On December 1, Robin Brooks, chief economist and managing director of the Institute of International Finance, asked, “You have to wonder what’s going on in the EU. Putin’s invasion of Ukraine is a big threat to everything the EU stands for. But then there are many examples like this: EU exports to Armenia are up 200% since the invasion. This stuff goes to Russia and helps Putin. What is Brussels doing?”
Coincidentally, just one day earlier, on November 30, The Economist stated that “Putin seems to be winning the war in Ukraine—for now.” This article highlighted the West’s failure to implement effective sanctions against Russia and named a few countries that were lending a helping hand to their apparent ally: Turkey, Kazakhstan, Iran, and North Korea.
Not too bothered by Western sanctions, Russia has successfully circumvented them by obtaining drones from Iran, ammunition from North Korea, and various goods through Turkey and Kazakhstan. The list seems too short, and it does not include aforementioned Armenia. This country, according to multiple sources, is one of Russia’s key partners in procuring various goods from the EU and East Asia as of February 2022.
For example, Armenia does not produce cars, but as the Financial Times noted in July 2023, car exports from Armenia to Russia have skyrocketed from $800,000 in January 2022 to just over $180 million in the same month of 2023.
But it is not just cars: microchips, smartphones and dozens of other goods enter Russia via Armenia. A report by the European Bank for Reconstruction and Development notes that “new supply chains through Armenia […] were established within days of the sanctions, and it took several months to expand them”. A joint statement by the U.S. Department of Justice, the Department of Commerce, and the U.S. Treasury categorized Armenia as a “third-party intermediaries or transshipment points to evade Russian- and Belarusian-related sanctions and export controls.”
It is important to note that about 40 percent of Armenia’s exports go to Russia, with much of the trade consisting of re-exports of Western goods that Moscow cannot obtain directly. According to Armenia’s state statistics agency, trade between Armenia and Russia nearly doubled in 2022, reaching $5.3 billion. Armenia’s exports to Russia nearly tripled, surging from $850 million in 2021 to $2.4 billion in 2022 and $2.8 billion in 2023. Imports from Russia increased by 151 percent to $2.87 billion. Total trade for January-August 2023 exceeded $4.16 billion., Armenian exports to Russia totaled $2.3 billion during this period, surpassing imports for the first time, which totaled $1.86 billion.
According to the U.S. Treasury Department, Armenia was assisting the Russian Federation not only in the import of civilian goods, but also in the procurement of military equipment.
It published detailed information about the involvement of an Armenian company in the purchase of foreign equipment for the Russian military industry. The company, identified as Aurora Group, allegedly purchased sensitive electronic components from Western suppliers and then re-exported them to Russia in violation of export control restrictions.
According to Bloomberg, there is evidence of European equipment components being shipped through Armenia for use in Russian military production.
The report cites documents on the shipments and interviews with industry experts as evidence that Armenia plays a key role in helping Russia evade sanctions and maintain its military capabilities.
The Telegraph stated that economic growth in Armenia had reached an impossible 13 percent in 2022, making it a candidate for the third fastest-growing economy in the world.
The newspaper also published a report by the German Centre for the South Caucasus, which “revealed that exports from Germany to Armenia rose from €178 million to €505 million in 2022. That’s from just one EU country. Exports from Armenia to the EU in the same twelve months doubled from €753 million to €1.3 billion.
With a population of barely three million and a GDP per capita of less than a tenth of the average Briton, these are impossible numbers. But they are real. What is clear is that imports to and exports from Russia — which are tariff and duty-free between all EAEU countries, are being near-seamlessly diverted to the outside world via their satellite states”.
According to the Jamestown Foundation, “a significant increase in Armenia’s foreign trade turnover without any serious economic basis domestically, especially the remarkable increase in exports to Russia, as well as the list of products primarily traded, give reason to think that these dynamics are artificial and that Armenia is directly involved in re-exporting sanctioned products to Russia.
Moreover, according to the US Bureau of Industry and Security, Armenia increased the import of microchips and processors from the US by 515% and from the European Union by 212%—then reportedly exported 97% of those products to Russia”.
According to the Polish magazine New Eastern Europe, Yerevan is helping Moscow circumvent EU, US, and UK sanctions by facilitating the transit of Iranian drones and missiles.
The magazine cites operational data on flights from Yerevan’s Zvartnots International Airport, where Soviet Ilyushin-76MD aircraft allegedly transported Iranian drones to Russia. Iran Air Cargo, the company sanctioned by the US, was observed operating flights through Yerevan airport to and from Moscow, along with other Iranian entities implicated in delivering Iranian drones to Russia through Armenian airports.
According to Ukrainian sources, Armenia is actively using the sea route connecting the ports of Batumi (Georgia) and Novorossiysk (Russia) to re-export sanctioned goods to the Russian Federation. Thus, the Armenian Shipping Company is responsible for the weekly transportation of 600 containers along the Batumi-Novorossiysk sea route.
Latvian Prime Minister Krišjānis Kariņš also commented on Armenia’s growing role in exporting sanctioned Western equipment and technology to Russia.
However, Yerevan’s moves in this game are not limited to technology transfers. Kariņš pointed out that there were two ways to deal with this: talk Armenia out of it or “look for legislation across Europe, to make sure that we criminalise the sanction avoidance. Close the loopholes!”, – he demanded. Sanctions do work, the problem is that they need to be enforced on those who help Russia avoid them.
