Russia’s war puts Central Asian economy in a quandary – The Diplomat

Central Asia is closely linked to trade networks spread across the former Soviet Union, which could lead to sanctions against countries and companies in the region. The existing risk has intensified since the Russian invasion of Ukraine in February and is gaining more attention as the war drags on. Meanwhile, US diplomats continue to reiterate Washington’s goal of minimizing the negative impact of international sanctions on the Central Asian economy, acknowledging that the region is in a difficult position.

In a recent US government warning, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, among a group of 18 countries, were named “transit points known to pass through restricted or controlled exports before they reach their destination in Russia or Belarus.”

At the end of June, the US Department of the Treasury Financial Crime Enforcement Network (FinCEN) and the US Department of Commerce Bureau of Industry and Security (BIS) issued a warning calling for “increased vigilance against potential attempts to evade export controls by Russia and Belarus.”

The alert provided an overview of current export restrictions, including a list of “goods of concern regarding possible export control evasion” and identified a number of “transactional and behavioral red flags” that financial institutions should look out for when trying to catch those who trying to evade sanctions. The first of 22 red flags mentioned the use of “trade corridors known to serve as possible transit points for exports to Russia and Belarus.”

The footnote lists a group of 18 countries as “general transit points” – Armenia, Brazil, China, Georgia, India, Israel, Kazakhstan, Kyrgyzstan, Mexico, Nicaragua, Serbia, Singapore, South Africa, Taiwan, Tajikistan, Turkey, USA. Arab Emirates and Uzbekistan.

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Among the goods identified by the BIS as “of particular concern due to their possible diversion and end use by Russia and Belarus to enhance their military and defense capabilities” were aircraft parts, antennas, cameras, GPS systems, integrated circuits, oilfield equipment and tomorrow.

The warning stated that, in some cases, “U.S. controlled goods may be legally exported to these and other jurisdictions as raw materials for the manufacture of other finished goods.” But they added that “further exports to Russia or Belarus of these finished products and goods, possibly through additional transshipment points, may be prohibited.”

Central Asian (and other) companies face significant risks if they do business with sanctioned Russian companies. The Uzbek company “Promkomplektlogistika” was the first enterprise in Central Asia fell under sanctions for actively supporting the efforts of the Russian company Radioavtomatika to circumvent sanctions.

Washington’s diplomatic engagement with the countries of Central Asia highlights the intention to minimize the impact of sanctions on Russia in the region. For example, in lMay ate Following a meeting between U.S. Secretary of State Anthony Blinken and Kazakh Foreign Minister Mukhtar Tileuberdi in Washington, D.C., State Department spokesman Ned Price confirmed that “Secretary Blinken reaffirmed our commitment to minimizing the impact on allies and partners, including Kazakhstan, of the sanctions imposed against Russia. in response to Russia’s unjustified and unprovoked war against Ukraine.”

A few days later, Assistant Secretary of State for South and Central Asian Affairs Donald Lu led the delegation for the regionmeetings with officials from Kyrgyzstan, Uzbekistan, Tajikistan and Kazakhstan. At each stop, the main topic of discussion was “minimizing the negative impact of international sanctions” as The Ministry of Foreign Affairs of Kyrgyzstan summed up the results of Lu’s visit. US Embassy in Uzbekistan on Telegram Post noted that after congratulating Acting Foreign Minister Vladimir Norov on his new role, Lou and Norov “discussed regional security, including our efforts to ensure that Uzbekistan’s development plans are not affected by the sanctions imposed against Russia.”

How exactly the US will minimize the impact of the sanctions is unclear, but there have been discussions in Kyrgyzstan about “opportunities for increasing investment cooperation”; in Uzbekistan Lu met with the Minister of Investment and Foreign Trade of the country to discuss “Opportunities for practical cooperation in the field of attracting American business … to Uzbekistan.” Similar conversations certainly took place in Kazakhstan and Tajikistan. Whether what the US is offering is enough to motivate cooperation in enforcing international sanctions (the Central Asian states have not announced their own sanctions on Russia, and no one really expects them to be) is a matter of debate and time.