DP20097 The Eurasian Roundabout: Trade Flows into Russia through the Caucasus and Central Asia
This paper documents two strategies deployed to work around trade sanctions imposed on Russia after its full-scale invasion of Ukraine in 2022. These include trade intermediated through Armenia, Kazakhstan and the Kyrgyz Republic (CCA3) and a simple, yet little-documented, method whereby goods shipped via the sanctioned economy to the neighbouring countries fail to reach their intended destination. Such flows, recorded as exports in their countries of origin but not recorded as imports by destination countries, amounted to around half of total "additional" exports from the EU and the UK to CCA3 in 2022-23. Although the two strategies offset less than 10 percent of the sanctions’ impact, substitution ratios exceeded 50 percent for numerous products. Despite evasion, sanctions have resulted in a substantial increase in unit values of products exported to Russia either directly or indirectly.
