It is not only Russia which circumvents Western sanctions on its oil and gas exports (through its so-called “shadow” fleet), but also the Germany and other European countries bypassing its own… “embargo” on its own exports to Russia.
This is demonstrated by a revealing report by the flagship business press in Germany, Handelsblatt, citing the official statistical services of Germany’s trading partners. Indeed, as politicians in Berlin wish, Germany’s exports to Russia have fallen sharply since the Russian invasion of Ukraine. While they amounted to around 33 billion euros in 2021, they fell to 1.8 billion euros last year, according to data from the International Monetary Fund (IMF).
Pharmaceuticals and some chemicals have so far been exempted from the EU’s 17 sanctions packages – mainly on humanitarian grounds.
Other goods, such as electronics, sensors and chips, are no longer allowed to be exported to make it harder for Russia to continue its war. Specifically, those used in the production of drones or missiles are no longer listed as exports in Germany’s foreign trade statistics.
However, according to data analysis and experts, this is only half the story: German technology continues to reach Russia and is used there in the war against Ukraine. Since these exports to Russia are banned as a result of the sanctions, trade flows have shifted.
Rather than being shipped directly to Russia, the goods are apparently exported to Central Asian countries such as Kyrgyzstan, Kazakhstan and Turkmenistan, or the Caucasus states of Armenia and Georgia, and then forwarded to Russia from there.
“There is almost no data on this, almost no checks,” says sanctions expert Elina Rybkanova of the Kyiv School of Economics in Ukraine. “Anything that reaches these countries can be sent to Russia – and we’ll never know.”
While German companies are officially prohibited from conducting operations that would result in their products being used for military purposes in Russia, he says the reality is quite different.
Exports to Kyrgyzstan have increased dramatically. German companies do not sell directly to sanctioned Russian buyers, Rybkanova says. Instead, the goods go to middlemen in Russia’s neighborhood, he says. From there, crossing the Russian border is no longer complicated, especially since many countries are in the same customs union, the Eurasian Economic Union.
While tracking individual transactions is difficult in her experience, the Kiev-based expert says official statistics contain “strong evidence” of sanctions being circumvented.
According to the IMF, exports of German goods to Russia’s neighboring countries have risen sharply since the sanctions took effect, even though these relatively small economies offer little reason for a sudden surge in demand for German goods. Central Asian countries such as Kyrgyzstan and the Caucasus states of Armenia and Georgia appear to be particularly important destinations for these types of German exports.
Renowned economist Robin Brooks of the Brookings Institution in Washington agrees: The increase in exports from EU countries to Central Asia and the Caucasus after the start of the war in Ukraine bears no relation to genuine exports to those countries, Brooks wrote in an analysis published on Platform X in late September. It has much more to do with circumventing Western export controls. the final destination for these goods is Russia, criticizes the economist.
More than three years after the invasion of Ukraine, transfers from the EU to Russia are still taking place, Brooks wrote – and called it “The EU’s Wall of Shame”.
German exports to Kyrgyzstan increased sixteenfold in two years. While “it’s not possible to be 100% sure” that all these goods are being resold to Russia, “Kyrgyzstan is a small country,” says sanctions expert Rybkanova, referring to the data. “There are only a handful of buyers of German products there.”
Moreover, according to Rybkanova, these flows of goods mainly consist of items that Russia cannot produce itself or obtain through other channels. He believes these are strategically important goods such as engines, sensors, electronics and metallurgical machinery used in the war against Ukraine.
Statistics suggest: Goods do not stay in the country
The example of Kyrgyzstan officially demonstrates that even government statistics suggest that goods do not remain in the country, but merely serve as transit. Germany reports a significantly higher value of goods exported to Kyrgyzstan than Kyrgyzstan records in German imports.
More than half of German imports are therefore re-exported directly to Kyrgyzstan and are therefore not considered imports there. Since the start of the Russian invasion, these figures have diverged significantly, according to IMF data.
The fact that German products are apparently promoted can also be inferred from Kyrgyzstan’s exports to Russia. Compared to the years before the start of the war in Ukraine, Kyrgyzstan’s exports to its big neighbor have roughly quadrupled, according to the IMF.
Other countries also seem to be in trouble. Germany is not alone in noticing this trend. Other countries are also recording extreme increases in their exports to Russia’s neighboring states. According to IMF data, the Czech Republic, Italy, the Netherlands and Austria also recorded remarkably high growth in their exports to Kyrgyzstan – in some cases, even more.
Although other EU countries may face similar problems, Germany, as the bloc’s largest economy and a major exporter, sells the most goods to Central Asia and the Caucasus. In 2024, EU member states together exported goods worth US$30.4 billion to the five Central Asian countries and the three Caucasian states. Of this, US$7.7 billion, or a quarter of total exports, came from Germany, followed by Italy and France with 12% and 8% respectively.
In Poland and the Baltic States, exports to Kyrgyzstan have fallen significantly again.
However, EU member states are finding it difficult to deal with the apparent resale of these goods to other countries, in particular Russia. Sanctions expert Rybkanova focuses particularly on Germany as an exporting nation: “If the local authorities in Central Asia have little desire to control these transactions, it is almost impossible for the German authorities to monitor them,” she says.
Export controls within the EU are carried out by the Member States themselves. “Individual export control decisions are taken by individual EU member states,” the German Federal Foreign Office writes on its website. Export applications are examined according to specific EU criteria. Special rules apply to control exports of military technology and military equipment.
The extent to which individual Member States differ in their export controls is evident from the data. Sanctions expert Rybkanova observes a “special incentive” among countries geographically close to Russia. Poland and the three Baltic states are more successful in combating this sanctions evasion than countries further away from Russia, he says.
While exports to Kyrgyzstan initially rose sharply from the Baltic states and Poland after the outbreak of war in Ukraine, IMF data shows that these exports are now returning to pre-war levels. Sanctions expert Rybkanova attributes this to investments in increased controls and customs measures.
Rybkanova sees these countries as models for large EU states like Germany. It would help to publicly prosecute some high-profile, obvious cases of sanctions evasion to show that indirect support to the Russian arms industry will be punished, the Ukrainian says.