ElitExpert presents the investigation of our partners from Kazakhstan - publication Republic.media, dedicated to "gray" exports to Russia to circumvent Western sanctions.
Russia's war with Ukraine and the sanctions imposed on the Russian Federation by individual countries have put the Kazakh authorities in a difficult situation. Astana, linked to the Kremlin by treaties within the EAEU, CSTO and CIS, does not dare to destroy Kazakh-Russian ties. As a result, Kazakhstan became a convenient loophole for the neighboring country to circumvent restrictions on the import of various goods.
In April of this year, US Treasury Assistant Secretary Elizabeth Rosenberg warned that the risks of applying secondary sanctions against Kazakhstani companies and banks had increased, and in June she stated this directly coordinator from US Department of State Sanctions Jim O'Brien. Noting that electronics exports to Russia have returned to pre-war levels, O'Brien named five countries that help Russia circumvent sanctions: Turkey, Georgia, the United Arab Emirates, Armenia and Kazakhstan.
Indeed, trade between Russia and Kazakhstan during the war did not decrease, but rather increased. At the end of 2022, according to official statistics, it was $28 billion, adding $2 billion compared to 2021.
According to the Bureau of National Statistics of the Republic of Kazakhstan, in the first half of 2022 alone, the export of cellular phones from the Republic of Kazakhstan to the Russian Federation amounted to 78 million dollars (against 36,8 thousand dollars for January-June 2021). In addition to smartphones, the supply of processors and controllers, flash drives and memory cards, and cars increased sharply in the first half of the year. For the first time, smart cards, photo and video cameras, washing machines and dishwashers began to be delivered to the Russian Federation.
According to the EBRD working paper published in February, "The Eurasian Lure: Trade Flows to Russia via the Caucasus and Central Asia", while exports of sanctioned European goods to Russia fell by about 80% compared to the rest of exports, to Kazakhstan, Kyrgyzstan and Armenia they grew by 30% more than the export of other goods.
If we talk about specific cases, then, judging by the data of investigative journalists, at least two Kazakh companies engaged in supply drones and components for special equipment to Russia. And recently investigation "Azattika" describes the supply schemes, when Kazakh and Kyrgyz companies, having ordered sanctioned products from the manufacturer, re-export it, unloading it in Russia, when the cargo follows the territory of the Russian Federation in transit, without delivering it to the destination.
The facts listed above forced the government to publicly justify itself. Vice Prime Minister and Minister of Trade and Integration of the Republic of Kazakhstan Serik Zhumangarin admitted , that dual purpose goods were delivered from Kazakhstan to Russia. According to him, representatives of the USA and the EU already last year handed over to the Republic of Kazakhstan a list of 7000 names of goods that were subject to sanctions. "This is our entire turnover. All of this cannot be blocked or tracked,” Jumangarin said.
Later, as a result of negotiations, this list was reduced to 104 names - based on details found in the Russian military equipment that was destroyed in Ukraine. "We are working on it," Zhumangarin said, assuring that companies that transport items such as microcircuits have been monitored more closely. However, he refused to announce the names of these companies.
In addition, the authorities of Kazakhstan announced the launch of an automated online tracking system of arrivals of imported goods to Kazakhstan and their subsequent movements from April 1, 2023. However, there are big doubts that it actually works.
To dispel these doubts, we decided to see with our own eyes what is happening on the border, and went to the West Kazakhstan region.
Checkpoint "Syrim": queues and angry drivers
The West Kazakhstan region is located in the north-west of Kazakhstan and borders five regions of the Russian Federation - Orenburg, Saratov, Samara, Volgograd and Astrakhan.
There are six checkpoints at the border. We arrived at the largest Syrym checkpoint.
About 400 units of freight transport pass through it every day. Cargo flow has increased especially strongly over the past year and a half – long queues, according to border guards and drivers, have become commonplace.
Already at the entrance to the checkpoint, we saw a queue of loaded vans.
On June 26, the day we were there, the line stretched for 5-6 kilometers. Other days, as the border guards and local residents told us, it can be 10-15 kilometers.
Drivers are waiting for the opportunity to drive for several days, they are nervous.
"Corruption!" - shouted, seeing us, one of those standing in this endless queue. "We've been standing for the fifth day," "They let us through the door," others said. Almost everyone we interviewed talked about corruption, lack of staff at the post, and contemptuous attitude towards people.
"Syrim" is a transit point for many cargo carriers, including those from other Central Asian countries - Uzbekistan, Kyrgyzstan.
"All of Central Asia is going to Moscow," the carriers joked, and, as in every joke, there is a lot of truth in this too. There are many cars with Kyrgyz license plates in the queue. There are fewer Uzbeks. But there are Belarusian numbers, and, of course, Russian and Kazakh numbers.
We talked to a dozen drivers, and all of them confirmed that the flow of cars has significantly increased in the last year and a half.
They come from different places. The destination is most often Moscow. As for cargo, they are very diverse.
"Everyone will take it": statistics from state authorities
"They carry everything - spare parts, equipment, TNP," Shingys Kuat, who is the head of the checkpoint branch on duty, told us. However, according to him, cars are serviced only in special cases.
"We don't have a scanner, the Russian side has one. We do not open all cars, of course, we only check, so to speak, suspicious cargo. If everything is normal according to the documents, then we will skip it," Shingys Kuat said.
This is an important point to which we draw the readers' special attention. An insider explained to us why later.
In 2024, Kuat says, it is planned to carry out reconstruction at the checkpoint, and then "everything will be there - the scanner and the rest."
Well, for now, the border is, one might say, porous.
"If they used to take it from there, now, on the contrary, they take it there. I live next to the highway and every day I see these loaded trucks, as well as tow trucks carrying cars and other goods used by Russia in the war against Ukraine. And Kazakhstan became the logistics hub for this," says our colleague from ZKO Lukpan Akhmedyarov.
His words are confirmed by official statistics. Zhunus Kunchayev, the deputy head of the State Revenue Department of the West Kazakhstan region, told us the figures that indicate a significant increase in cargo flow across the border of the ZKO with Russia.
If in 2022, according to his data, 184 trucks crossed the border through the ZKO checkpoint, then according to the data for five months of the current year - 271. That is, 218 units more. Regarding exports to the countries of the Eurasian Economic Union, according to the data for 160 months of 33, the total figure is 889 billion tenge. At the same time, 5% belongs to Russia.
A separate topic is the relocation of Russian business. Since the beginning of the war, many Russian companies have moved to the West Kazakhstan region. They opened their representative offices there or registered local subsidiary companies.
"In 2022, 679 foreign companies were registered in the region, 627 of them with Russian capital. Since the beginning of 2023, there are 128 companies with foreign participation, and 108 of them are Russian. More than 43,5% are engaged in retail and wholesale trade, 3,7% are engaged in freight transportation," Zhanna Bekkaliyeva, deputy head of the Department of Entrepreneurship and Industrial-Innovative Development of ZKO, told us.
She showed the growth of trade with Russia in numbers.
"According to the results of 2022, the total turnover of the region amounted to 8,9 billion dollars. 8 billion of them belong to the countries of the Customs Union. Its turnover increased by 11% compared to 2021. Of this figure, export supplies amounted to $1,7 billion and increased by 44,5% compared to 2021. The lion's share is trade with Russia. Trade turnover of ZKO with the border areas of the Russian Federation in 2022 amounted to 146 million dollars, including exports - 33,8 million dollars," said Zhanna Bekkaliyeva.
Among the goods exported to Russia, the official named many things, including "ferrous metal scrap, pipes, pump-compressor and drilling rigs made of ferrous metals."
But "unusual" goods are also exported from Kazakhstan to Russia.
"Unusual goods": salmon and shrimp from Europe
Akmaral Shayakhmetova, a journalist from ZKO, discovered this fact.
"Every year I monitor these data, what is produced in us, what is imported and what is exported. And each time it was approximately the same category of goods. But over the last year, I discovered that the total export from the territory of Kazakhstan increased by 25%, in particular from ZKO. And precisely from the period when sanctions began to be introduced. This is mainly machinery: tractors, self-propelled trucks, trucks, self-propelled vehicles... Our production has not increased, maybe by 1,1%, but definitely not such an increase that a huge number of tractors will be exported.
When I asked economists to comment on this, they told me that it was a gray export.
Seafood, in particular salmon and shrimps, which arrived from Europe and went to Russia, were among the unusual goods. All this data is for 2022,” Akmaral told us in the comments on the video.
In general, according to Akmaral Shayakhmetova's data, obtained by her from open sources, after the war in Ukraine, exports from the ZKO to the territory of Russia increased by 60 million dollars.
"Actually, our borders are "leaky" and anything can be transported through them, including sanctioned goods," states Lukpan Akhmedyarov after the results of our trip to the checkpoint.
"I am convinced that no one reveals these cars, that they are in these trucks, that they are being transported there, they just look at the documents. Drones, various household appliances, electronics, or dual-purpose goods that can be used in both civilian and military industries can be transported under the guise of TNP. Currently, there is a very high demand for technological goods in Russia. And Kazakhstan is the gray zone through which all this can be transported.
The Kazakh authorities can officially say: yes, we support sanctions and so on. But as a matter of fact, our authorities are not doing anything to bring order to the border and to install a protective wall to prevent the passage of sanctioned goods," Lukpan believes.
His words were later confirmed to us by our insider, who is engaged in foreign economic activity.
Watch the special report from the border at this link.
What the insider said
Our interlocutor is a participant in foreign economic activity. Is engaged in the supply of products to Kazakhstan from China. He told us how sanctions are circumvented in practice.
According to him, there is a so-called "green" list of companies - such a register, where a green corridor is automatically punched out of them. That is, they are completely overlooked ».
Moreover, this list works not only on the border with Russia, but also on the border with China. As soon as the name of a company from the "green" list is seen on the waybills at the checkpoint, the road is immediately open to it.
So it was not by chance that during the survey, drivers complained to our journalist that trucks were being passed "with a ring".
In addition, according to the interlocutor, risks are shared.
That is, initially the goods are imported into the territory of Kazakhstan quite legally for allegedly domestic purposes, they undergo customs clearance - " and that's all, there are no questions for them, because they have passed inspections, the print inspection reports have been posted at the electronic declaration center in Astana ».
And then, already from warehouses in Kazakhstan, other companies - from the same green list - organize the delivery of goods to Russia.
» This list is not something that is approved once and for all - the companies on it are constantly changing, which is why it is so difficult to track ", our interlocutor explained.
To the question of who forms it and how they get there, he said off the record: " Those at the top decide ».
We will immediately state that we cannot document this information - only the video recorded words of a person who asked not to be named for security reasons. But we should note that our other insiders from the circles around the government confirmed his story.
The editors also have a list of companies from the so-called of the green list, but we cannot claim that all of them carry specifically sanctioned goods
What's next?
On June 23, the EU adopted the 11th package of sanctions, directed on strengthening already existing restrictions and stopping their circumvention. It is assumed that upon discovery of the facts of supplies of sanctioned goods to Russia, the EU will first establish a "constructive dialogue" with the country, and if it does not yield results, restrictive measures will be taken for companies or restrictions on sales to this country of goods whose export to Russia is already prohibited.
While the EU is only thinking about imposing sanctions on countries, which include Kazakhstan, Ukraine has taken concrete actions.
On July 1, a Decree was published on the website of the President of Ukraine, according to which two Kazakh companies — ITS-Astana LLC and Tynys JSC — will be introduced sanctions . Their essence is reduced to the limitation or complete termination of trade operations, suspension of economic and financial obligations, blocking of assets, termination of joint projects and industrial programs.
The reasons for the introduction of sanctions are not mentioned, but it is easy to guess about them. Yes, on official website LLC "ITS-Astana" says that the company is the main supplier of welding equipment, components, as well as spare parts in Kazakhstan and is part of the Russian group of companies "ITS", which unites developers, industrial enterprises and centers for sales and service of welding equipment. In turn, Tynis JSC engaged production of polyethylene pipes, truck cranes, fire extinguishing equipment and personal protection.
Ukrainian sanctions, according to the experts we interviewed, are the "first swallows" for Kazakhstan: the sanctions ring around our country already exists, and the subject of discussion can only be how quickly it will become a "jam" for Kazakhstan's economy.
Kazakh financial analyst Arman Beysembayev believes that Kazakhstan is already suffering image and reputational losses: the country has already entered the circle of countries that help Russia.
"So far, we manage to avoid sanctions, but the "Zashmorg" will hang around our neck for sure. For now, I think individual companies will be punished. And with regard to supplies of dual-purpose goods, controls will eventually be tightened. In this regard, logistics will be complicated, delivery time will increase, which will automatically lead to an increase in the final price. Taking into account the nature of the European bureaucracy, which prefers to play it safe, spot bans on certain product groups are possible. It is not very pleasant, of course, but it will not cause a global blow to the Kazakh economy," he said in a comment to "Republika".
In turn, Kazakh economist Aidar Alibayev does not rule out the repetition of the Russian scenario in Kazakhstan, when manufacturers themselves would prefer not to deal with a country that supports the aggressor:
"In the West, reputation costs are too expensive. And to trade in Kazakhstan, which takes up a few percent of the total supply package, risking the reputation - smart people will not do that. If they left the Russian market, which is ten times larger than Kazakhstan's, why don't they run away from us? Reputation is more important to them than pennies earned in Kazakhstan."
According to Alibayev, the process will gain momentum:
"As a result, we may be left without important high-tech components needed in energy, mechanical engineering, etc. But unfortunately, our officials can't see beyond their own noses."
"Undoubtedly, the circumvention of sanctions gives a big profit," said Kazakh political scientist Dimash Alzhanov comments "Azatika". "If you look at the report of the European Bank for Development and Reconstruction, exports from Western countries to Kazakhstan increased by approximately 80% last year."
And Akorda, in his opinion, makes good use of the fact that Western countries do not have a clear policy towards Kazakhstan, and offers various concessions in the field of extraction and supply of energy resources. "So far, the USA and the EU countries probably do not dare to take risks and start putting pressure on Kazakhstan with all the consequences that follow," concludes Dimash Alzhanov.
The article was worked on Nazira Darimbet, Lukpan Akhmedyarov, Volodymyr Radionov, Yulia Kozlova, Oksana Makushyna.
