Kazakhstan’s backdoor trade with Russia must be stopped

David A. Merkel is managing director of Summit International Advisors, a consultancy based in Phoenix, Arizona. He previously served as U.S. deputy assistant secretary of state for European and Eurasian affairs and as director for South and Central Asia at the National Security Council.

Kazakh Foreign Minister Murat Nurtleu traveled to Brussels last month, just weeks after taking office, to plead his country’s case amid growing signs that the EU and U.S. may impose sanctions on Astana over the blind eye it has turned to the trafficking of restricted goods to Russia.

Rather than lobbying for forbearance, Astana should be tightening its border controls to prevent its territory from being used to circumvent the sanctions imposed on Moscow for its brutal and illegal invasion of Ukraine.

Kazakhstan has assisted Moscow in avoiding Western sanctions in the name of reducing hardship for the Russian people. But it is the Russian military that has been a top beneficiary of Astana’s loose trade policy.

Consider washing machines. In 2021, Kazakhstan did not export any to Russia. Last year, nearly 100,000 washers transited Kazakhstan on their way to Russia. Analysts believe that Russian arms makers have been plundering the machines for the semiconductors they contain and then reusing them for guided missiles.

Other reports point to Russia taking chips from cars brought in from Kazakhstan for use in weapons going to the battlefront in Ukraine. At the same time, Astana’s imports and exports of semiconductors themselves have soared; last year, it shipped $3.7 million worth of advanced chips to Russia, up from a volume of $12,000 in 2021.

Aside from trade, Kazakhstan has also continued to let Russia use a leased area to test weapons of mass destruction. In April, Russia announced that a new intercontinental ballistic missile had been test fired to its Sary-Shagan range, which sits between Almaty and Astana.

In February, U.S. Secretary of State Antony Blinken traveled to Astana and discussed the possibility that Washington might impose secondary sanctions on Kazakhstan with President Kassym-Jomart Tokayev. Elizabeth Rosenberg, assistant treasury secretary for terrorist financing and financial crimes, reiterated the risks on a visit in April.

“Our top priority is to prevent Russia from repurposing goods for the war, and to cut off its facilities from the inputs needed to fill their production gaps,” she said in Astana. “We are providing intelligence, technical assistance and actionable information to government regulators and private-sector entities to help enable countries to stamp out Russian defense procurement in or through their jurisdictions.”

In response to such pressure, Kazakhstan has made some moves to increase monitoring of imports intended for reexport. But Astana still needs to address the “ghost trade,” in which goods are imported for shipment to a designated Kazakh end-user but are instead diverted to Russia. This activity has flourished since the Tokayev administration loosened import labeling rules.

Redirection of goods is also a simple matter due to Russia and Kazakhstan both being members of the Eurasian Economic Union (EAEU). As such, there are no customs checks for goods transiting the 7,591-km border between the two nations.

U.S. Secretary of State Antony Blinken discussed the possibility of Washington imposing secondary sanctions on Kazakhstan with President Kassym-Jomart Tokayev in February in Astana.   © Reuters

Indeed, the two remain close, linked also by the Collective Security Treaty Organization, which provided cover for Moscow to send troops to help Tokayev with suppressing unrest last year. He met with Russian President Vladimir Putin 11 times over the course of the first year of the Ukraine war and was one of only a few national leaders to attend the 2022 St. Petersburg International Economic Forum four months after Russia’s invasion started.

Tokayev was back at Putin’s side in Red Square last month when Moscow held its annual parade to mark the end of World War II.

As the Kazakh government controls up to 60% of the domestic economy, it has powerful levers to restrict trade with Russia should it be inclined to do so.

It is incumbent on Washington and Brussels to push Tokayev along. Business leaders and government officials involved in the transit of military and dual-use technologies should be subject to overseas asset freezes or visa bans. Particular attention should be placed on state-owned railway operator Kazakhstan Temir Zholy and financial institutions involved in the transit trade.

Unless Astana enforces customs restrictions to keep imported blacklisted goods from reaching Russia, the U.S. and EU should consider extending its sanctions to the whole of the EAEU, which also includes Belarus, Armenia and Kyrgyzstan.

In the meantime, countries that support Ukraine should work together to restrict the export of items to Kazakhstan that can be cannibalized for chips for military use to prewar levels in line with the country’s own domestic demand.

Cutting off illicit trade through Kazakhstan can reduce Russia’s arsenal of guided missiles for attacking Ukrainian troops, infrastructure and civilians and perhaps reduce the cost and duration of the war. With arms and financial support bolstering Kyiv as its soldiers and citizens sacrifice themselves daily to defend their country, it is overdue for Washington and Brussels to crack down on Kazakhstan’s willful blindness toward the skirting of sanctions.

Source: https://asia.nikkei.com/Opinion/Kazakhstan-s-backdoor-trade-with-Russia-must-be-stopped