US hits Kyrgyzstan with war sanctions

US hits Kyrgyzstan with war sanctions
Among sanctioned items Kyrgyz firms are said to have re-exported to Russia are tantalum capacitors. They are high-priority components needed for electronic circuit boards that feature in weapons. / elcap, cc-by-sa 3.0
By bne IntelIiNews July 21, 2023

The US has hit Kyrgyzstan with sanctions as it ups the ante against third countries in Russia’s backyard said to be facilitating the re-export of substantial quantities of sanctioned goods that make their way to the Russian defence industry for use in the Kremlin’s war effort against Ukraine.

US and European diplomats have spent months lobbying Kyrgyzstan’s Japarov administration for a significant crackdown on the shadowy trade, but the impact of that approach appears to have been minimal, meaning Washington has now turned to the sanctions stick. On July 20, the US Treasury Department listed 18 individuals and more than 120 entities based across Kyrgyzstan and Russia that were now subject to Ukraine war sanctions.

Responding to the move, Kyrgyz officials denied that Bishkek was helping Moscow circumvent sanctions but did not rule out the possibility that private companies in Kyrgyzstan have become involved in shipping “dual-use” items to Russia that are ordered by civilian contractors but can be diverted to manufacturers making military goods. Kyrgyzstan’s security agency said that “neither the Kyrgyz state itself nor any state structures and companies are involved in the violation of the regime of compliance with sanctions imposed by the United States and Western countries on Russia.” But it admitted the “possible involvement of private companies”.

Kyrgyzstan, it added, has launched a probe “aimed at establishing and stopping such activities [aimed at bypassing sanctions]”. Kyrgyzstan’s Chairman of the Cabinet Akylbek Japarov, meanwhile, promised measures would be applied “so that sanctioned goods do not cross our border and, moreover, do not go where there are sanctions”.

The newly sanctioned entities include several based in Kyrgyzstan that the US Treasury Department said have operated as intermediaries to provide foreign-made electronics and technologies to Russia.

At least six of the companies sanctioned were featured in a recent investigation by RFE/RL’s Kyrgyz Service into Kyrgyz and Kazakh companies taking part in re-exporting sanctioned dual-use technologies to Russia.

The US Treasury’s Office of Foreign Assets Control (OFAC) said on July 20 that, as well as curtailing Russia's ability to obtain technology, the new sanctions package included moves aimed at reducing its revenue from mining, degrading its access to the international financial system and starving it of defence, aerospace and other technology produced by the Group of Seven leading industrialised nations.

“Since Russia launched its full scale invasion of Ukraine, the United States, working with our allies and partners, has taken unprecedented steps to impose costs on Russia and promote accountability for the individuals and entities who support its illegal war,” US Secretary of State Antony Blinken said in a statement. “We will continue to stand with Ukraine for as long as it takes,” he added.

Deputy Secretary of the Treasury Wally Adeyemo said in the OFAC news release that the actions "represent another step in our efforts to constrain Russia’s military capabilities, its access to battlefield supplies, and its economic bottom line.”

The sanctioned individuals include former Russian finance minister Aleksei Kudrin, a longtime confidant of President Vladimir Putin. Kudrin was in charge of the government’s official watchdog, the Audit Chamber, until late last year, when he joined Russian tech giant Yandex.

The six companies designated for sanctions by OFAC that featured in the RFE/RL investigation are LLC RM Design and Development, Basis Trade Prosoft LLC, Region-Prof LLC, ZAO GTME Tekhnologii, OOO Radiotekhsnab (RTS) and Technologies Systems and Complexes Limited (TSC).

ZAO GTME Tekhnologii (GTME Tekhnologii) is a Kyrgyz-based entity established in June 2022. RFE/RL concluded that it has made dozens of shipments of goods to Russia. The shipments were said to include high-priority items such as tantalum capacitors and electronic integrated circuits.

OFAC noted that LLC RM Design and Development has been a "prolific shipper" of electronics including semiconductors and integrated circuits to Russia. Shipments, it said, have been supplied to firms that have secured electronics deliveries for Russian-based defence companies.