Latvian exports of sanctioned goods soar to Russia's neighbours

Latvian exports of sanctioned goods soar to Russia's neighbours
Compared to pre-war years, exports of electronic integrated circuits to Kazakhstan climbed from €100,000 to €3.6 million in 2022. / Wikipedia
By Linas Jegelevicius in Vilnius September 4, 2023

Latvian trade with Russia's neighbours has soared, particularly in mechanical and electrical equipment, as exports of sanctioned goods to Russia itself have stopped, indicating circumvention of sanctions, according to Latvian Television's programme De Facto, reported eng.lsm,lv, part of the country's public broadcast LSM.

In many export categories where some of the goods are sanctioned, against a drop in export to Russia, there is a rapid jump to one of the countries of Eurasian economic cooperation, which facilitates customs procedures for Russia: Kazakhstan, Kyrgyzstan, or Armenia.

This is particularly apparent in the category of mechanical and electrical equipment, where exports to Russia fell by a quarter last year, while growth in the three countries was between five and 12 times. This year, exports have continued to grow particularly rapidly to Kyrgyzstan.

In electronic integrated circuits,   Latvian exports to Russia used to have a value of more than €6.5 million.  Following the introduction of EU sanctions, the volume has fallen to zero, but at the same time, Latvia started exporting to Kazakhstan, which is a joint customs union with Russia. Compared to pre-war years, exports to Kazakhstan climbed from €100,000 to €3.6 million in 2022. 

The circumvention of sanctions, including the export of banned goods to Russia through third countries, is subject to criminal liability. Deputy Director of State Revenue Service (VID) Customs Administration Sandra Kārkliņa-Ādmine says the authority is working actively with customs authorities in Central Asian countries to understand what is happening with cargo.Since the Russian invasion of Ukraine, the VID has launched more than 200 criminal proceedings for the violation of sanctions.

A list of sanctioned goods is also being made for Russian trading partners. Since June, a ban on transit through Russia has been imposed on many commodity groups, which limits the possibility for goods to "disappear" along the way. VID representative Kārkliņa-Ādmine said that the arrival of sanctioned goods in Russia after being legally transported to Central Asia should be addressed at the European Commission or diplomatic level because customs cannot prevent them.

As reported by bne IntelliNews, this year Latvia’s Central Statistical Bureau (CSB) published a list of businesses that continue to export to Russia and Belarus. This allows the public to see which companies from Latvia continue to operate in the aggressor countries. 

According to the list, a total of 1,095 companies exported from Latvia to Russia in 2019, more than 800 exported to Russia last year, and only 307 in the first five months of 2023. Meanwhile, last year, almost 400 companies exported to Belarus, 170 this year.

LTV also requested the same lists to be created for Central Asian countries potentially used to circumvent sanctions, as well as a list of companies importing goods from Russia, but the Central Statistical Bureau refused to give the information.

The CSB stated in its reply that, following the publication of the exporters, it had received explanations from the companies that had a significant impact on the analysis. For instance, goods being exported to different countries but customs formalities sorted on the border of Russia, or logistics companies carrying out tasks for other companies.

CSB stated it will refrain from creating and publishing lists of exporting and importing companies to any country in order to avoid risks of misinterpretations, said.