprehensive, targeting both Moscow’s access to finance and its ability to trade. Since 2014, sanctions have made it nearly impossible for the Kremlin to raise money abroad for energy projects. After the 2022 invasion of Ukraine, Western countries started to target Russian imports of high-tech goods (such as semiconductors) in a bid to constrain Russia’s ability to build military gear, as well as exports of hydrocarbons to curb the Kremlin’s revenues.
The Russian economy is so large that schemes to evade sanctions or shift trade elsewhere cannot fully make up for lost business. This is not surprising: Russia is the world’s ninth-largest economy, with imports of more than $300 billion in 2021. For small countries, such as North Korea, Cuba, or Belarus, successful sanctions-dodging can be small enough to happen under the radar—for instance, through so-called suitcase trade in smuggled goods. Conversely, doing illicit business with Russia on a scale large enough to meet the needs of its nearly $2 trillion-a-year economy would be hard to conceal.
4. China is not a major enabler. China is not big on evading sanctions. Last year, Beijing imported more oil and gas from Russia than it did in 2021. However, this was not sanctions evasion, since firms around the world are free to buy Russian oil as long as it is priced below $60 per barrel if Western shipping companies or insurance firms are involved. When it comes to exporting goods to Russia, Chinese firms appear to be cautious: Chinese customs data shows that there is no sign of a boom in China’s shipments to Russia.
Two reasons underpin Beijing’s lack of willingness to evade sanctions. First, China is struggling just as much as Russia to get hold of advanced microchips; in 2022, Western countries curbed the ability of both Russia and China to import sophisticated semiconductors and the equipment to make them. Second, Chinese businesses worry that the United States could soon impose secondary sanctions on Russia. In such a scenario, Chinese firms would need to exit the Russian market in a rush—or risk being sanctioned themselves.
5. Russia is not swamped with smuggled high-tech goods. Russia’s high-tech imports from several nonsanctioning economies, such as Armenia, Turkey, Kazakhstan, and the United Arab Emirates, have surged over the past year, giving credence to the idea that Moscow is easily dodging sanctions. Media reports on this issue conveniently forget to mention that there is a catch: Such eye-popping growth rates invariably come from a very low base.
Take Turkey, whose semiconductor exports to Russia quadrupled in 2022. That sounds like a lot—until you note that the total reached only $489 million at most—and probably less, since this amount includes other advanced electronic products. Although this figure does not capture smuggling, even several times the amount would remain far below Russia’s needs. In 2021, Russia’s imports of high-tech components, including semiconductors, topped $13 billion, and Russia’s microchip needs have no doubt increased further since the start of the war; semiconductors are a critical component for missiles and other military gear. If Russia were really swamped with smuggled semiconductors, it would not have to resort to harvesting chips from fridges or dishwashers, as has been widely reported.
6. Oil exports remain an area of concern. Western countries are seeking to curb Moscow’s revenues through restrictions on Russian oil exports. These measures take two forms: embargoes on imports of Russian crude (in the EU, for instance) and the G-7 oil price cap, which prevents Russia from exporting oil priced above $60 per barrel whenever Western companies are involved. The cap has had mixed results: It appears to be well-respected in Russian Baltic Sea ports, which mostly serve India now, but less so in Russia’s Far East, from where oil is shipped to a variety of emerging economies.
The data is stark: In the first quarter of 2023, 96 percent of the oil shipped from the huge Russian Pacific Ocean port of Kozmino was sold above the price cap, for an average price of $73 per barrel. More than half of these shipments involved Western shipping or insurance firms, pointing to widespread illegal evasion of the G-7 price cap. Looking ahead, implementing the oil price cap could also become increasingly difficult as Moscow builds a sanctions-proof supply chain to export its oil, complete with Russian-owned ships and insurance services.
7. Tackling sanctions evasion is hard. Tackling sanctions evasion is like whack-a-mole; as soon as one loophole is closed, various actors get busy creating other lucrative schemes to circumvent sanctions. This does not mean that nothing can be done to address this issue. Convincing third countries not to turn a blind eye to sanctions evasion is a first step. It may yield results: In September 2022, Uzbekistan, Kazakhstan, Turkey, and Vietnam abruptly stopped using Mir, Russia’s payments system for fear of breaching U.S. sanctions.
Secondary sanctions are another option. Only the United States uses such penalties, which force companies around the world to make a choice between trading with the sanctioned country or the United States. Most firms choose to stay in the U.S. market. So far, U.S. secondary sanctions target only the Russian defense sector, but they could be expanded to other areas. Washington will tread carefully: Russia is such a big commodity exporter that imposing secondary sanctions on Moscow would fuel a spike in commodity prices.
8. Sanctions evasion does not mean sanctions do not work. In the first quarter of 2023, Moscow’s receipts from oil exports fell by $15.6 billion compared the same quarter in 2022, a drop of 29 percent. Around three-quarters of this drop was due to sanctions; the rest was mainly the effect of declining oil prices. As a result, over these same three months, the Russian Finance Ministry reported a $30 billion government budget deficit, a whopping 82 percent of the full-year deficit target. This is making it harder for the Kremlin to finance the war. Sanctions evasion is happening, but the bigger picture is a different one. Sanctions are working, and evasion is not much more than a drop in the ocean.
FAQs
How many sanctions do we have on Russia? ›
With Over 300 Sanctions, U.S. Targets Russia's Circumvention and Evasion, Military-Industrial Supply Chains, and Future Energy Revenues | U.S. Department of the Treasury.
How much Russia lost due to sanctions? ›By mid-2016, Russia had lost an estimated $170 billion due to financial sanctions, with another $400 billion lost in revenues from oil and gas. According to Ukrainian officials, the sanctions forced Russia to change its approach toward Ukraine and undermined the Russian military advances in the region.
What sanctions were just put on Russia? ›- A ban on the export of dual-use goods - items with both a civilian and military purpose, such as vehicle parts - by the UK, EU and US.
- A ban on all Russian flights from US, UK, EU and Canadian airspace.
- A ban on the export of luxury goods to Russia.
On 25 February and 1 March 2022, Serbia, Mexico and Brazil announced that they would not be participating in any economic sanctions against Russia.
What are the 4 types of sanctions? ›- Reasons for sanctioning.
- Economic sanctions.
- Diplomatic sanctions.
- Military sanctions.
- Sport sanctions.
- Sanctions on the environment.
- Sanctions on individuals.
The Russian economy is shrinking
According to the World Bank, the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD), 2022 was a bad year for the Russian economy. It is estimated that in 2022, Russia's gross domestic product (GDP) dropped by 2.1%.
Sweeping sanctions from the US, UK and European Union have cost the country's tycoons more than just a portion of their vast fortunes.
Is Russia losing money on oil? ›Before the war, oil revenues constituted 30–35 percent of the total Russian budget. In 2023, oil revenues have fallen to just 23 percent of the Russian budget. This decline in revenue has occurred despite Russia's exporting roughly 5 to 10 percent more crude oil in April 2023 compared to March 2022.
Is it legal to send money to Russia from USA? ›It is not possible at the moment for you to send money to Russia from the USA. Case-by-case exceptions may be made if you contact the US State Department to send emergency transfers.
Is it safe to travel Russia now? ›Russia - Level 4: Do Not Travel.
Do sanctions against Russia work? ›
Are they working? That depends on their objective. Sanctions have inflicted some pain on Russia's economy, but they have not caused widespread economic collapse or halted Russia's aggression against Ukraine.
Who is Russia's best friend? ›Similarly, a 2017 opinion poll by the Moscow-based non-governmental think tank Levada-Center states that Russians identified India as one of their top five "friends", with the others being Belarus, China, Kazakhstan and Syria.
How many countries are on Russia's unfriendly list? ›The list was first published in May 2021 where it consisted of the United States and the Czech Republic. Following the start of the Russian invasion of Ukraine on 24 February 2022 and international sanctions imposed against Russia, the list has since been expanded to 49 states.
What countries are Russia's allies? ›The Collective Security Treaty Organization
The Moscow-led CSTO is a military alliance in Eurasia made up of six post-Soviet states: Armenia, Kazakhstan, Russia, Belarus, Kyrgyzstan, and Tajikistan, but not all of them have played ball over the last year.
The most severe sanction in a civil lawsuit is the involuntary dismissal, with prejudice, of a complaining party's cause of action, or of the responding party's answer.
Who imposes sanctions in the US? ›Office of Foreign Assets Control, Department of the Treasury – OFAC plays a primary role in administering and enforcing many U.S. sanctions programs. In coordination with the Department of State, OFAC issues licenses where appropriate for a variety of goods, services and transactions.
What are most negative sanctions? ›Negative sanctions can include embarrassment, shame, ridicule, sarcasm, criticism, disapproval, social discrimination, and exclusion as well as more formal sanctions such as penalties and fines.
Who is buying Russian oil? ›Behind China and India, Turkey and Bulgaria are the biggest buyers of Russian crude.
How do Russians feel about the war? ›At the national level, public polling of Russian attitudes toward the war have shown support remaining relatively stable since the Feb. 24, 2022, invasion: On average, Russians still seem to support the war, even if not with the overwhelming positivity that the Kremlin might suggest.
What is Russia's wealth? ›HNWIs in Russia
In 2021, the total wealth of the adult population in the country reached nearly 3.8 trillion U.S. dollars.
Who has the strongest economy in the world? ›
| # | Country | GDP |
|---|---|---|
| 1 | Luxembourg | 86 billion |
| 2 | Bermuda | 7 billion |
| 3 | Ireland | 504 billion |
| 4 | Switzerland | 801 billion |
- Sri Lanka. ...
- Portugal. Debt to GDP Ratio: 114% ...
- Cuba. Debt to GDP Ratio: 117% ...
- Bahrain. Debt to GDP Ratio: 120% ...
- Zambia. Debt to GDP Ratio: 123% ...
- Suriname. Debt to GDP Ratio: 124% ...
- Bhutan. Debt to GDP Ratio: 125% ...
- United States. Debt to GDP Ratio: 129%
How much does Russia owe? About $40 billion US in foreign bonds, about half of that to foreigners. Before the start of the war, Russia had around $640 billion US in foreign currency and gold reserves, much of which was held overseas and is now frozen.
How much money is Russia in debt? ›In the latest reports, Russia National Government Debt reached 327.9 USD bn in Jan 2023. The country's Nominal GDP reached 619.9 USD bn in Sep 2022.
How much of Russia is poverty? ›MEDIAN INCOME
Sources: WDI for GDP, National Statistical Offices for national poverty rates, POVCALNET as of April 2022, and Global Monitoring Database for the rest. The official poverty rate in Russia has been slowly declining in recent years: from 12.6 percent in 2018, 12.3 percent in 2019 to 12.1 percent in 2020.
As one might expect, China has been the top buyer of Russian fossil fuels since the start of the invasion. Russia's neighbor and informal ally has primarily imported crude oil, which has made up more than 80% of its imports totaling more than $55 billion since the start of the invasion.
Who is buying Russian oil 2023? ›As of January 14, 2023, the largest volume of Russian crude oil shipments went to China, at 55.2 million metric tons per day based on a 30-day running average. Since the beginning of 2022, the shipments to the European Union (EU) and the United States have decreased significantly.
Is Russia in a decline? ›According to the state statistics agency, in 2020 and 2021 combined the country's population declined by 1.3m; deaths outstripped births by 1.7m.
How much cash can I take from USA to Russia? ›Currently there are no restrictions for amounts of money that can be brought into Russia. Any sum of money over $10,000 brought into the country (including traveler's checks) must be declared at customs. Individual residents are allowed to export foreign currencies in a lump cash sum up to $10,000.
Does Zelle work in Russia? ›
Can I use Zelle to send money to Russia? No, you cannot use Zelle to transfer money to Russia. Zelle is only available for transfers between United States bank accounts.
Can US banks wire money to Russia? ›For example, if you send money from USA to Russia via a bank, you will typically get charged high wire transfer fees. Often, both the sender and the recipient have to pay high fees for bank wire transfers.
What is a typical breakfast in Russia? ›Traditional Russian breakfast features their famous big & thin pancakes (Blini), cottage cheese pancakes (Syrniki), buckwheat porridge (Kasha), and more goodness!
Are there flights from USA to Russia? ›There are direct flights from the United States to Russia. Direct flights usually depart from John F. Kennedy International Airport, Los Angeles International Airport, and Miami International Airport.
How safe is Mexico for tourists? ›Generally speaking, Mexico is a safe destination if visitors use common sense and educate themselves about the particular region of the country they are visiting. Due to crime, several regions of Mexico are subject to elevated travel advisories.
Is Russia's economy growing? ›Russia's economy is slated to grow 1% this year, according to JPMorgan Chase & Co. Or shrink 2.5%, if you ask the Organization for Economic Cooperation and Development.
How many tanks does Russia have? ›Of Russia's nearly 13,000 active combat tanks, only a fraction are main battle tanks. A 2021 Russian source estimated that their operational main battle fleet was closer to 2,600 tanks, made up of T-72s, T-80s, and T-90s, with another 400 T-72 variants used as range tanks.
What do sanctions do? ›Sanctions can be intended compel (an attempt to change an actor's behavior) or deterrence (an attempt to stop an actor from certain actions). Sanctions can be target an entire country or they can be more narrowly targeted at individuals or groups; this latter form of sanctions are sometimes called "smart sanctions".
Is India an ally of the US or Russia? ›1. Is India a US ally? India has been a “strategic partner” of the US for at least two decades, but they're not formal allies. That means that while they have much in common — two large, heterogeneous democracies — New Delhi doesn't feel bound to sync its world view with Washington.
Who is Russia's largest ally? ›Belarus: Russia's Closest Ally
A neighbor of both Russia and Ukraine, Belarus's Russia-dependent strongman Alexander Lukashenko has given Russia unrestricted access to its air space and land to attack Ukraine. Belarus has also provided logistical and medical support to Russian forces.
What is the unfriendliest country in Europe? ›
The Netherlands has been rated among the most unfriendliest countries in the world for expatriates by Forbes magazine, while Canada is rated the most friendliest country for expats.
What is the biggest country without Russia? ›| # | Country | Land Area (Km²) |
|---|---|---|
| 1 | Russia | 16,376,870 |
| 2 | Canada | 9,093,510 |
| 3 | China | 9,388,211 |
| 4 | United States | 9,147,420 |
Countries supporting Russia in the war with Ukraine
Other Russian Supporting Countries in the war with Ukraine are Cuba, Nicaragua, Venezuela, and Kyrgyzstan.
While NATO represents 31 allies to the United States, there are many other allies stretching from the Middle East to the Indo-Pacific. Each ally, she said, is important to U.S. defense.
Who are the United States allies? ›The United States has bilateral relations with many countries in the Indo-Pacific. The U.S. also has treaty allies – Japan, South Korea, the Philippines, Australia and Thailand.
Why is China helping Russia? ›China has become an increasingly important trading partner for Russia as it seeks to soften the impact of economic sanctions imposed by some countries in response to its invasion.
Does the US have sanctions on Russia? ›United States Imposes Additional Sanctions and Export Controls on Russia in Coordination with International Partners. In coordination with the G7, Australia, and other partners, the United States is imposing new sanctions today on Russia for its illegal war in Ukraine.
Are there US sanctions against Russia? ›As part of that continued effort, and working alongside our Allies and partners, the Department of State is today imposing sanctions on individuals and entities complicit in: sanctions evasion and circumvention; maintaining Russia's capacity to wage its war of aggression; and supporting Russia's future energy revenue ...
What is the 11th sanctions package? ›The 11th sanctions package focuses on anti-circumvention of the existing sanctions and includes a new mechanism to potentially punish countries outside of the EU that enable sanction evasion.
What countries are under US sanctions? ›| Active Sanctions Programs | Program Last Updated |
|---|---|
| Iran Sanctions | Jun 06, 2023 |
| Iraq-Related Sanctions | Dec 28, 2022 |
| Lebanon-Related Sanctions | Apr 04, 2023 |
| Libya Sanctions | Oct 17, 2022 |
What does the US buy from Russia? ›
The top import categories (2-digit HS) in 2019 were: mineral fuels ($13 billion), precious metal and stone (platinum) ($2.2 billion), iron and steel ($1.4 billion), fertilizers ($963 million), and inorganic chemicals ($763 million). U.S. total imports of agricultural products from Russia totaled $69 million in 2019.
Is the US banning exports to Russia? ›In addition, since February 2022, the U.S. government has: Denied all [U.S.] exports, reexports to, and transfers of items subject to the Export Administration Regulations for military end uses or end users in the Russian Federation and Belarus.
Can you still do business with Russia? ›Professional and business services to a person connected with Russia. Regulation 54C prohibits a legal or natural person from providing, directly or indirectly, accounting, business and management consulting, and public relations services to a 'person connected with Russia'.
What major resource is China buying from Russia? ›Chinese imports of Russian oil rise by nearly one-quarter from the same period in 2022. Russia overtook Saudi Arabia to be China's top oil supplier in the first two months of 2023, according to Chinese government data, as buyers snapped up sanctioned Russian oil at steep discounts.
Where does the money from sanctions go? ›By state law, all monetary penalties imposed as a sanction shall be deposited into the state treasury to the credit of the State Literary Fund. The Department of Criminal Justice Services does not benefit from monetary penalties.
What are the 3 main types of economic sanctions? ›Prominent forms of economic sanctions include trade barriers, asset freezes, travel bans, arms embargoes, and restrictions on financial transactions.
Why does the US have sanctions? ›Economic sanctions are often used as political weapons towards other countries, President Donald Trump and the United States of America has been noted for using economic sanctions, such as tariffs against Iran and North Korea in order to restrict these countries from using weapons of mass destruction, In particular, ...
Is China a sanctioned country? ›The United States government applies sanctions against certain institutions and key members of the Chinese government and its ruling Chinese Communist Party (CCP), certain companies linked to the People's Liberation Army (PLA), and other affiliates that the US government has accused of aiding in human rights abuses.
Is North Korea a sanctioned country? ›The European Union has imposed a series of sanctions against North Korea since 2006. These include: embargoing arms and related materials. banning the export of aviation and rocket fuel to North Korea.
What is the real meaning of sanction? ›sanc·tion ˈsaŋk-shən. 1. : a punitive or coercive measure or action that results from failure to comply with a law, rule, or order. a sanction for contempt. : explicit or official approval.