Monday, May 29, 2023

Germany’s exports to Russia’s neighbors raise questions about sanctions

BERLIN (Reuters) – Germany’s exports to countries bordering Russia rose sharply again in the first quarter, raising concerns that re-exporting goods from neighboring states could help Moscow avoid sanctions imposed over its war in Ukraine. helping.

The value of German exports to Russia fell by more than 47% between January and March compared to the same period a year earlier, reflecting harsher trade sanctions imposed by the European Union and other Western powers.

However, Germany’s exports to Kyrgyzstan rose 949% to 170 million euros ($187.14 million), according to a Reuters analysis based on data from the German statistical office.

Although still relatively minor in value, German exports to Georgia were up 92%, compared to 136% to Kazakhstan, 172% to Armenia and 154% to Tajikistan.

The increase in trade flows, which also increased last year following Russia’s invasion of Ukraine on February 24, 2002, will reinforce concerns that banned products will continue to end up in Russia after being sold by market operators in neighboring countries.

“How else can such a growth rate be explained?” said Gabriel Felbermayer, a trade expert and president of the Austrian Institute for Economic Analysis (Wifo, for its German abbreviation).

Leaders of the Group of Seven (G7) will discuss at their summit in Japan this week how to crack down on Russia, including a plan to end sanctions evasion by third countries.

An eleventh EU sanctions package, currently under negotiation, would also target individuals and countries that evade existing trade sanctions.

“The breaking of sanctions against Russia is unacceptable,” German Finance Minister Christian Lindner said in Brussels on Tuesday.

But the crackdown on re-exports is complicated by overlapping customs and trade agreements between countries that have not signed up to all the Western sanctions.

“Armenia, Belarus, Kazakhstan and Kyrgyzstan are part of a customs union with Russia,” Felbermayer explained.

“This means they have a common customs regime with third countries and everything that goes from the EU to Kyrgyzstan can be resold to Russia without any controls or tariffs.”

Increase pressure

Exports of motor vehicles and motor vehicle parts to Kyrgyzstan grew particularly strongly in the first quarter, rising more than 4,000% to more than €84 million from a very small base. Export figures for metal products, chemicals and clothing also increased by more than 1,000%.

The increase follows a six-fold increase in German exports to Kyrgyzstan last year following Russia’s invasion of Ukraine in February 2022.

German exports to Turkey, seen as another indirect export route to Russia, also increased in the first quarter, rising by almost 37% to just under €8bn, compared to an overall increase in German exports of 7.4%.

Türkiye is part of a customs union with the European Union.

“Therefore, industrial products from the EU can enter Turkey duty-free,” Felbermayer said. “But since Turkey does not participate in EU sanctions, EU products are re-exported from there to Russia.”

The same goes for imports from Türkiye to Germany. Felbermayer said these could contain significant amounts of Russian components without the EU doing much about it.

Under pressure from the G7, Turkey earlier this year agreed to end transit to Russia of Western goods barred by sanctions, which a senior US Treasury Department official said began showing up in Turkish trade data this month. Has gone.

Washington has stepped up diplomatic pressure on countries and private companies around the world to ensure compliance with the sanctions.

A senior EU official told Reuters that European companies must also make sure they know who will be the end users of the goods they export, otherwise they risk the facility to potentially circumvent sanctions. Let’s pick up

The senior official said, “If you suddenly see that goods sold by your company to Russia are increasingly being exported to a third country, then I think you should ask yourself whether you are capable of breaking the sanctions.” Not contributing.”

(1 dollar = 0.9084 euro)

Nation World News Desk
Nation World News Desk
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