How to combat circumvention of Russia sanctions: the case of Armenia
A new analysis of the German Economic Team focuses on monitoring potential sanctions circumvention of goods originating in the European Union, for which Armenia might be used as a re-export hub to Russia.
Monitoring of potential sanctions circumvention
Since the European Union introduced economic sanctions against the Russian Federation in the wake of the war in Ukraine, there have been ongoing attempts to undermine the sanctions regime. In terms of trade, one possible way of circumventing sanctions is to export goods subject to export restrictions to a third country before they are re-exported from there to Russia.
The German Economic Team was approached by the Government of Armenia to monitor potential sanctions circumvention of goods originating in the European Union, for which Armenia might be used as a re-export hub to Russia. It should be highlighted that the Armenian government has been proactive in its efforts to combat potential sanctions circumvention and has introduced several measures in this regard since 2023.
Focus on the CHPI list
For the purposes of our analysis, the EU’s “List of Common High Priority Items (CHPI)” was used as a basis. This is a compilation of particularly critical dual-use goods enabling the Russian military to continue its war against Ukraine. Consequently, these goods are subject to export restrictions.
Focusing on these items, our analysis assessed trade flows from the European Union to Armenia and from Armenia to the Russian Federation. A parallel increase in export activity between the EU and Armenia on the one hand, and between Armenia and the Russian Federation, on the other hand, could be indicative of potential sanctions circumvention.
Strong reduction of potential circumvention since the introduction of government measures
Our analysis shows that exports of CHPI from Armenia to Russia have fallen sharply since the government introduced various measures. With a focus on preventing the potential circumvention of CHPI, a key decision was to implement export controls. In May 2023, a permission procedure for the export of dual-use goods was introduced, which was later complemented by the mandatory use of electronic invoices for exports via air transport, as well as fines for exports without the required documentation (including attempts to do so). Through the combination of these measures, the Armenian government has been successful in preventing the country from being used for potential sanctions circumvention.
For a more detailed analysis, please see the Policy Briefing “Is there a circumvention of EU sanctions via Armenia? Estimation for 2024”.
