The Russia sanctions as a human rights instrument: Violations of export controls regarding war-critical goods to RussiaNorwegian Helsinki Committee – Corisk – Wikborg Rein – Rud Pedersen Group
24.10.2023

Sanctions are intended to punish those who violate human rights and international law. European Commission President, Ursula von der Leyen, expressed the seriousness of the EU in this respect in February 2022, by stating that sanctions were intended “to cripple Russia’s economy”.³¹ The G7 countries and the EU early on took measures to co-ordinate sanctions among them, eventually also bringing Australia, New Zealand, Taiwan, Singapore, Switzerland, and most of Europe's non-EU members into the sanctions coalition.

Early financial sanctions against the Russian central bank, targeting transfers in US dollars and SWIFT transaction mediations, all severely hit the Russian economy, its currency reserve and its ability to operate external transactions.³² Sanctions on individuals have further reduced the Kremlin’s ability to distribute spoils to oligarchs and reward loyalists, an important ingredient in the country’s informal economic system.³³ Sanctions restricting the provision of services and goods to Russia have been more variably effective. This chapter investigates sanctions on trade in goods, focusing on Western exports of war-relevant (in some cases war-critical) goods and technologies to Russia.

In this chapter, we thus present selected research and investigations into violations of Western sanctions. Sanctions against Russia were first enacted in 2014 but were multiplied and extended to new sanctioning countries in 2022 and 2023. Export controls are intended to deprive Russia of key technologies and reduce its warfare ability. Controls include specific dual-use regulations, and the banning of exports of some 3,400 groups of goods, out of a total of approximately 15,000 groups of goods.³⁴

In addition, there are import bans to curtail Russian (export) revenues, which are not the focus of this report. Bans on imports from Russia include many technologies, coal and petroleum products, and wooden articles, among others. Our analysis of Western trade is calibrated against the time of specific EU sanctions entering into force. EU and US sanctions have not been totally synchronous, for example the US Government had banned trade in petroleum products and digital components already by March 2022, whereas the European Union banned these commodities successively through the winter of 2022-2023.

Large Western exporters of goods to Russia prior to Russia’s current attack on Ukraine included, first of all, Germany, the United States, Poland, Japan, Korea, France, Italy, UK, Netherlands, the Baltic states and Finland. These countries’ export bans make considerable inroads into some of the countries’ exports, and concerted action with equally strict enforcement is vital to secure a level playing field with fair competition. Sanctions violations create an unfair playing field, by letting law-abiding companies bear the burden and cost of forgone business while less ethical competitors win market shares in Russia (and possibly in third countries exporting to Russia) by way of illicit exports.³⁵

Yet another group of companies is those whose goods end up in Russia without their will and knowledge. This last group of involuntary sanctions violators is a specific target group for this report, as there is a clear need for higher awareness of the risks they face and environment they operate in.

As we will document below, some countries have tended to uphold their pre-invasion exports to Russia, including trade in sanctioned goods. Evidence indicates widespread and pervasive violations of sanctions, including indirect violations via third countries. This is ethically and legally unjustifiable behavior that may have severe consequences for Western companies, as described in detail in chapters 4 and 5.

During 2022, analysts started to investigate whether trade in sanctioned goods had actually stopped, or whether it continued via less visible channels. At the approval of each package of sanctions, the EU Commission estimated how much trade was expected to be reduced by each new round of measures, given the historic level of trade in the relevant commodities. However experience from other sanctions regimes gave reason for concern: sanctions are sometimes directly violated, but more often indirectly violated via trade with or operations in third countries. While governments routinely monitored direct trade with Russia, a handful of experts started to analyze Western indirect trade with third countries, especially after substantial sanctions entered into force from 10 July 2022.³⁶

In early 2023, experts at the Bank of Finland and the European Bank for Reconstruction and Development (EBRD) published research on country-level trade with third countries.³⁷ The McFaul-Yermak Group of researchers from Yale, Stanford and the Kyiv School of Economics at an early stage proposed sanctions regulations and explored the effects of sanctions including the extent of violations.³⁸ In November 2022, the group drew up a research and regulatory agenda including offender lists and a watchlist of high-risk companies and individuals in third countries, with improved information-sharing and enforcement efforts.³⁹

The partners behind this report have addressed some of the same issues and have appealed to European authorities to close loopholes and address target third countries since early February 2023.

In this chapter, we analyze Western and European exports that are directly linked to Russia’s war effort, and thus its human rights violations. Estimates of exports to Russia are useful to any analysis of the effects of sanctions, including major changes which have included new groups of goods (July 2022, March 2023), the transit ban for dual-use goods in the EU's 10^th sanctions package (March 2023), and enhanced monitoring measures on trade with third countries in the 11^th package (June 2023).⁴⁰

Towards the end of the chapter, we will present some of the ways that sanctioned Western goods are traded with Russia, to warn businesses of some of the key pitfalls in trade and inform governments of some of the major loopholes in the sanctions regimes. We bring specific, real-world examples of how the trade unfolds and how Western exporters become entangled in these violations.

For trade in sanctioned commodities, analysts can apply two different data sets and methodologies. To estimate indirect trade, analysts record relatively coarse national trade data on the total trade with neighbors and apply a top-down method where excessive or ‘abnormal’ total trade volumes that cannot be naturally explained must involve Russia. Excessive exports are measured against a baseline of “normal” exports over the preceding 3-5 years. Months with negative values where exports to Russia were below the baseline level, must be removed.⁴¹

Excessiveness must allow for some growth in the trade according to economic growth in the importing countries and inflation in the Western exporting countries. The analyst must ensure that the spike in Western trade with the neighbor wasn’t simply replacing a corresponding decline in the country’s trade with non-Western countries. For example, a sudden, significant increase in the total imports of one of Russia’s neighbors, where the Western part of that abnormal increase can be strongly assumed to end up in Russia.

This works well for Russia’s closest ex-Soviet neighbors, while for Turkey or the UAE the spike in Western exports also conceal some goods destined for other conflict zones in the Middle East and must be calibrated against the change in these countries’ total exports to Russia.

To estimate actual, direct trade in sanctioned goods, analysts can apply customs data at detailed commodity level and simply sum up the trade volumes bottom-up at face value. Since there are about 3,400 sanctioned export commodity groups, and a comparable number of groups subject to import bans, it is too time-consuming to retrieve time series of trade in all sanctioned goods. Data from UN ComTrade only include trade at 4-digit HS classification level, whereas many sanctions are defined at the deeper 6- or 8-digit levels. Without options to mass-download data of this granularity, analysts are left with time-consuming retrieval of data, group- and country-wise, which helps explain why there are no available surveys of the total trade in sanctioned goods with Russia.

Detailed customs data are commercially available for Russia, Kazakhstan and Uzbekistan, but not for Western countries. Contrary to expectation, Russian and Kazakh customs import data are probably of high quality and completeness, since these data form the basis for the states' import controls and duty revenues.⁴² Below, we present estimates of trade in sanctioned goods according to both methodologies.

First, we make a top-down estimation of the extent of Western exports of sanctioned goods to Russia via neighbors, by exploring national trade data and finding the excessive Western exports via Russia’s neighbors that must be strongly assumed to end up in Russia (Figures 1-3). This estimation only runs up to May 2023, due to the delayed release of statistics from certain countries. A detailed macro-economic study of all the countries involved led us to allow for a flat ‘natural’ growth of 20 % for all ex-Soviet states, with the residual increases above that regarded as ‘excessive’.⁴³ For Kazakhstan and Georgia, we have checked that total imports increased, and the Western excessive exports were not simply replacing non-Western supplies.

For Turkey, we have calibrated excessive Western exports against Turkish exports to Russia, which implied a reduction in the estimate for Western indirect trade by 45 percent compared to the total excessive Western exports to Turkey (the rest of the excessive Western exports then having flowed to other conflict areas and sanctioned countries in the Middle East). For Russia’s ex-Soviet neighbors, excessive Western exports are likely to end up in Russia and not elsewhere, due to their trade links and location far from other sanctioned countries and conflicts.

Second, we make a bottom-up estimation of the extent of European exports of 17 groups of war-relevant, sanctioned goods to Russia (Figures 4-8). From Russian customs data we account the exact Western exports directly to Russia and via third countries, as they appear in the Russian imports database. The data include a considerable amount of Western exports via Belarus, but not the indirect exports via two other EEU member states – Kazakhstan and Armenia.

Western exports to Kazakhstan are available in Kazakh customs data, and we have added all Western excessive exports of the 17 sanctioned groups of goods to the previously recorded Russian data to get the full picture. Only 4.8 million USD worth of Western exports via Kazakhstan were also accounted for in the Russian data in 2023, and this amount of double accounting is so small that we have found it unnecessary to search for those trades and exclude them from the data. Customs data for Armenia do not exist, so our total data will slightly under-estimate European indirect export of the 17 groups of goods.

With these caveats accounted for, we present below our best estimates of total Western direct and indirect exports to Russia, including estimated breakdowns to country level. Further, we will present actual European exports of 17 groups of sanctioned goods to Russia, according to the countries which these goods departed from as they entered Russia.

Estimates of Western direct and indirect trade with Russia below follow methodologies described in detail by Corisk in May 2023.⁴⁴ The estimates are based on official trade data – UN ComTrade data for Western trade with Turkey and Turkish trade with Russia, and national data for other bilateral trade relations. Due to late reporting by some EU member states, we only include direct and indirect exports to Russia up to and including May 2023.

In Figure 1, we combine and illustrate two different trade flows. The green colored area represents monthly, direct exports to Russia from 21 Western countries, starting in January 2019 and ending in May 2023.⁴⁵ The blue colored area represents monthly, excessive (abnormal) Western exports to eight of Russia’s ex-Soviet neighbors and Turkey, beyond a 20 % annual growth rate.⁴⁶ For Turkey, such excessive Western exports were higher than the total Turkish exports to Russia, reflecting that Turkey presumably channels shadow trade to several other conflict areas such as Iran, Iraq, Syria, Lebanon, or Libya. Therefore, we only include the excessive share of Turkey’s exports to Russia and assume this to represent shadow trade in Western goods. This assumption is to a considerable extent supported by random checks of micro customs data. The ex-Soviet republics that border Afghanistan count almost zero in our estimate, so it is highly unlikely that any residual shadow trade with the Taliban regime there will impact our results to any substantial degree.

Figure 1 reveals three important stages, relating to the Russian attack on Ukraine in February 2022 (black line). First, Western exports to Russia increased significantly in late 2021 which probably reflects Russian hoarding of certain technologies and goods prior to the attack. Second, Western exports to Russia declined dramatically until April 2022, presumably due to “shock restraint” by exporters during the early phase where logistics were disrupted, and many exporters possibly struggled to get an overview of the legal framework relevant for their goods and trade partners.

The third phase starts in May 2022, where direct exports to Russia picks up, presumably as logistics networks are re-established and exporters gain a better understanding of the regulatory frameworks surrounding their trade. But more importantly, Western exports to third countries surrounding Russia (blue) rapidly picks up from May 2022 and becomes overtly excessive, indicating indirect Western exports to Russia in the magnitude of 1-3 billion Euros per month.

Two important regulatory milestones can be analyzed with respect to the data. First, the many export bans introduced from 10 July 2022 immediately resulted in a clear decline in direct Western exports to Russia, but this was more than offset by a rapid and strong growth in excessive exports to neighbors (indirect violations). Second, the many exports and transit bans introduced from around 27 March 2023 initiated a new, clear decline in direct exports to Russia, which was not offset by increases in shadow trade. This indicates an increasing effect of the sanctions packages over time, but more granular analysis should be conducted to understand the full impact of the latest rounds of sanctions.

In Figure 2, we estimate the excessive Western exports to nine of Russia’s neighbors, including Turkey, broken down by exporting country. Altogether, in the 15 months between March 2022 and May 2023, our 21 Western countries conducted excessive (abnormal) exports to the value of 18.7 billion Euros, which indicates the level of indirect exports to Russia. It is important to bear in mind that these data present official exports by country of consignment, which means that some countries’ exports may include considerable amounts of goods that originate in other countries. This may in particular concern the large indirect exports flowing from Lithuania, which are to a large degree channeled as excessive Lithuanian exports to Belarus but include both Lithuanian and other Western commodities.

Figure 2 reveals how Germany stands out with almost a quarter of all excessive Western exports to Russia’s neighbors, whereas Lithuania and Poland also facilitate very significant excessive sales via third countries. Germany is historically the largest Western exporter to Russia, while the United States presents growing but relatively modest indirect export indications. The United Kingdom and Canada also present relatively moderate levels of indirect violations, which is interesting as these countries have other sanctions regimes and legal systems than EU member states. Most strikingly, the Nordic and Baltic countries, except Lithuania, also present only modest indications of indirect violations, despite their geographic proximity to Russia. However, Finland’s indicated indirect exports of 350 million Euros are noteworthy, and this country also directly borders Russia.

In Figure 3, we present the same estimate of excessive Western exports to Russia’s neighbors since March 2022, but this time broken down to depict the importing or facilitating country filling the role of an intermediary. Importantly, we have not yet included the United Arab Emirates and other significant third countries in this analysis. We see how Kazakhstan absorbs the largest excessive Western exports, almost one-third of the total over the 15 months under consideration. Turkey comes second with more than 5 billion Euros in excessive Western exports that we assess as included in Turkish exports to Russia. Belarus deserves specific mention – the estimate of 1.4 billion Euros in excessive exports and indirect violations via Belarus is probably too low. This is because Belarus itself has been the subject of sanctions since March 2022, which initially brought down Western exports to the country and makes it much harder to establish a good historical baseline for comparison. Customs data indicate larger Western indirect exports via Belarus, than what Figure 3 presents.

So far, we have only estimated the excessive Western trade based on official data on total trade, asserting that excessive trades indicate indirect exports to or “shadow trade” with Russia. This kind of top-down estimate based on macro data is commonly applied by analysts but has limited precision.

In this section, we turn to micro data from customs databases, and provide bottom-up summaries of accounting data for actual trade in sanctioned goods. Such data give useful information on how Western exports are affected by new regulations. The results accrue from analysis of Russian and Kazakh customs import data, with the important caveat that these data exclude much of the trade via Belarus and Armenia inside the EEU customs union (see Figure 3). This means that the full European indirect exports to Russia in Figures 4-8 will be somewhat under-estimated.

Through figures 4-8, we will present actual European exports to Russia plus excessive exports via Kazakhstan of 17 groups of war-relevant commodities sanctioned by the EU and USA, exported from a total of 28 European countries.⁴⁷ This stands apart from Figures 1-3, which brought estimates of all Western shadow exports of all groups of sanctioned goods. We will first present the European exports of 17 sanctioned groups at the commodity level in Figure 4, according to their European place of departure in Russia’s import data, and according to their European place of origin in the Kazakh data (where all the goods depart from Kazakhstan).

The reason why we apply place of departure in the Russian data and place of production (origin) in the Kazakh data, is to avoid double accounting. Then, we present European exports according to their place of production of goods (origin) at country level in Figures 5 and 7. This metric gives an indication of how well Western companies manage to control the end-use and end-trade of their war-relevant products, regardless of which territory they enter Russia from. Finally, we present the European place of departure (shipment) of the sanctioned goods, according to the last country in which the goods were physically located before they entered Russia. This metric gives an indication of how well Western and other governments and customs agencies succeed with export control of goods leaving their territory, regardless of which country is the formal exporter.

Figures 5 and 7 will indicate the success of businesses per country in complying with the relevant sanctions, while Figures 6 and 8 will indicate the success of governments and customs authorities in curbing shipment from national territories. The goods in Figures 5 and 7 are all of European origin, which is vital as these figures address the compliance of European businesses. The goods in Figures 6 and 8 will contain some re-exports of non-European goods, which is acceptable as these figures first of all address the success of European authorities in enforcing rules and controlling exports.

The war-relevant goods are grouped according to their HS classification and include oils, paints and polyamides (3208, 3209, 3403, 3908), IT components (8541, 8542), IT hardware (8471), ball bearings and shafts (8482, 8483), trucks (87012, 870422, 870432, 871639), powerful diesel cars (87033319, 87033390), car and truck parts (8708), and drones and aircraft parts (8806, 8807).⁴⁸ Among these, HS groups 3908, 8481, 8482 and 8703 contain a negligible amount of non-sanctioned commodities, but even they have clear industrial application and may even have direct military utility.⁴⁹

In Figure 4, we present the development in 2022-2023 of 17 war-relevant commodity groups departing directly to Russia from 28 European countries and departing to Russia from Kazakhstan with origin in the same European countries.⁵⁰ This choice of different data types allows us to avoid double accounting at acceptable data retrieval efforts. Months with negative values have been removed at commodity level, since negative indirect exports make no logical sense. The negative values were modest with low likelihood of noticeable effects of delayed exports to account for.

Figure 4 shows how Russia’s imports went through four distinct sanction periods, starting with the post-attack period (“Russia attack”) where vehicles and some IT goods were sanctioned from March 2022 and exports massively dropped, likely due to a ‘rules shock’ effect. In the second period from July 2022, many tools, chemicals, and mechanical goods, including ball bearings were sanctioned (“Tools sanctioned”). In the third period from October 2022, more IT goods and components were sanctioned (“IT sanctioned”). And in the latest period from April 2023, practically all the goods in question were sanctioned (“All sanctioned”). In that last period on the right-hand side of Figure 4, all European exports or shipments of these 17 groups of goods should have ceased.

In Figure 4, we see how European exports to Russia of the sanctioned goods fell dramatically after Russia’s attack on Ukraine in February 2022. In this period, trucks, cars and car/truck parts (yellow) became sanctioned but we see clearly how the exports of these goods increased substantially in 2023. Further, we see how new export bans from July on mechanical parts (blue) and chemicals (grey) may have had some temporary effect, but soon gave way to renewed growth in the exports until December 2022. Please note that Russian imports from Western countries have a regular tendency to fall considerably from December to January, so that the immediate and strong decline in January 2023 should not be fully attributed to sanctions effects.

The new bans on exports of IT hardware (scarlet) from October 2022 may have had a more profound effect on European shipments of computers and memory units, while the direct shipments of digital IT components including semiconductors and integrated circuits (red) was never substantial from European countries – the larger shipments of predominantly US microchips flow mostly from East Asia, even though exports from European companies are also indeed recorded.⁵¹

European exports of the sanctioned groups peaked at 400 million USD in December, with monthly levels otherwise fluctuating in the range 200 – 300 million USD per month (values in Euros being only slightly lower). In the last period from April 2023, practically all the goods in the survey were duly and conclusively sanctioned and all the exports in Figure 4 should then have ceased. But shipments of trucks, cars and car parts, mechanical parts, and chemicals continued to flow to Russia, while shipments of computers and memory units (IT hardware) have been substantially reduced in 2023.

In Figure 5, we present Russia’s imports of the same 17 groups of sanctioned, European commodities as in Figure 4, but we group them according to the European country of origin as they were imported by Russia and excessively imported by Kazakhstan. The figure represents similar trade as Figure 4 but contains exports solely by country of origin and thereby indicates how well European companies succeed in complying with sanctions regulations. Months with negative values have been removed at country level. We have divided the figure into the same four sanction periods as in Figure 4, allowing analysis of the effect of regional and national regulations throughout the period.

In Figure 5, we see how European exports of 17 sanctioned goods develop for individual countries and regions. We notice how exports from the UK remain marginal throughout the period (blue), in line with the macro analysis and other findings. France and Italy are also relatively marginal exporters of these sanctioned goods (red), with little deviations across the periods. The Nordic countries, however, seem to increase their direct and indirect exports to Russia (green), and we will see below in Figure 7 that Sweden is behind the bulk of these traded products. The Baltic states have little own production of the 17 groups of war-relevant goods (bright green), and the same is generally the case for Poland (yellow). However, there is a more profound increase in the value of goods that are exported to Russia and originate in the Netherlands (brown), Germany (orange), and other EU countries (violet). These countries retain more or less the same export volumes throughout the period, with little reduction even in the last period where all the goods are sanctioned.

In Figure 6, we present Russia’s imports of the 17 groups of sanctioned goods that were shipped to Russia directly from Europe (country of departure). The data indicate how well European countries and their customs authorities manage to control the shipment of sanctioned export goods from their territory, regardless of whether or not the producer or seller of the goods was a European company. Again, we divide the chart into the same four periods. In the last period, practically all the 17 groups of goods were sanctioned, and shipments should fall significantly to suggest good enforcement.

In Figure 6, we see in detail how the total shipments of 17 sanctioned groups of goods from European territory developed for individual countries and regions. Shipments of sanctioned goods from the UK, France and Italy virtually vanishes fully as a result of the sanctions (blue, red), but data reveal that these countries partly continue exporting, particularly via Turkey (Figure 5). There is little shipment from the Nordic countries (dark green), only Finland has any degree of direct shipment in this group. However, the Baltic states are an important place of final shipment to Russia, making up almost a third of all European shipments throughout the different sanctions periods illustrated in the figure (bright green). Shipment values are also more or less maintained despite sanctions from Poland (yellow), Germany (orange), and other EU countries (violet).

We see from Figure 6 that European countries shipped far fewer products than they produced among the 17 sanctioned groups of goods (Figure 5). This confirms the general macro picture of a European inclination to indirectly violate sanctions restrictions by way of exports via third countries (Figures 1-3). While the 28 European countries studied produced 17 sanctioned goods worth of 200-300 million USD per month (Figure 5), they shipped such goods worth 100-200 million USD per month (Figure 6), with a resulting total of European indirect exports to Russia via third countries of 100 million USD per month for only these 17 groups.

In Figures 4-6 above, we summarized the monthly exports to Russia of goods that were produced or shipped from 28 European countries. But sanctions were introduced successively and not all the 17 groups of goods were sanctioned in all of the countries all of the time. Therefore, we will now present the same exports of 17 groups of sanctioned goods to Russia, but this time only during the year 2023, when virtually all of the goods were sanctioned in the EU for most of that period. This gives a better indication of a compound value of sanctions violations (direct and indirect), since the resulting data will represent almost entirely illicit exports taking place during a period when sanctions are in force. Again, note that the values here are for only 17 groups of goods over 7 months, therefore being much lower than the estimates in figures 2-3 for exports of all sanctioned goods over 15 months.

In Figure 7, we present Russian imports of 17 groups of sanctioned goods by country of production in 2023, regardless of where the goods are physically shipped from. This indicates the success of the producer businesses in complying with sanctions, by limiting the sales of their products to Russia. We see how German goods dominate the supplies of the studied goods to Russia, far ahead of the production of such sanctioned goods for the Russian market in the Netherlands, Italy, Sweden, and France. Countries with a relatively low production of such sanctioned goods for the Russian market include Southeast Europe, the Baltic states, and the Nordic countries excluding Sweden.

The total produced goods among 17 sanctioned groups for the Russian market in Figure 7, was approximately 2.2 billion USD (2.1 billion Euros) for the 28 European countries in the first seven months of 2023. This includes indirect exports via Kazakhstan but will exclude some intra-EEU volumes exported via Belarus and Armenia, thereby implying that the total values in Figure 7 are marginally under-estimated.

In Figure 8, we present Russian imports of 17 groups of sanctioned goods by European country of departure in 2023, regardless of who was the formal exporter or where those goods were produced (they were mostly European). These data indicate the success of European governments and customs in curbing the shipment of sanctioned goods from their territory. The total values are lower than in Figure 7, because they do not include European exports that go via Turkey, the United Arab Emirates, or other third countries. They only present goods flowing directly from Europe and goods flowing formally via Kazakhstan but de-facto partly or wholly via Kazakhstan, without double counting.⁵²

Poland and Germany are leading in shipping the sanctioned goods to Russia, but there are also substantial shipments from Lithuania and Belarus, of which micro data reveal that exporters in Lithuania ship many sanctioned goods to Russia via Belarus. With their proximity to Russia, Finland, Latvia, and Estonia also portray substantial direct shipments to Russia. Countries with a relatively low shipment of such goods to Russia include the UK, Austria, Switzerland, Southeast Europe, and Nordic countries except Finland.

The total European shipment of 17 sanctioned groups to Russia was 1 billion USD (900 - 950 million Euros) for the first seven months of 2023. This will include some non-European goods, but we can safely assert that European producers exported more than 2 billion Euros of these 17 groups of war-relevant goods to Russia, with a bit more than half of these exported via third countries and almost half shipped directly from European territory.

Based on customs micro data not presented here, we observe that countries in Northern Europe mainly export indirectly to Russia via northern routes, with Kazakhstan and Kyrgyzstan important transaction facilitators. The United Kingdom and South European countries mainly make use of indirect export routes via Turkey. Whereas Turkey undoubtedly channels goods to Russia via their territory through re-exports via the Black Sea, the role of Kazakhstan is generally different. Customs data reveal substantial Western exports to Russia via the northern routes of Finland, the Baltics and Belarus, where the official exporter is a company from an ex-Soviet state. Companies registered in countries like Kazakhstan can assist Russian importers in the critical middleman function of providing currency for payment. A surplus on Kazakhstan’s external balances may allow for such a crucial role.

Evidence indicates that several EU member states allow direct exports of sanctioned goods from their territory to Russia, with or without a non-EU exporter involved in the supply chain. Further, there are substantial exports of sanctioned goods to Belarus that should evoke sincere concern in the EU. And not least, companies registered in countries like Uzbekistan, Kyrgyzstan and Kazakhstan are often performing the official export sales transaction when goods are shipped directly to Russia from EU territory. Shipments from certain EU ports attest to issues in customs authorities’ control of exports.

During the summer of 2023, Corisk conducted a case study of the 3,926 shipments to Russia of sanctioned goods produced in Finland and Norway that were traded between March 2022 and April 2023. Each shipment represents Russian imports that took place at least one month after the entry into force of the relevant EU sanctions.⁵³ Each trade was thereby technically in violation of sanctions, although note that we have not checked for each trade whether it had received national permission under the EU rules. The data in Figure 9 represent trades in goods listed by the EU as sanctioned but are not the result of detailed legal analysis, and do not imply an allegation of wrongdoing by any companies or individuals. There is a minor proportion of trades involving companies producing for the fishery, agricultural, and forestry industry markets, where there is some uncertainty as to the legal status of the traded goods.

The shipments are recovered from Russian customs import data and exclude an additional volume of goods that arrived in Russia via re-export by traders in the EEU countries of Belarus, Armenia, or Kazakhstan. We corrected for double entries in the database. The result must not be confused with the estimates for Norway’s and Finland’s total indirect exports to Russia (440 million Euros) in Figure 2, which include full estimates for trade via EEU countries, and which represent exports by country of consignment rather than exports by country of origin. In the Russian import data utilized in Figure 9, almost all indirect exports via Kazakhstan and Armenia are lacking. We have estimated excessive exports to these two countries to imply indirect exports of 225 million Euros for Finland and 52 million Euros for Norway, explaining almost all of the deviation between Figures 2 and 9.

Results of the case study are presented in Figure 9. The 3,926 shipments represent sanctioned goods worth 120 million USD produced in Finland or Norway and exported to Russia during 14 months from March 2022 to April 2023. It includes all trades in goods listed as sanctioned by the EU, albeit with the caveat that some of these may have had government approval and may therefore not constitute illegal acts.

In Figure 9, we distinguish between which departing country the goods were shipped from (orange), and which trading country that was the registered domicile of the exporting agent or company (blue). For example, a Finnish good may be exported by a Finnish agent from Finnish territory, or by a Turkish agent from Finnish territory, or by a Finnish agent from Turkish territory, or by a Turkish agent from Turkish territory. The good will always have Finnish origin, but it may depart from Finland or from abroad (orange), and it may be exported by an agent registered in Finland or registered abroad (blue).

Orange circles denote the value of sanctioned goods being shipped to Russia directly from that country of departure (but exported by anyone). Blue circles denote the value of sanctioned goods being exported to Russia by a company registered in that trading country of export (but shipped from anywhere). For any given trade, the departure country and the trading country may be the same, or they may be two different countries.

Figure 9 reveals that sanctioned Finnish and Norwegian goods are predominantly shipped from the territories of Finland or Norway themselves (orange). Other important countries of departure include Turkey, China, Lithuania, Estonia, and Belarus. If the country of departure is a Western country, it befalls the customs authority of that country to enforce relevant export controls. Turning to the trading agents or companies performing the formal export sales to the Russian importers, these are predominantly registered in Finland and Norway themselves, followed by Turkey and Switzerland, and somewhat smaller values from the United Arab Emirates, Kyrgyzstan, Cyprus, China, Uzbekistan, Belarus, and Estonia. Foreign trading agents may perform the last-chain sales to Russia because the Russian importer is unable to acquire the foreign currency needed to carry out the purchase from Finland or Norway. One or more non-Western companies are usually present in the supply chains, but the Finnish or Norwegian producers are still legally liable for complicity if there is a failure to comply with the prevailing sanctions.

From the data we can draw some lessons about the modus operandi of exports from Finnish and Norwegian producers of sanctioned goods. The supply chain to Russia usually involves at least one non-Western company as the trading agent, or a non-Western territory as the country of departure.

We generally find three main methods of exporting to Russia in the evidential trades:

1. the Finnish or Norwegian goods are sold by domestic exporters (trading agents) and shipped (departing) directly from the domestic territory. The domestic trading exporter may be the producing company itself. Without government permission, both the domestic producer and the domestic trading agent violate the sanctions regulations, and the domestic customs authority has failed to prevent the violation from taking place through border export controls. Contrary to expectations, such direct violations of sanctions are quite common in the two countries, and direct exports from own territory is the general rule in their exports of ships, ships repair, heavy machinery, and car parts.
2. the Finnish or Norwegian goods are sold by foreign exporters (trading agents) but shipped (departing) directly from the domestic territory or from another EU territory. Without government permission, this means that the domestic producer violates the sanctions regulations, and the European customs authorities have failed to prevent the violation from taking place through border export controls. Such violations via non-Western agents but from Western territory is very common in the data. The third-country agent often carries out the transaction in order to overcome Russian importers’ shortage of hard currency. A trading company from an ex-Soviet country buys the sanctioned good from the Norwegian or Finnish producer, and sells it to Russia by shipment from Norway, Finland, or one of the Baltic states. This is quite common in exports of small-sized commodities by air, such as IT components.
3. The Finnish or Norwegian goods are sold by foreign exporters (trading agents) and shipped (departing) from foreign territory. The Norwegian or Finnish producer has either deliberately sold the goods abroad knowing that the buyer there will re-export them to Russia, or the foreign buyer has bought the goods in the market and re-exports it to Russia without the knowledge of the producer. Domestic customs authorities are not to blame, but the exporter is responsible for ensuring that foreign buyers do not re-export the sanctioned goods to Russia. The re-exporting company is most commonly registered in Turkey, China, or elsewhere in Asia.

Based on detailed examination of the 3,962 shipments of sanctioned goods, we present below by order of export value 10 real-life trades that follow typical logistics routes and supply chains. For each trade, we do not indicate whether the goods were produced or shipped from Norway, or Finland:

1. Industrial equipment worth 2.4 million USD, shipped directly from the Nordic country of production to the city of Chelyabinsk in Russia, sold by an exporter registered in Switzerland.

2. Shipping equipment worth 350,000 USD, shipped directly from the Nordic country of production to Novgorod Airport in Northwestern Russia, sold by an exporter registered in the Nordic country.

3. Shipping equipment worth 341,000 USD, shipped from Tallinn in Estonia to St. Petersburg, sold by an exporter registered in Estonia which has carried out many sanctioned exports to Russia and was sanctioned by the US government from May 2023.

4. Oil products worth 282,000 USD from the Nordic country of production, shipped from Lithuania to Russia, sold by an exporter registered in Turkey.

5. Industrial products worth 267,000 USD, shipped from the Nordic country of production to southern Russia, sold by an exporter registered in Georgia.

6. Car parts worth 191,000 USD from the Nordic country of production, shipped from Minsk in Belarus to Russia, sold by an exporter registered in Kyrgyzstan.

7. Airport equipment worth 80,000 USD from the Nordic country of production, shipped by air from Vilnius Airport in Lithuania to Moscow Airport in Russia, sold by an exporter registered in Turkey.

8. Energy industry equipment worth 80,000 USD from the Nordic country of production, shipped from Lithuania to Moscow, sold by an exporter registered in Turkey.

9. Shipping equipment worth 11,200 USD, shipped directly from the Nordic country of production to the city of Kronstadt in Russia, sold by an exporter registered in Turkey.

10. Digital equipment worth 6,000 USD, shipped from Vantaa in Finland to St. Petersburg, sold by an exporter registered in Estonia, which was sanctioned by the US government from May 2023.

Based on these and countless other examples, we can infer some typical risks that Nordic and other companies encounter in the landscape of international trade with Russia.

• First, many companies are probably unaware of their sanctioned goods ending up in Russia, even if there are relatively few nodes in the supply chain.
• Second, several companies have sold sanctioned and non-sanctioned goods directly to sanctioned Russian importers (designated / listed companies), including importers that are known to supply military weapons production facilities.
• Third, several EU-registered companies sell sanctioned goods to agents also registered in the EU, which are partly sanctioned by the US government and partly under scrutiny by the European Commission and/or Ukraine for systematically reselling sanctioned goods to Russia.
• Fourth, a substantial number of Western companies display a pattern of repeated and logistically similar indirect trades following the introduction of sanctions, attesting to deliberate schemes that strengthen the impression that indirect exports to Russia may be intentional.