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23 May 2023

Western Anti-Russian Sanctions Affect Central Asia—But Not in the Way the West Had Hoped For

As the West considers expanding sanctions to include other countries, some believe this could actually work to consolidate alliances with Russia.

Western Anti-Russian Sanctions Affect Central Asia—But Not in the Way the West Had Hoped For

Image: freedarst/Shutterstock 

Last week, all eyes were upon the five former Soviet republics located between the Caspian Sea and China as they convened in China’s ancient capital of Xi’an, on the western end of the Great Wall, once the main eastern terminal of the ancient Silk Route. The aim is to prevent the Central Asian region from becoming a springboard for the West’s multi-level campaign to paralyze Russia.   

Concrete Western sanctions aimed at crippling Russia’s national economy started in 2014, shortly after Crimea’s incorporation into the Russian Federation and the proclamation of Ukraine’s breakaway regions Lugansk and Donetsk in response to Ukraine’s anti-Russian so-called Maidan Revolution. But at that stage, Russia and some of its neighbours to the south had already begun to shift their interests eastward, and the ongoing hostilities between Russia and Ukraine have only accelerated that process.   

“Most Extensive Restrictions” 

“New restrictions against Moscow were announced by the United States, Canada, Great Britain, Japan, Australia, and New Zealand. The EU agreed on the tenth package on the night of February 25,” reported Izvestia, a Russian news site. “According to the European Council of February 25, the tenth package includes:  

       - expansion of the list of goods prohibited for export to Russia (added special equipment, spare parts for trucks, electronics, and goods for the construction sector, which can be transferred to the Russian military)   

       - a ban on the transit of European dual-use goods and technologies through Russia in order to avoid circumvention of sanctions  

       - restriction on the import of bitumen and synthetic rubber from Russia   

       - suspension of the broadcasting license of RT Arabic and Sputnik Arabic   

       - a ban on Russian citizens to manage critical infrastructure operators and use EU gas storage facilities (with the exception of a few LNG storage facilities)   

       - Sanctions against three Russian banks (Alfa-Bank, Tinkoff Bank, and Rosbank).   

In total, 121 individuals and legal entities were included in the sanctions list.” [...] The most extensive restrictions were introduced by the United States. The blocking sanctions affected 11 financial institutions, including the Moscow Credit Bank (MCB), banks St. Petersburg, Uralsib, Zenit, and MTS Bank. The SDN list also includes Lanta-bank, Metallinvestbank, Levoberezhny, and Primorye banks, SDM-bank and the Ural Bank for Reconstruction and Development (UBRD).”   

But in the most recent developments, sanctions have started to expand to most of the world. According to the Financial Times, the European Union is considering a proposal to impose sanctions on Chinese companies trading equipment with Russia considered suitable to serve “Russia’s war machine.” The draft sanctions list is said to include both mainland Chinese companies and Hong Kong companies: 3HC Semiconductors and King-Pai Technology, as well as Sinno Electronics, Sigma Technology, Asia Pacific Links, Tordan Industry, and Alpha Trading Investments.   

“Continuous High-level Discussions” 

Similar threats hang over Kazakhstan, Uzbekistan, and Kyrgyzstan. But the demographic and economic intertwinement of those countries with Russia is too intense and too immense to ignore. “Russia is the largest trading partner of Kazakhstan,” a Russia’s Nezavisimaya Gazeta stated recently. “Exports in 2022 grew by a quarter to $8.8 billion. Almost the main export item was household appliances. For example, exports of televisions, monitors and projectors increased 312 times, computers 215 times, and telephones 88 times. At the same time, Kazakhstan and Kyrgyzstan have become one of the largest timber suppliers to the EU. Imports of raw materials from the two Central Asian republics increased from 445 thousand euros in 2021 to more than 30 million euros in 10 months of 2022.”   

Elsewhere, the article notes: “To oversee anti-Russian sanctions, the European Commission has established the position of an international EU special envoy for sanctions in order to ensure continuous high-level discussions with third countries in order to avoid or even circumvent the unprecedented restrictive measures imposed on Russia since the beginning of its actions in Ukraine. This post was taken by EU sanctions envoy David O’Sullivan, who visited Kyrgyzstan in March. During a briefing in Bishkek, he said that by the end of 2022, exports of goods from the European Union to Kyrgyzstan increased by 300%, and for some advanced technologies and dual-use goods by 700%.”   

Secondary Sanctions “Almost Hypertrophied” 

On the western shore of the Caspian, Azerbaijan offers a different picture. Russia ranks third among the top trading partners of Azerbaijan after Italy and Turkey. Russia accounts for 10.22% of the total trade turnover of the country. In 2022, the trade turnover between Azerbaijan and Russia surged 23.9% to $3.71 billion. The share of trading operations with Russia stood at 7% of the overall trade turnover of the country. According to the customs office, Azerbaijan’s exports to Russia dropped by 5.5% year-on-year to $68.5 million in January 2023. Imports of goods from Russia surged almost twofold to $267.8m. It can therefore be assumed that Azerbaijan is less exposed to the threat of Western “sub-sanctions” than its Transcaspian counterparts.   

For all it matters, that threat is much less severe than the U.S., NATO, EU, and their subordinates’ sabre rattling tends to suggest. All of Latin America, Africa, the Near East, and South Asia (except Australia, New Zealand, and Japan) simply ignore all Western warnings and coordinate their resistance through the BRICS (Brazil-Russia-India-China-South Africa) block, which has not only Egypt, Argentina, and Nigeria but also Kazakhstan in its waiting room. Many experts, including Western ones, have already admitted that this makes anti-Russian sanctions futile and bound to make them work like a boomerang for those instigating them.   

“The threat of secondary sanctions from the U.S. and the EU, their likelihood is almost hypertrophied, and the significance of these sanctions is exaggerated,” stated doctor of historical sciences and leading researcher Alexander Knyazev of the Institute for International Studies at the Moscow State Institute of International Relations. “Because any such sanctions action against any country in the region politically automatically transfers the country to the camp of opponents of the West and also automatically makes it a closer ally of Russia and, perhaps, China,” In all: the West is considered by some to be doing more to consolidate an alliance stretching from Belarus to Indonesia than to break it. 


Author bio: By Charles van der Leeuw, co-founder of Caspian Business News (Baku https://www.info-clipper.com/en/company/azerbaijan/caspian-business-news-newspaper-publisher.azd9xoa1s.html) and author of Cold War II: Cries in the desert – or how to counterbalance NATO’s propaganda from Ukraine to Central Asia (2015).