The decline in exports from developed countries to the Russian Federation is accompanied by growth in other areas

The reduction in exports from the EU countries, Great Britain and the USA under the influence of sanctions for the Russian military operation in Ukraine becomes less pronounced when taking into account supplies to the countries of Central Asia, as well as Armenia, Azerbaijan, Georgia and Belarus; in some cases, the peak reduction in supplies to the Russian Federation is accompanied by a maximum the growing share of exports to neighboring countries, according to a study by the Institute of International Finance. Direct growth in exports to the Russian Federation is noted from China, India and Turkey, but in these cases, supplies to the countries of the region also increased sharply – this dynamics is likely explained by the complication of logistics and company payments.

The sanctions had a significant impact on the trade of countries bordering the Russian Federation, ensuring a boom in trade turnover of the Central Asian states, according to a review by the Institute of International Finance. A sharp increase in supplies to the EAEU countries was noted back in 2022, but now the IIF has compared data on export volumes of developed economies to Russia, as well as in total to Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. Belarus was included in this sample according to the same criterion – the volume of imports from third countries also increased here.

At the same time, direct supplies to the Russian Federation increased sharply from China, Turkey and India (by approximately 80%, 60% and 40% compared to January-September 2019), but the growth in supplies from the three of these countries to the countries of Central Asia was also strong – and the relative shares of the two export directions have remained almost unchanged (in the case of Turkey, Central Asian countries account for 55% of total exports to Russia and neighboring countries, for China – about 40%, for India – a little more than 20%). Exports to the Russian Federation also increased from Switzerland, but less significantly; in four more countries, supplies to Central Asian countries compensated for the reduction in direct exports to the Russian Federation – these are Lithuania, Brazil, Estonia, and Latvia. Exports from Poland to Central Asian countries also increased sharply, but overall supplies fell by about 10%. For the remaining countries (there are 24 in total in the sample), there was a more pronounced decline in exports to the Russian Federation, only partially offset by an increase in supplies to neighboring countries. Exports to Central Asian countries did not increase at all from Norway. According to the European Commission, total exports to Russia from EU countries from February 2022 to September 2023 decreased by 81%.

The IIF also notes that the volume of reorientation turned out to be maximum for the countries whose exports fell the most – these are Denmark, Finland, the UK and the USA (here we are talking about an increase in the share of supplies to Central Asia compared to 2019 – it can grow even with a fall total exports to the region). Thus, for the USA this share increased from 30% to 90%, for Finland – from 10% to 90%. “The results of the study show how difficult it is to regulate global trade, taking into account the degree of its decentralization and distribution of trade flows,” the IIF concludes, citing the ineffectiveness of the oil price ceiling – the average price of all types of oil from the Russian Federation exceeds $60 per barrel. “At the same time, the data does not automatically indicate a violation of the sanctions regime (remember, the G7 countries have banned the export of many types of technological products and dual-use goods to the Russian Federation.— “Kommersant”) — we see only the overall volumes of supplies, although the reorientation of exports to landlocked countries raises questions,” the authors of the study note.

The reorientation of trade, we note, is happening, among other things, due to complications in logistics and settlements with the participation of Russian banks – the UAE, in particular, has become a major hub for wholesale operations. The Ministry of Finance of Armenia stated that of the 85% increase in exports from Armenia to Russia from January to September 2023, 80% was provided by re-exports, while Armenian supplies directly increased by only 4.4%.

Tatiana Edovina