Russia’s war puts Central Asian economies in a difficult position – The Diplomat

Central Asia is intimately linked to trade networks that stretch across the former Soviet Union, a fact that could expose countries and companies in the region to sanctions. The existing risk intensified with the Russian invasion of Ukraine in February and has drawn increasing attention as the war drags on. Meanwhile, US diplomats continue to repeat Washington’s goals to help minimize the negative impact of international sanctions on Central Asian economies, acknowledging the difficult situation the region finds itself in.

A recent U.S. 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 calling for “increased vigilance for potential attempts to evade Russian and Belarusian export controls”.

The alert provided an overview of current export restrictions, including a list of “products of concern for possible evasion of export controls”, and identified a series of “transactional and behavioral red flags” that financial institutions must search to try to catch those who try to evade sanctions. The first of 22 noted red flags mentioned the use of “known trade corridors to serve as possible 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, United Arab Emirates and Uzbekistan.

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

The alert stated that in certain cases, “U.S. controlled items may be legally exported to these and other jurisdictions as inputs for the production of other finished goods.” But he added that “further export to Russia or Belarus of these finished products and goods, possibly 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 company in Central Asia sanctioned for actively supporting the efforts of Radioavtomatika, a Russian company, to evade sanctions.

Washington’s diplomatic engagement with Central Asian states underscored the intention to minimize the impact of sanctions against Russia in the region. For example, in theate may After US Secretary of State Antony Blinken met with Kazakh Foreign Minister Mukhtar Tileuberdi in Washington, D.C., 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, Assistant 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”. Summary of the Kyrgyz Foreign Ministry after Lu’s visit. The United States Embassy in Uzbekistan in a telegram The post noted that after congratulating Acting Foreign Minister Vladimir Norov on his new role, Lu and Norov “discussed regional security, including our efforts to ensure that Uzbekistan’s development plans are not adversely affected by the sanctions imposed on Russia”.

It’s unclear exactly how the US will minimize the impact of sanctions, but in Kyrgyzstan “opportunities for increased investment cooperation” were discussed; in Uzbekistan Lu met with the country’s Minister of Investment and Foreign Trade to discuss “Opportunities for practical cooperation in the field of attracting American companies…to Uzbekistan”. Similar conversations have certainly taken place in Kazakhstan and Tajikistan as well. The question of whether what is proposed by the United States is sufficient to motivate cooperation in the application of international sanctions (the Central Asian states have not announced their own sanctions against Russia and no one is really waiting there) is a matter of debate and time.