US primes sanctions in fight against hidden Kyrgyzstan pipeline of banned goods for Russia

US primes sanctions in fight against hidden Kyrgyzstan pipeline of banned goods for Russia
A recent rare success saw the seizure on the Kyrgyzstan-Kazakhstan border of Russia-bound Chinese DJI Agras T-30 heavy-duty crop-duster quadcopter drones. They are “dual-use” items that can be put to military use. / Promotional video, YouTube, screengrab.
By bne IntelIiNews July 19, 2023

Kyrgyzstan could reportedly be hit with US sanctions as early as this week after failing to shut booming trade windows through which re-exported sanctioned goods make their way to the Russian defence industry for use in the war effort against Ukraine.

After months of US and European diplomats making fruitless visits to the Kyrgyz capital Bishkek in efforts to persuade Kyrgyzstan’s Japarov administration to crack down on the shadowy bazaar, the Biden administration decided to prepare new economic measures to pressure the country to halt the re-exports, according to two US officials familiar with the plans, cited by The Washington Post on July 18.

Kyrgyz officials have repeatedly said in recent weeks that Bishkek is committed to respecting sanctions, but it is clear Washington believes it needs to lean on President Sadyr Japarov and his top officials to find the sincere political will to deliver some action, rather than more words. The US is making it clear that it is fully aware of how integrated Kyrgyzstan—an impoverished nation that once formed part of the southern frontier of the Soviet Union—is with strategic ally Russia economically, especially given its membership of the Moscow-led Eurasian Economic Union, but has to make a move against rife sanctions violations that are costing lives on the Ukraine battlefield.

A recent rare seizure on the Kyrgyzstan-Kazakhstan border of Chinese DJI Agras T-30 heavy-duty crop-duster quadcopter drones, “dual-use” items that can be put to military use and were on their way to a Russian buyer, helped to demonstrate the scale of the problem. But without Kyrgyz assistance, sanctions enforcers know they face a losing whack-a-mole effort at halting flows of sanctioned hardware and electronics pouring into the Russia defence complex. That principle also applies for several other of Russia’s neighbours thought to be turning a blind eye to major flows of sanctions-listed goods across their territories to Russian buyers.

Kyrgyzstan, however, is apparently causing particular concern. In the past year, it has seen a quite mind-blowing expansion of import-export companies that mainly facilitate trade with Russia, profiting from soaring sales of sanctioned Chinese and European goods.

Those goods range from drones and aircraft parts to rifle scopes and advanced bomb circuitry, according to a senior US official with detailed knowledge of the transactions, who was quoted by the Post. The newspaper also mentioned concerns in Washington that Russian intelligence agents are embedded in operations to help choreograph made-to-fit detailed goods orders on shipments that arrive via Kyrgyzstan. 

“Kyrgyzstan, while small relative to other countries, is a clear example of every factor at play at once to create an unacceptably [sanctions] evasion-friendly environment,” the senior official was quoted as saying.

Trade data show Kyrgyzstan’s exports to Russia last year skyrocketed by 250% y/y. For some items, such as rifle scopes, there was no previous record of Kyrgyzstan ever exporting such items to Russia, the US daily noted.

Drill down into the trade data and you find Kyrgyz companies making bulk purchases of sensitive electronics such as specialised semiconductors and voltage amplifiers from Chinese and South Korean companies. Other data indicates that the purchased items were indeed re-exported to Russia.

Reuters on July 19 quoted a Kyrgyz official as saying his country would feel picked on if it was hit with US sanctions over trade flows to Russia. "We would regret it if among the many dozens of countries seeing a much greater trade volume of the banned supplies, some people in Washington decided to pick on Kyrgyzstan," the official, who spoke on condition of anonymity, said.

"Kyrgyzstan is a free market economy with very limited government resources," the official added. "We cannot be reasonably expected to police every entrepreneur and approve every transaction."

The Kremlin said on July 19 that Kyrgyzstan was a close partner that benefited from integration with Russia. "We intend to further develop bilateral relations with Kyrgyzstan, which we value very highly, as well as all formats of our joint integration," Kremlin spokesman Dmitry Peskov said.