Is Armenia a logistical hub for Russia’s sanctions evasion scheme to fuel Putin’s war?

Western technology is finding its way into Russian missiles, increasing doubts about the sanctions’ effectiveness. Moscow has found a way to circumvent trade restrictions by obtaining the assistance of third countries.

Experts have extensively discussed the claims that Armenia serves as Putin’s key supply hub in Russia’s war against Ukraine.

Armenian firms are re-exporting sanctioned goods to Russia

According to recent allegations, Armenian firms are re-exporting sanctioned goods to Russia via the Batumi-Novorossiysk sea route. The Armenian Shipping Company transports 600 containers weighing a total of 6 tons to Russia weekly via Georgian ports, as stated by Nicholas Chkhaidze, a Research Fellow at the Baku-based Topchubashov Center.

This complex Russo-Armenian operation covers a wide range of items, including automobiles, Western-made spare parts, and medical equipment. Vehicles, particularly American vehicles, are among the most often re-exported goods; they are typically carried through Georgian ports to Armenia, where they are registered and held in the city of Gyumri. From Gyumri, vehicles are re-exported to Russia, once again via Georgia.

C&M International LLC, the operator of transportation along the maritime route Batumi-Novorossiysk, the Armenian Shipping Company, the client company from Armenia, and Black maritime Forwarding LLC, a Russian-based receiver organization, are typically involved in such operations. Georgian entities engage in sanctions evasion via Armenia, even if they are unaware of the origin of the items.

Armenian exports to Russia climbed after Putin started the war

Armenian exports to Russia climbed by 187% between 2021 and 2022. Furthermore, more than half of these shipments were re-exports from other countries, prompting speculation that Armenia plays an important role in diverting Western products to Russia in order to help Moscow avoid sanctions.

Because of its strategic location, Armenia has emerged as a major transit route for commerce between Western nations and Russia since the implementation of Western sanctions on Moscow, according to IntelliNews.

EU to penalize countries that help Russia to circumvent sanctions

The European Commission proposed a new mechanism to penalize countries that do little to prevent Russia from bypassing export restrictions on sensitive goods. Armenia is one of the countries being considered for potential EU penalties.

The EU is particularly concerned about dual-use items being diverted from civilian industry users to military producers in its diplomatic efforts to improve third-country sanctions implementation in terms of trade with Russia. If that pressure fails, a mechanism will provide EU member countries with the right to impose export restrictions on vital products.

US and EU officials detected a “surge” in electronic components being delivered to Russia that was “deemed critical to the production of weapons, including Russian cruise missiles,” the New York Times wrote back in April 2023.

According to documents acquired by the New York Times, senior tax and trade authorities noted an increase in the sale of chips and other electronic components to Russia via third countries, primarily Armenia and Kazakhstan.

They supplied information on the transit of eight very sensitive types of chips and other electronic components that they have judged crucial to the manufacture of weapons, including Russian cruise missiles that have bombarded Ukrainian cities and civil energy infrastructure, according to these sources.

Armenia increased imports of microchips from the US by 515%

The US Bureau of Industry and Security data shows that between 2021 and 2022, Armenia’s imports of microprocessors and chips from the US increased by approximately 500%, while shipments from the EU increased by approximately 200%.

According to the document, Armenia shipped 97% of those identical products to Russia. Russia and Armenia’s trade volume topped $5 billion in 2022, which is a substantial increase in terms of the trade growth percentage. Russia’s and Armenia’s commercial turnover reached $2.6 billion in 2021.

The Bureau of Industry and Security highlighted eight kinds of chips and components deemed vital to Russian weapons development in another paper, including one called a field programmable gate array, which had been discovered in one model of the Russian cruise missiles KH-101 used in the Kremlin’s attacks against Ukraine.

Unsurprisingly, Russia’s purchases of essential microchips and electronics have returned to pre-invasion stages, as Moscow found other nations to re-export the high-tech parts purchased from European corporations.

Russia has been producing weapons with Western chips after it started the war

Conflict Armament Research, an independent company investigating Russian weaponry retrieved from the battlefield, documented that Russia produced weapons with chips made after the start of its full-scale war in Ukraine.

In 2023, Lancet drones collected from several locations in Ukraine discovered three similar chips produced by a US corporation in offshore manufacturing. The United States imposed limitations on this specific type of chip in September 2022.

Armenian economy is oriented toward Russia 

Armenia has long regarded Russia as a key partner. However, after Moscow failed to support Yerevan during the conflict with Azerbaijan, which had conquered the long-disputed Nagorno-Karabakh land, Armenians began to debate changing their geopolitical orientation away from Russia. 

On the ground, nevertheless, business continues as usual, with Armenian firms not only partnering with Russian companies but also providing them with a gateway to trade with the West.

While Armenian Prime Minister Nikol Pashinyan stated in an October speech that Yerevan is willing to integrate with the EU, his country maintains its pro-Russian economic policies. In these circumstances, it is especially unexpected that France, a NATO member, has decided to supply weapons and air defense systems to Armenia, a Russian ally. No one guarantees that the said Western military technology will not end up in the hands of Russia.

Western microchips in Russian cruise missiles

Back in December 2022, the Reuters investigation revealed how Russia circumvented sanctions. They showed how Western companies continue to supply microchips to Russia despite the sanctions imposed by the US and EU due to Russia’s full-scale invasion of Ukraine. These chips originate from world-renowned top businesses, and Moscow obtained them despite sanctions.

While Ukraine battles to reject Russian military assaults, the United States and its allies must fight another battle to keep chips used in missile systems, drones, and tanks out of Russian hands.

However, denying Russia access to semiconductors has been tough, and the United States and the European Union have yet to achieve a clear success. While Western sanctions have reduced Russia’s ability to manufacture weapons, the Russian regime continues to gain access to numerous technology components through sanctions evasion schemes.

While the United States and the European Union mobilize to provide Ukrainians with anti-missile systems to defend their cities from Russian missile attacks, Moscow continues to bombard Ukraine with Western technologies. 

Failure to prevent Russia from acquiring Western technologies for its armament means postponing Ukraine’s victory and bringing Putin’s war closer to the EU’s frontiers.

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