Russia’s War Puts Central Asia’s Economies in a Difficult Position

Central Asia is intimately tied to trade networks that stretch across the former Soviet Union, a fact that can expose countries and companies in the region to sanctions. The existing risk was heightened by the Russian invasion of Ukraine in February and has drawn increasing attention as the war progresses. Meanwhile, US diplomats continue to echo Washington’s goals to help minimize the negative impact of international sanctions on Central Asian economies, acknowledging the difficult place the region finds itself.

A recent US government alert identified Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan among a group of 18 countries as “transshipment points through which restricted or controlled exports are known to pass before reaching destinations in Russia.” or Belarus”.

In late June, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and the US Department of Commerce’s Bureau of Industry and Security (BIS). issued an alert urging “greater vigilance against possible attempts to evade export controls from Russia and Belarus.”

The alert provided an overview of current export restrictions, including a list of “commodities of concern for potential export control evasion,” and identified a number of “transactional and behavioral red flags” for institutions to consider. financial companies seek when trying to catch those who try to evade sanctions. The first of the 22 red flags mentioned mentioned the use of “trade corridors known to serve as potential transshipment points for exports to Russia and Belarus.”

A footnote identified a group of 18 countries as “common transshipment points”: Armenia, Brazil, China, Georgia, India, Israel, Kazakhstan, Kyrgyzstan, Mexico, Nicaragua, Serbia, Singapore, South Africa, Taiwan, Tajikistan, Turkey, USA. United Arab Emirates and Uzbekistan.

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Among the commodities that the BIS identified as “of particular concern due to their potential diversion and end use by Russia and Belarus to enhance their military and defense capabilities” are aircraft parts, antennas, cameras, GPS systems, circuits, integrated, oilfield equipment and more.

The alert stated that, in some cases, “controlled US items may be legally exported to these and other jurisdictions as inputs to the production of other finished goods.” But he added that “further export to Russia or Belarus of those products and finished goods, potentially through additional transshipment points, may be prohibited.”

Central Asian (and other) companies face substantial risks if they do business with sanctioned Russian companies. An Uzbek company, Promcomplektlogistic, was the first sanctioned Central Asian company for actively supporting the efforts of Radioavtomatika, a Russian company, to evade sanctions.

Washington’s diplomatic engagement with Central Asian states has emphasized the intention to minimize the impact of sanctions on Russia in the region. For example, in theate mayo After US Secretary of State Antony Blinken met with Kazakhstan Foreign Minister Mukhtar Tileuberdi in Washington, DC, State Department spokesman Ned Price reiterated that “Secretary Blinken confirmed our commitment to minimize the impact on allies and partners, including Kazakhstan, of sanctions imposed on Russia in response to Russia’s unjustified and unprovoked war against Ukraine.”

A few days later, Under Secretary of State for South and Central Asian Affairs Donald Lu led a delegation throughout the regionmeeting with officials in Kyrgyzstan, Uzbekistan, Tajikistan and Kazakhstan. At each stop, a central theme of discussion was “minimizing the negative impact of international sanctions” such as the Kyrgyz Foreign Ministry summarized after Lu’s visit. the Embassy of the United States in Uzbekistan in a telegram The publication noted that after congratulating Acting Foreign Minister Vladimir Norov on his new position, Lu and Norov “discussed regional security, including our effort to ensure that Uzbekistan’s development plans are not adversely affected.” for the sanctions imposed on Russia.

It is unclear specifically how the US will minimize the impact of sanctions, but Kyrgyzstan discussed “the possibilities of increasing investment cooperation”; in Uzbekistan Lu met with the Minister of Investment and Foreign Trade of the country to discuss “Opportunities for Practical Cooperation in the Field of Attracting American Business… to Uzbekistan.” Certainly similar talks also took place in Kazakhstan and Tajikistan. Whether what the US offers is enough to motivate cooperation to enforce international sanctions (Central Asian states have not announced their own sanctions against Russia and no one really expects them to) is a matter of debate and time. .

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