Russia kept its economy afloat by evading sanctions during the Ukraine war.
These include measures such as switching to the Chinese yuan in international trade and using a secret fleet of ships to export oil.
This undermines the international community’s efforts to force the Kremlin to end the war.
Russia’s economy appears to be fighting sanctions following the outbreak of the Ukraine war to claim.
The country has managed to maintain its income from the energy sector. It circumvents harsh Western sanctions by, for example, maintaining a fleet of secret tankers that transport Russian oil around the world.
Aside from energy exports, Russia has also found ways to counter the EU ban on its crude oil imports as well as being locked out of the Swift payment system. More importantly, these actions undermine efforts by the international community to force the Kremlin to end the war in Ukraine.
Here are five measures that Russia taken to circumvent the sanctions.
1. The “ghost trade” could help Russia get defense and intelligence goods
Despite sanctions restricting much of the European Union’s exports to Russia, the country appears to have received at least $1 billion worth of goods in “ghost deals,” the “Financial Times” (FT) on Wednesday.
These exports include dual-use goods – products that can be used for defense or intelligence services. According to “FT”, this includes aircraft components, optical devices and gas turbines.
Only half of the $2 billion worth of controlled goods destined for the former Soviet Union states of Kazakhstan, Kyrgyzstan and Armenia reached those destinations, according to the FT in its analysis of publicly available data. The “FT” suspects that the remaining goods could have reached Russia via the intermediate countries.
“Where else could they go?” Erki Kodar, Estonian sanctions minister, asked the FT. “Why would these countries suddenly need these goods at this time? Who needs these goods most in the region? This is obviously Russia.”
2. A fleet of secret oil tankers transports Russia’s raw materials
A fleet of older oil tankers without tracking devices are suspected of secretly transporting sanctioned Russian oil around the world.
The fleet keeps Russia’s energy trading going and gives cause for concern: Because the outdated ships have a particularly high risk of accidents. As a result, insurance claims could become a problem – because the owners are often unknown, so the authorities don’t know who to sue for damage.
Russia has also assembled a “shadow fleet” of more than 100 oil tankers to circumvent sanctions, such as the “FT” reported back in December.
Also in December, Reuters reported that new shipowners – mostly from the Middle East and Asia – were buying up aging oil tankers amid skyrocketing charter prices for tankers hoping to ship Russian oil to India and China.
3. Russia uses the Chinese yuan in energy trading
After certain Russian banks were banned from the Swift payments system, which allows money houses to make cross-border transactions, the country turned its attention to other countries. For example, China’s yuan for trades previously settled in US dollars.
Russia is not the only country taking steps to break free from its dependence on the dollar. Since many countries are dependent on Russia’s energy price, they jump on the yuan bandwagon.
Russians bought 41.9 billion rubles worth of Chinese currency in March, or 492 million euros, three times the 11.6 billion rubles bought in February, Russia’s central bank said on April 10.
Ruble-yuan trade accounted for 39 percent of the total volume in Russia’s foreign exchange markets, surpassing the ruble-dollar share of 34 percent, the central bank added.
4. Russia creates a gray market for imports after Western companies leave the country en masse
Many international companies have pulled out of Russia en masse because of the invasion of Ukraine. This led to fewer import opportunities for the Russian market.
To counteract this situation, Russia in May 2022 – three months after the start of the Ukraine war – parallel imports legalized.
This system allows retailers to bring products into the country without authorization from the brand owner. By August, those gray market sales reached nearly $6.5 billion, according to Denis Manturov, Russia’s trade and industry minister Interfax report.
It also means that the people of Russia were sort of able to do that latest iPhone in hands to keep. In March 2023, the Russian Ministry of Industry loudly expanded Reuters the list of brandswhich the country is allowed to import without the permission of the trademark owner.
US toy makers Hasbro and Mattel, Swedish furniture giant Ikea, and luxury brands like Giorgio Armani and Yves Saint Laurent are included in the expanded list.
5. Russia’s oil goes to the West through intermediate markets
Although the West and its allies have imposed tough sanctions on Russian oil – including an EU ban on crude oil by sea and a price cap of $60 a barrel – the fuel continues to flow into these countries.
According to study published in April According to the Center for Research on Energy and Clean Air (CREA), Western countries that have banned Russian oil have collectively imported nearly $46 billion worth of Russian oil products.
That’s because these countries have sourced energy products from other countries — including China, India and the United Arab Emirates — which, according to the study, bought far more oil from Russia.
“This is currently a legal way to export oil products to countries imposing sanctions on Russia because the origin of the oil has been altered,” the CREA researchers write in the report. “This process provides Putin War chest with money.”
Business Insider has not received a response from the Kremlin to a request for comment.
This article was translated from English by Marius Gerards. You can find the original here.