Work with Russia’s Neighbors to Make Sure Sanctions Bite Hard
Apr 27, 2022
Imposing sanctions to punish institutions and individuals connected with Russia’s invasion of Ukraine is just the first step. Working to ensure effective, persistent implementation of the sanctions the United States, the European Union, and others are putting in place to press Russia to end its invasion of Ukraine is essential if sanctions are going to bite. Dialogue, the exchange of technical information, and adequate training on what to look for in terms of sanctioned Russian companies, persons, and government entities that are trying to get around U.S. and international sanctions are key to successful sanctions implementation. Building and maintaining on-going connections with foreign governments, banks, and corporations are likewise crucial for a successful sanctions regime, especially in countries with long-standing economic ties with Moscow. Nowhere is this more the case than in countries that were once part of the Soviet Union.
Countries to Russia’s south — the band of states across the Caucasus and Central Asia that were once part of the Russian Empire and Soviet Union — can be targets for Russian companies and individuals looking to get around the increasingly biting sanctions that the U.S., European, and Asian countries have imposed to press the Kremlin to halt its invasion and to pull its troops out of Ukraine. Experience with enforcing other international sanctions regimes shows that the targets of sanctions start working almost immediately to figure out safe havens, offshore entities and accounts, and other mechanisms to safeguard and have access to the assets and transactions the United States and others seek to block. We have to expect the Russians and Belarusians being sanctioned now will be creative, energetic, and determined in looking to evade the growing network of sanctions.
Central Asian and Caucasus countries have deep and long-standing economic ties with Russia. Russia is a top source of imports for all of these countries and for most also a major export destination. For Armenia, Georgia, Kazakhstan, the Kyrgyz Republic, and Uzbekistan, Russia ranks in their top three export markets. Even for an energy exporter like Azerbaijan where Russia is not in the top three markets for the country’s goods in value terms, Russia is a key market for the agricultural sector that employs the bulk of the population.
Moreover, there are close financial and banking sector ties with Russia. Many international companies ran their marketing and other operations in this part of the world out of regional headquarters in Moscow. Millions of these countries’ citizens work in Russia as migrant laborers, sending cash back to families at home and relieving some of the pressure on these emerging and developing economies to create jobs for their young and growing populations. Remittances from Kyrgyz workers were equivalent to around a third of the country’s GDP in 2021. Over one million Tajiks, out of the country’s total population of almost 9 million, work abroad and send back remittances, according to the World Bank, equivalent to 26% of Tajikistan’s GDP in 2020. Ninety percent of those workers are in Russia.
These economic ties are vectors for Russian influence. Since independence, Moscow has put pressure on these countries to halt energy or other infrastructure projects Russia’s government thought might diminish its ability to maintain economic and political clout. There has been an implicit fear that Russia could force the return of migrant workers, thus aggravating the economic and social situation in their home countries. Russia has blocked exports of tomatoes, wine, and other farm products as way to punish neighboring countries.
There is no reason to think Russia will not look to press the countries to its south as it grapples with the disruptions international sanctions will bring.
For U.S. sanctions to succeed, it is imperative that we get ahead of those evasion efforts and that we put every possible effort into ensuring the sanctions’ full implementation. Furthermore, such energetic enforcement efforts have to be continuous and constant.
Our embassies and Washington agencies, especially the Departments of State, Treasury, and Commerce should reach out to counterparts in the region now, not just with the announcements of the latest sanctions being imposed, but to talk with the governments about what can be done to ensure everything possible is done to preclude their countries being used for section evasion.
My own recent conversations in some of the region’s capitals underlined this need. Experts in our government agencies should alert counterparts now on for what they should be on the lookout rather for than contacting them after the fact. We should be talking about steps Russians might take to off-shore financial assets or to find new ways to conduct financial transactions to circumvent sanctions. We should work with agencies and, as appropriate, the private sector to ensure that they are aware of potential illicit transactions with sanctioned Russian firms and their subsidiaries. We should talk with these governments about the training their officials on the might need to be cognizant of the sanctions and the ways to see which transactions are open to evasion.
The countries on Russia’s south, as well as those on its west, understand the attack on Ukraine baldly reveals the Putin government’s intentions and attitudes towards their continued independence, sovereignty, and territorial integrity. There is a conviction that if Ukraine falls, they could well be next. The U.S. government has rightly re-iterated the position it has held since these countries gained, or regained, their independence with the Soviet Union’s collapse. These countries have a direct interest in the success of the international efforts to convince the Kremlin to rollback its invasion. We should help them make sure they can do their part in avoiding efforts to undermine the international sanctions on Russia.
Ambassador (ret.) Robert F. Cekuta’s positions in the State Department included Deputy Assistant Secretary for Energy, Sanctions, and Commodities. He currently chairs Energy and Economic Programs at the Caspian Policy Center.