April 14. 2024. 6:49

The Daily

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Kazakhstan tightens controls over trade with Russia

Kazakhstan said on Monday (27 March) it would require exporters to file additional documents when sending goods to Russia, following reports that Russian companies have been using local intermediaries to bypass Western sanctions.

Russia is Kazakhstan’s biggest trade partner. After Russian forces invaded Ukraine on 24 February 2022, the West imposed sweeping sanctions on Russia’s $2.1 trillion economy, prompting Moscow to seek circuitous routes for importing technology and goods.

Kazakhstan and Russia are both members of the five-nation Eurasian Economic Union (EAEU). In theory, that means there are no customs checks on goods crossing the 7,591-kilometer border between the two countries.

After the West barred sales of thousands of goods to Moscow over its invasion of Ukraine, some Kazakh businesses started purchasing such items and reselling them to Russian firms.

The Astana government, however, has pledged to uphold the sanctions, and said on Monday that the new rules, effective from 1 April and applying to exports within the Russia-led Eurasian Economic Union, would reduce “underground” trade.

“(The procedure) rules out the filing of documents by figureheads, fake senders or recipients,” it said in a statement.

Kazakh exports to Russia jumped by a quarter last year, and Kazakh businessmen say a move by Turkey to crack down on Russian “parallel imports” had prompted a fresh wave of requests from Russians seeking goods they cannot purchase directly.

Turkey halts transit of sanctioned goods to Russia

Turkey halted the transit of Western-sanctioned goods to Russia this month after a year of war in Ukraine and mounting US and European pressure on Ankara for action, a top export official and a diplomat said.

A report by Reuters from earlier this month illustrated how this parallel flow works in practice. Citing seven anonymous sources familiar with the situation, the news agency wrote of how “Russian companies have flooded their Kazakh partners … with new requests to help them … import badly needed goods.”

With the sale of thousands of items banned by the West, traders established an elaborate network of supply chains through third countries to bypass the restrictions.

The Reuters sources, who all spoke on condition of anonymity due to the sensitivity of the matter, said they had seen a rise in Russian requests to help get everything from bearings and aircraft parts to rare earth metals across Kazakhstan’s border.

US Secretary of State Anthony Blinken urged Central Asian countries during a visit to the region this month to uphold the sanctions and promised to help them deal with collateral damage.

While Kazakhstan has incurred no secondary sanctions, Washington has slapped them on an Uzbek company over supplies of microcircuits to Russia.

Kazakh exports to Russia rose by a quarter to $8.8 billion last year and sales of some items surged. For example, exports of bearings doubled to $111 million, official statistics showed.

Exports of plastic pipes, certain kinds of which Russia has had trouble producing or sourcing, more than tripled last year to $12 million.

At the same time, Kazakhstan sharply increased imports of computers from European countries and Taiwan, although it is unclear how many of them were then re-exported to Russia.

Sometimes no law is even broken, the sources said. Often complex items include sanctioned components but are not explicitly banned themselves. So sharp is the rise in trade that Kazakh customs are overloaded, they added.