Microchips From Central Asia and the Caucasus

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WASHINGTON. Russia circumvents the sanctions, returns to imports at pre-invasion levels of Ukraine and pushes the allies to tighten controls on international business and put pressure on third countries.

One year after the imposition of the sanctions, it is above all the technological sector – chips, semiconductors, integrated electrical circuits – used in drones, satellites and in the military sector that shows no signs of yielding.

The data from the Trade Data Monitor, cited by Bloomberg, outline a scenario in which a network of countries and companies emerges which is not only supporting business with Russia, but which has replaced producers and exporters in some areas Europeans and the USA.

Sources in the Biden administration explained to La Stampa that “no one expected that the sanctions would have an immediate impact and that their effect will be measured in the medium and long term”. Yet the difficulties are well known in Washington. Both because several countries have intensified trade with Russia; and because the evasion of sanctions has become systematic.

The Justice, Commerce and Treasury Department task force has issued guidelines to tighten controls for companies that circumvent the sanctions. On February 24, the G7 had issued a note which concluded with the announcement of the crackdown on “third parties” who help Moscow to circumvent the sanctions. Thoughts had gone to China, but the list of countries that have increased business with Putin by exploiting the so-called “transshipment points” (i.e. places of transshipment of goods destined for Russia) is much longer. China, including Macao and Hong Kong, Armenia, Turkey and Uzbekistan are the key hubs.

To get banned goods into Russia or Belarus, companies resort to camouflage mechanisms: a sprawling distribution network confuses shipments, Web IPs don’t match those of the customer, last-minute changes to shipping routes, payments that they come from third countries and cannot be traced back to the last recipient, as well as the use of private rather than corporate emails are some of the “tricks” to lose track of the shipment.

The G7 launched the Enforcement Coordination Mechanism, a data-sharing tool to crack down on sanctions evasion. And in November, Washington imposed a fine of 497,000 dollars on Vorago Technologies of Austin (Texas) which had sent advanced electronic circuits to Moscow via Bulgaria. US administration sources explained that “we have already taken action against third party actors”, but that in order for the sanctions regime to function fully, “efforts must be coordinated”. The EU has less stringent rules than the US. Control is up to individual Member States and there is no alignment. Latvia, for example, is the only country that considers “the violation of sanctions a crime”.

On the one hand Washington is tightening controls and on the other it is moving diplomatically to isolate Moscow. Secretary of State Antony Blinken has recently returned from a mission to Kazakhstan and Uzbekistan. The latter is on the list of transhipment countries. Astana exported semiconductors for the amount of 12 thousand dollars a year before the war in Ukraine, in 2022 the turnover rose to 3.7 million.

Astana has filled a small part of the gap left by Europeans and Americans: before the war they supplied hi-tech goods for 163 million dollars, in 2022 just 60 million. Turkey, Serbia, Central Asia and the UAE put the rest in it. However, the Emiratis ended up under the American radar because in the second half of 2022 they exported to Russia for 18 million dollars hi-tech devices that can be used on the battlefield. Precisely what in Washington, from the moment of the launch of the first sanctions, they wanted to avoid.

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