The Case for Stopping Russia Sanction-Busters

When Russia launched its full-scale invasion of Ukraine in February 2022, the international community quickly came together to condemn the aggressor. United Nations resolutions denounced the military incursion. Over 100 countries across the globe have consistently spoken out against the Russian war since it began, but many of them are violating the Western sanctions on the Kremlin, buying Russian energy resources, and selling goods and services. Still, the international community did not just talk—it imposed stiff penalties on Russia. The Russian Federation was expelled from the Council of Europe and suspended from the United Nations Human Rights Council. Furthermore, several Russian companies, government officials, and oligarchs were sanctioned. Several politicians and oligarchs also had their assets frozen or seized. Finally, numerous countries have banned exports to Russia, reduced Russian gas imports, and reduced or ended their business relationships with Russia. Numerous Russian banks were removed from SWIFT, the global monetary banking system. As a result, the Russian Federation has lost billions of dollars, and the Russian economy has been under significant strain. Yet, these losses were not enough to end the war. Russia can still sustain its war machine, even paying for North Korean troops to assist with the fighting. This is because multiple companies and banks are undermining the impact of international sanctions on Russia. The European Union, the United Kingdom, the United States, and other Western actors maintain normal trade relations with most neutral countries across the globe. This has created an opening for Russia as some countries in South America, Africa, and Asia serve as third-party intermediaries, re-exporting Western goods and services to Russia. Many restricted goods, including dual-use items and other forms of equipment, are being sent to Russia from these countries, providing Russia with the material and equipment it needs to continue its invasion of Ukraine. To streamline this process, Russia uses intermediaries to sell its crude oil, which ends up in gas tanks everywhere including the United States. Countries like India, Turkey, and the United Arab Emirates purchase oil from the Russian Federation. This information is publicly available. Companies such as India’s Reliance Industries, Turkey’s STAR Refinery and Tupras Refinery, and the UAE’s Amur Trading FZCO import Russian crude that is then blended with other crudes at purchaser oil refineries. The mixed substance is refined into gasoline and sold worldwide, allowing Moscow to profit. All of this would be impossible without a sophisticated system of financial facilitation. Banks from former USSR countries—still heavily dependent on Russia in everything from energy supplies to security—are natural suspects. For example, when the full-scale invasion began, financial institutions such as Kazakhstan’s Kazpochta, Uzbekistan’s Kapital Bank, Kyrgyzstan’s Kompanyon Bank and MBank, and Armenia’s Ardshinbank continued doing business with Russia, primarily through the Russian money-transfer company Unistream. These financial institutions suspended their operations with Unistream after the United States imposed sanctions on the currency transfer company in July 2023. Not all have heeded warnings about sanctions. For example, banks in Kyrgyzstan, which is heavily dependent on Moscow, continued their business openly with the Russian Federation until this past summer when additional sanctions announced by the Biden administration persuaded a number of them to finally announce that they would be cutting ties with Russia. When the full-scale invasion of Ukraine began, Kyrgyzstan mysteriously increased its trade relations with Western entities. At the same time, international financial transactions from Kyrgyzstan to Russia also increased. Current reporting indicates that Kyrgyzstan may still be involved in sanctions evasion.