Leaked customs data exposes extent of Russia’s sanctions circumvention

Russia has successfully managed to circumvent the ban on sanctioned goods, with trade volumes in the last six months alone estimated at hundreds of millions of dollars, Verstka, an independent Russian news media outlet, reported on Monday.

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Classified Russian customs data obtained by the publication shows that "almost anything" can be imported into Russia, from dual-purpose microchips to turbojet engines for passenger aircraft.

The microchips and microprocessors needed for the defence industry are flowing freely into Russia in huge volumes, Verstka reported.

Of the 25 largest importers identified by the publication, 11 are direct suppliers to the military-industrial complex, including the five largest. Two of the top five companies, VMK and Testkomplekt, have been sanctioned by the United States.

In total, since the start of the year, chips from Western companies have been imported to Russia for more than USD 502 million.

Other goods are imported in a similar way. For instance, since the beginning of the year, Unimatic has freely imported machines from Italian O.M.V. and German Arinstein worth at least USD 5 million.

One of Unimatika's main government customers is Plant No. 9, Russia's leading tank gun manufacturer.

Russia's largest airlines manage to import Western spare parts worth tens of millions of dollars. For example, Aeroflot brought to Russia spare parts worth USD 7.5 million from the American companies Honeywell, Woodward, and Boeing, and USD 2.5 million from Safran Nacelles, as well as USD 4.5 million from France.

In March, another airline, Globus, imported a complete turbojet engine used by the Airbus family of aircraft. Such engines are manufactured by the Franco-American concern CFM International. The cost of one engine starts at USD 7.5 million.

Russia also easily circumvents sanctions on consumer electronics imports.

Since 25 February 2023, the United States has banned the export of smartphones worth more than USD 300 to Russia, but this did not prevent it from importing more than USD 389 million worth of iPhones over the next few months — and this does not include shadow imports.

Russian importers circumvent sanctions by registering companies in third countries — usually so-called neutral states with active international trade — which then buy the goods they need on the domestic market or order them directly from the manufacturer and re-export them to Russia.

For electronics imports, Russia most often uses China and Hong Kong. Turkey, the UAE, and the neighbouring Kazakhstan, Kyrgyzstan, Armenia, and Uzbekistan.

Verstka points out that the West is trying to combat these schemes, and it has become more difficult to transport goods to Russia compared to last year. For instance, manufacturing companies that see an abnormal increase in sales to a certain country can set limits on the sale of their goods.