Russia evades sanctions by ordering from Kazakhstan

RUSSIA / FSU POLITICS - In Brief 17 Mar 2023 by Alex Teddy

On March 17 Reuters reported that Russian companies are ordering Kazakh companies to buy forbidden items from the West on their behalf. These items are then sold to Russia. Russia is also doing this via Turkey and other former Soviet states. It seems that Turkey is now taking action to stop its companies facilitating sanctions evasion.  The items ordered are plane parts, phones, electronics, microchips, chemicals, radio equipment, bank card materials, turbines, bearings, rare earth metals. Kazakhstan is making a mint from this. Turkey claims not to allow the facilitation of sanctions busting. Kazakhstan has a 7,500 km border with Russia. It is Russia's longest border. In Russia it is a crime to obey foreign sanctions. Putin says that Western luxury goods are still on sale in Russia. The US Secretary of State visited Central Asia in March 2023 and asked those countries to abide by sanctions. European companies are loath to sell some goods to Kazakhstan because they suspect that they will be resold to Russia.  Russia is Kazakhstan's biggest trading partner. Its exports to Russia went up to USD 8.8 billion in 2022. Bearings sales doubled. Exports of plastic pipes tripled. Kazakhstan Customs is so overloaded with items being exported to Russia that it cannot inspect them all. Kazakh companies that sell items to Russia can claim a 12% VAT refund. However, if they are selling items to Russia they tend not to claim this. They can mark up the price they sell the item to Russia for over 12% to cover the cost of this and make a profit.

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