Executive summary
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To analyse Kyrgyzstan’s capacity to help Russia circumvent sanctions, it is important to consider the internal political situation in Kyrgyzstan under President Sadyr Japarov. Kyrgyzstan has long been considered an “island of freedom” in Central Asia, with a number of independent media outlets, independent MPs and an active civil society. However, the authoritarian tendencies of recent years under the rule of President Sadyr Japarov have taken on the clear outlines of an emerging dictatorial state.
Kyrgyzstan’s authorities have unjustifiably restricted the right to peaceful assembly, including peaceful rallies on the topic of Russia’s war against Ukraine. Dozens of civil activists and human rights defenders have faced political persecution for their participation in peaceful protests in support of Ukraine. The Kyrgyz authorities opened a politically motivated criminal case under the article “preparation for organisation of mass disorder” against at least 27 politicians, human rights defenders and civil activists over protests against the transfer of the Kempir-Abad reservoir to Uzbekistan and unjustifiably suspended human rights commissioner Atyr Abdrakhmatova. In order to restrict coverage of socially significant processes, the authorities impede the activities of the media. A striking example was the Bishkek court’s decision in April 2023 to grant a petition from Kyrgyzstan’s Ministry of Culture demanding that Azattyk Media – the Kyrgyz service of Radio Free Europe/Radio Liberty – stop operating.
By suppressing civil society, the media, and restricting the rights and freedoms of citizens, the Kyrgyz authorities narrow the space for objective reporting and criticism of the actions of the Kyrgyz leadership, not only in relation to large-scale corruption, but also regarding the support of Russia in circumventing sanctions. Democratic countries should impose personal sanctions on representatives of the Kyrgyz authorities, for increasing the number of political prisoners, restricting the right to peaceful assembly and persecuting independent media.
Despite its declared “neutral” position on Russia’s war against Ukraine, Kyrgyzstan, like Kazakhstan, is actively increasing cooperation with Russia, including deliveries of sanctioned goods to Russia. This is evidenced by Kyrgyzstan’s official foreign trade statistics for 2022:
- Total imports of goods into Kyrgyzstan increased from USD 5.5 billion to USD 9.6 billion, an increase of 72.6% over 2021. Of these, imports of “machinery, equipment and apparatus” rose from USD 770 million to USD 1.6 billion, or more than 2-fold, while exports of “machinery, equipment and apparatus” almost doubled – from USD 101 million to USD 197 million.
- Russia is Kyrgyzstan’s second largest trading partner after China, with a 27.4% share of Kyrgyzstan’s total trade turnover with all countries. Kyrgyzstan’s foreign trade turnover with Russia in 2022 increased by 40.3% compared to 2021, while exports from Kyrgyzstan to Russia increased by 245% from USD 393 million to USD 963 million in 2022. Russia is the largest export destination for Kyrgyzstan with a total share of 44.1%, making Kyrgyzstan economically dependent on Russia.
As a member of the Eurasian Economic Union (EEU) and the Collective Security Treaty Organization (CSTO), Kyrgyzstan, like Kazakhstan, plays an important role in ensuring the supply of banned goods to Russia despite international sanctions. Given the small volume of the country’s GDP (about USD 10.5 billion for 2022), it is important to consider export growth for 2022 rather than the total amount of goods delivered when analysing exports from Kyrgyzstan to Russia, as it is export growth that reflects the policy of the Kyrgyz authorities to help Russia circumvent sanctions:
- Kyrgyzstan exported 115,920 electric detonators worth USD 882,400 to Russia in 2022, although it did not make any shipments in 2021. Electric detonators are used in the production of anti-personnel and anti-tank mines. Kyrgyzstan, for its part, imported 193,536 electric detonators from Canada in 2022, valued at USD 3.7 million. There is reason to believe that Kyrgyzstan has re-exported Canadian-made electric detonators to Russia.
- Exports of radar, radio navigation and remote control military equipment in 2022 amounted to USD 169,800, a 60% increase compared to 2021.
- The amount of telescopic sights (for weapons) exported from Kyrgyzstan to Russia in 2022 is USD 199,700, a 13-fold increase from 2021.
- Shipments of aircraft, helicopter and drone parts from Kyrgyzstan to Russia increased from zero in 2021 to USD 1.5 million in 2022.
- In 2019-2021, Kyrgyzstan did not export parts of lasers, devices and optical instruments to Russia, but in 2022 exports reached USD 193,100.
Kyrgyzstan also showed an abnormal increase in re-exports of dual-use goods in 2022:
- In 2022, Kyrgyzstan supplied USD 315,700 worth of semiconductor devices to Russia, 109 times more than in 2021.
- Shipments of integrated circuits from Kyrgyzstan to Russia in 2022 amounted to USD 612,800, 104 times more than in 2021.
- Exports of printed circuits in 2022 amounted to USD 23,700 – 11 times more than in 2021.
- Exports of computing machines for automatic processing from Kyrgyzstan to Russia amounted to USD 2.5 million, almost 7 times more than in 2021.
- Exports of electrical machinery and special-purpose apparatus have increased nine-fold, from USD 40,700 in 2021 to USD 367,300 in 2022.
In addition to dual-use goods, Kyrgyzstan has sharply increased shipments of consumer electronics, components of which are used for military purposes. Exports of smartphones, parts for internal combustion engines and bearings have also increased unusually:
- Exports of cooling and freezing equipment for 2022 totalled USD 210,300, 9 times more than in 2021.
- In 2022, exports of TVs, monitors and projectors amounted to USD 634,600, 24 times more than in 2021.
- Shipments of smartphones from Kyrgyzstan to Russia in 2022 exceeded USD 2.7 million – six times more than in 2021.
- The export value of parts for internal combustion engines in 2022 was USD 7.8 million, which is 350 times more than in 2021.
- Exports of bearings used in the production of armoured vehicles amounted to USD 89,000, 21 times more than in 2021. However, Kyrgyzstan is not a manufacturer of bearings.
Insiders of the Open Dialogue Foundation report that some of the goods imported into Kyrgyzstan are not actually delivered to their declared destination. As these goods are delivered to Kyrgyzstan from Europe via Russian territory, the truckers leave the goods in Russia and simply receive stamps in Kyrgyzstan that the goods have allegedly been imported into Kyrgyzstan. This is confirmed by the Finnish publication Yle, which reported in March 2023, quoting the head of Finnish customs control, that some of the goods either remain in Russia on their way to Kyrgyzstan or are re-exported from Kyrgyzstan to Russia.
Given the 72.6% increase in total imports into Kyrgyzstan and the 245% increase in exports from Kyrgyzstan to Russia, it can be concluded that the increase in imports into Kyrgyzstan is in Russia’s favour as imported goods, including sanctioned goods, are re-exported to Russia. Kyrgyzstan receives upfront payments from Russia for the purchase of sanctioned goods. It is important to note the growth dynamics of re-exports of a number of goods from Kyrgyzstan to Russia in January-February 2023. For example, in January-February 2023, the volume of re-exports of semiconductors from Kyrgyzstan to Russia was 3 times higher than for the whole 2022, and the volume of re-exports of integrated circuits was 4 times higher. This indicates an established system of upfront payments from Russia to Kyrgyz companies, since Kyrgyzstan itself does not have sufficient financial resources to increase supplies of goods to Russia several times, and for some goods, tens or hundreds of times. This system of upfront payment creates a sustainable negative trend for Kyrgyzstan to increase its capacity to help Russia circumvent sanctions, thus widening the gaps in the sanctions regime. This runs counter to the aspirations of democratic countries to close the loopholes in the sanctions regime.
Kazakhstan and Kyrgyzstan, two Central Asian countries, members of the EEU and the CSTO, are active supporters of Russia in circumventing sanctions. At the same time, Kazakhstan is the only transport corridor for the delivery of sanctioned goods from Kyrgyzstan to Russia.
Kyrgyzstan’s 2021 GDP was about USD 10.5 billion, while Kazakhstan’s reached USD 224 billion. At the same time, Kyrgyzstan’s GDP per capita is just over USD 1,600, while Kazakhstan’s is over USD 11,700. Therefore, Kyrgyzstan does not have the financial resources, as Kazakhstan does, to provide large-scale supplies of sanctioned goods to Russia. In addition, Kyrgyzstan’s GDP per capita indicates that it is one of the poorest countries in the world. Accordingly, this size of GDP per capita indicates a low level of welfare of the population, so there is no economic justification for a surge in imports into Kyrgyzstan and a surge in exports from Kyrgyzstan to Russia. In 2023, Kazakhstan and Kyrgyzstan, abusing the trust of democracies and taking advantage of impunity, have significantly increased shipments of sanctioned goods to Russia. This trend can be seen in the supply of integrated circuits from the two countries to Russia:
Given the 72.6% increase in total imports into Kyrgyzstan and the 245% increase in exports from Kyrgyzstan to Russia, it can be concluded that the increase in imports into Kyrgyzstan is in Russia’s favour as imported goods, including sanctioned goods, are re-exported to Russia. Kyrgyzstan receives upfront payments from Russia for the purchase of sanctioned goods. It is important to note the growth dynamics of re-exports of a number of goods from Kyrgyzstan to Russia in January-February 2023. For example, in January-February 2023, the volume of re-exports of semiconductors from Kyrgyzstan to Russia was 3 times higher than for the whole 2022, and the volume of re-exports of integrated circuits was 4 times higher. This indicates an established system of upfront payments from Russia to Kyrgyz companies, since Kyrgyzstan itself does not have sufficient financial resources to increase supplies of goods to Russia several times, and for some goods, tens or hundreds of times. This system of upfront payment creates a sustainable negative trend for Kyrgyzstan to increase its capacity to help Russia circumvent sanctions, thus widening the gaps in the sanctions regime. This runs counter to the aspirations of democratic countries to close the loopholes in the sanctions regime.
Kazakhstan and Kyrgyzstan, two Central Asian countries, members of the EEU and the CSTO, are active supporters of Russia in circumventing sanctions. At the same time, Kazakhstan is the only transport corridor for the delivery of sanctioned goods from Kyrgyzstan to Russia.
Kyrgyzstan’s 2021 GDP was about USD 10.5 billion, while Kazakhstan’s reached USD 224 billion. At the same time, Kyrgyzstan’s GDP per capita is just over USD 1,600, while Kazakhstan’s is over USD 11,700. Therefore, Kyrgyzstan does not have the financial resources, as Kazakhstan does, to provide large-scale supplies of sanctioned goods to Russia. In addition, Kyrgyzstan’s GDP per capita indicates that it is one of the poorest countries in the world. Accordingly, this size of GDP per capita indicates a low level of welfare of the population, so there is no economic justification for a surge in imports into Kyrgyzstan and a surge in exports from Kyrgyzstan to Russia. In 2023, Kazakhstan and Kyrgyzstan, abusing the trust of democracies and taking advantage of impunity, have significantly increased shipments of sanctioned goods to Russia. This trend can be seen in the supply of integrated circuits from the two countries to Russia:
- The amount of re-exports of integrated circuits from Kazakhstan to Russia in 2022 exceeded USD 18 million, 74 times the amount of re-exports for 2021. For January-February 2023, the amount of re-exports was USD 4.6 million, 18.5 times more than for all of 2021. And if current volumes of supply are maintained, the amount of re-exports of integrated circuits from Kazakhstan to Russia for 2023 will exceed the amount of re-exports for 2022.
- As noted earlier, Kyrgyzstan re-exported USD 612,800 worth of integrated circuits to Russia in 2022, 104 times more than in 2021. At the same time, shipments of integrated circuits in January-February 2023 alone exceeded USD 2.4 million, 406 times more than in all of 2021.
With a sevenfold difference in GDP per capita, in January-February 2023, Kazakhstan re-exported only twice as many integrated circuits to Russia as Kyrgyzstan. This confirms that Kyrgyzstan receives additional resources in the form of upfront payments from Russia for the purchase of sanctioned goods for subsequent re-export to Russia.
Similar to Kazakhstani banks’ assistance to Russia in circumventing financial sanctions, Kyrgyzstan’s banks also provide Russians with access to international payment systems and provide financial support for export transactions related to the supply of sanctioned goods to Russia. Such banks include, for example, RSK Bank, Demir Bank, Bakai Bank and others.
The participation of EEC, CSTO and Central Asian heads of state in the “Victory Parade” in Moscow on 9 May 2023 demonstrates to the world that they are with Russia in the war against Ukraine. This is further evidenced by practical actions such as helping to circumvent sanctions, financing the war and providing military equipment and territory to wage the war against Ukraine. 9 May 2023 should be a watershed moment for the West and Ukraine in their policies towards Russia’s allies in the CSTO, EEU and Central Asia. The CSTO should be recognised as a terrorist organisation and sanctions should be imposed against it.
As in the case of Kazakhstan, attempts by democracies to convince Kyrgyzstan diplomatically not to support Russia in circumventing the sanctions have been unsuccessful. Approaching the problem of sanctions circumvention through “dialogue” and “cooperation” with Kazakhstan and Kyrgyzstan, based on the aforementioned data, merely allows a build-up of Russia’s military capabilities and economy. Moreover, top state officials and their entourage, as beneficiaries of the war against Ukraine and those who are directly responsible for helping Russia bypass the sanctions, enjoy full impunity.
The imposition of sanctions on shell companies and their nominal owners will not bring positive results, as authorities can create new shell companies or change some of the nominal owners of shell companies to others and continue supplying sanctioned goods. Also, export restrictions against countries like Kazakhstan, Kyrgyzstan, etc. will not be effective, as the authorities of these countries are already buying some of the sanctioned goods from the ‘Global South’ for subsequent re-export to Russia. For the same reason, the ban on the transit of sanctioned goods to Kazakhstan and Kyrgyzstan via Russia, which is under discussion in the EU, will not be effective.
It is important to emphasise that, in both Kazakhstan and Kyrgyzstan, the countries’ top leadership (listed below) controls state agencies (customs service, financial regulator) as well as commercial banks and freight forwarders. It is these individuals, who have the necessary financial capacity, who generate additional demand for sanctioned goods for subsequent re-export to Russia. In view of the above, personal sanctions should be imposed on individuals and legal entities from Kazakhstan and Kyrgyzstan to stop the supply of sanctioned goods to Russia in real, rather than aspirational, ways.
A LIST OF PERSONS RECOMMENDED FOR INCLUSION IN THE LIST OF PERSONAL SANCTIONS FOR HELPING RUSSIA CIRCUMVENT SANCTIONS AND FOR HUMAN RIGHTS VIOLATIONS
Kyrgyzstan:
Individuals:
- JAPAROV Sadyr Nurgozhoevich: born on 6 December 1968, President of Kyrgyzstan since 28 January 2021.
- TASHIYEV Kamchybek Kydyrshayevich: born on 27 September 1968, chairman of the State Committee for National Security of Kyrgyzstan since October 2020.
- ZULUSHEV Kurmankul Toktoraliyevich: born on 12 February 1970, General Prosecutor of Kyrgyzstan since October 2020.
- NIYAZBEKOV Ulan Omokanovich: born on 28 August 1975, Minister of Internal Affairs of Kyrgyzstan since 14 October 2020.
- MAKSUTOV Altynbek Askarovich: born on 13 October 1972, Minister of Culture, Information, Sports and Youth Policy of Kyrgyzstan since October 2022.
- BOKONTAYEV Kubanychbek Keneshovich: born on 18 January 1969, Chairman of the National Bank of Kyrgyzstan since 29 September 2021.
- ISABEKOV Samat Satarov: born on 9 October 1972, Chairman of the State Customs Service of Kyrgyzstan since 20 January 2022.
Legal persons:
- Kyrgyzstan RSK Bank.
- Kyrgyzstan Bakai Bank.
- Demir Bank.
The justification for the inclusion of the above persons in the list of sanctions is provided in Annex 3.
Kazakhstan:
- TOKAYEV Kassym-Zhomart Kemelevich: born on 17 May 1953, a Kazakhstani politician and diplomat, President of Kazakhstan since 20 March 2019.
- TASMAGAMBETOV Imangali Nurgaliyevich: born on 9 December 1956, a Kazakhstani politician and diplomat, Secretary General of the Collective Security Treaty Organisation (CSTO) since 1 January 2023, as the representative of the Republic of Kazakhstan.
- KULIBAYEV Timur Askarovich: born on 10 September 1966, a Kazakhstani oligarch, son-in-law of former Kazakhstani president Nursultan Nazarbayev.
- VASILENKO Roman Yurievich: born on 14 August 1972, a Kazakhstani diplomat, Deputy Minister of Foreign Affairs of the Republic of Kazakhstan since January 2022.
- Collective Security Treaty Organisation (CSTO): an interstate military alliance in Eurasia consisting of six post-Soviet states: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
The reasons for including the above persons in the list of personal sanctions are presented in Annex 2 of the report “Beneficiaries of Russia’s War against Ukraine“. The report is based on public data, official foreign trade statistics of Kyrgyzstan, insider information and expert assessments.
The Open Dialogue Foundation would like to thank the experts and insiders for their help in writing this report. We also thank Mukhtar Ablyazov, former Minister of Energy, Industry and Trade of Kazakhstan (1998-1999) for his advice.
1. The internal political situation in Kyrgyzstan
To analyse Kyrgyzstan’s capacity to help Russia circumvent sanctions, it is important to consider the internal political situation in Kyrgyzstan under the rule of President Sadyr Japarov. Kyrgyzstan has long been considered an “island of freedom” in Central Asia, with a number of independent media outlets, independent MPs and an active civil society. However, the authoritarian tendencies of recent years under President Sadyr Japarov have taken on the clear outlines of an emerging dictatorial state.
Restrictions on peaceful assemblies
Kyrgyzstan’s authorities have unjustifiably restricted the right to peaceful assembly, including peaceful rallies on the topic of Russia’s war against Ukraine [1], [2]. Dozens of civil activists and human rights defenders were politically prosecuted for participating in peaceful protests in support of Ukraine [1], [2], [3]. In April 2023, the Pervomaisky Court of Bishkek extended the ban on peaceful assemblies in central Bishkek, while the Supreme Court upheld the ban [1], [2].
Repressing the media
In 2022, Kyrgyzstan’s Ministry of Culture and Information extra-judicially blocked media outlets such as Respublica, 24.kg and the Kyrgyz service of Radio Free Europe/Radio Liberty – Radio Azattyk (hereinafter Radio Azattyk). The Ministry explained the blocking of Radio Azattyk by referring to the law “on protection from inaccurate (false) information”. In October 2022, it became publicly known that Radio Azattyk’s bank account at Demir Bank was blocked at the request of the State Committee for National Security. In its written response of 31 October 2022, the bank referred to Article 14 of the law “on combating financing of terrorist activities and legalisation (laundering) of criminal proceeds”. However, contrary to the requirements of banking law, the bank did not explain under which paragraph of the article the account was blocked, i.e. did not provide full information.
On 27 April 2023, the Leninskiy Court of Bishkek ruled in favour of the Ministry of Culture and Information to ban Radio Azattyk. The EU Delegation to Kyrgyzstan called for a fair hearing of the appeal, while the UK embassy expressed hope for a “free and legal review of the appeal“. The chairman of the US House Foreign Affairs Committee condemned the pressure on independent media and called on the Kyrgyz authorities to withdraw the decision to shut down Radio Azattyk and remove all restrictions on its operations.
On 5 May 2023, President of Kyrgyzstan Sadyr Japarov said: “Freedom of speech and protection of human rights are our main priority. Principles such as not acting contrary to the interests of the state, not spreading false information, not slandering anyone, not damaging anyone’s reputation must be respected“.
With his statement, the President of Kyrgyzstan confirms his personal responsibility for restricting the activities of the media and the political persecution of civil society. Instead of real protection of human rights, he misleads the citizens of Kyrgyzstan and the international community about the alleged priority of human rights protection.
Political persecution of civil society
In October 2022, the Kyrgyz Ministry of Internal Affairs detained over 20 politicians, human rights defenders and activists who had criticised the transfer of the Kempir-Abad reservoir to Uzbekistan (see Annex 1 for a current list of those arrested). The authorities placed the detainees in a pre-trial detention facility while they were being investigated in a politically motivated criminal case under the article “preparation for organisation of mass disorder”. On 18 January 2023, it became publicly known that the Kyrgyz Ministry of Internal Affairs had classified the criminal case file. In March and April 2023, international human rights organisations Human Rights Watch and Amnesty International demanded the release of all detainees.
On 3 May 2023, the Kyrgyz parliament prematurely dismissed Commissioner for Human Rights Atyr Abdrakhmatova on the proposal of the Ata-Jurt Kyrgyzstan parliamentary faction. On 19 April 2023, Atyr Abdrakhmatova presented her annual report on the human rights situation in Kyrgyzstan, in which she pointed out the growing pressure on freedom of speech. Without waiting to hear the full Commissioner’s report, members of parliament voted to overturn the decision of parliament’s constitutional law committee of 18 April 2023 to consider the report. Human rights defenders speculate that the decision to remove Atyr Abdrakhmatova from her post prematurely is linked to her work in defending the rights of politically persecuted people in the case of the Kempir-Abad reservoir transfer to Uzbekistan. On 4 May 2023, the US Embassy expressed “concerns about the government’s commitment to transparency and accountability” and also stated that the early resignation was “incompatible with the Kyrgyz Republic’s membership in the Human Rights Council”.
By suppressing civil society, the media, and restricting the rights and freedoms of citizens, the Kyrgyz authorities narrow the space for objective reporting and criticism of the actions of the Kyrgyz leadership, not only in relation to large-scale corruption, but also in relation to support of Russia in circumventing sanctions. Democratic countries should impose personal sanctions on representatives of the Kyrgyz authorities, for increasing the number of political prisoners, restricting the right to peaceful assembly and persecuting independent media.
2. Kyrgyzstan’s position on Russia’s war against Ukraine
In a telephone conversation on 26 February 2022 between the President of Russia and the President of Kyrgyzstan, Kyrgyz President Sadyr Zhaparov, according to the Kremlin press service, expressed support for Russia’s actions: “Sadyr Zhaparov, noting Kyiv’s responsibility for the failure of the Minsk agreements, expressed support for Russia’s resolute actions to protect civilians in Donbass. Vladimir Putin thanked the President of Kyrgyzstan for his principled solidarity“.
The same day, 26 February 2022, Kyrgyz presidential spokesman Yerbol Sultanbayev said, “We welcome the settlement of the current situation, including through negotiations, to prevent further casualties and destruction“.
On 1 March 2022, the President of Ukraine announced the recall of Ukraine’s ambassador from Kyrgyzstan over the justification of Russian aggression against Ukraine: “Our diplomats are right now implementing just and absolutely necessary decisions in relation to those countries that betrayed their word and international law. We immediately call the ambassador back from Kyrgyzstan for consultations for justifying the aggression against Ukraine“.
On 9 March 2022, at a parliamentary session, President Japarov declared the need to “remain neutral“: “The situation is complicated, and in recent days it has been escalating. We are a small country, we do not have enough influence to stop the conflict, so we have to take a neutral stance. Now we are experiencing rising prices of food, fuel and lubricants, a rise in the dollar exchange rate. In such difficult times we need unity“.
In an interview on 25 April 2022, the President of Kyrgyzstan actually once again shifted responsibility to Ukraine for allegedly failing to implement the Minsk agreements: “For all of us, what is happening is a tragedy. People are dying on both sides. It would have been nice if there had been no war. The two sides had an opportunity to prevent a war. But because of the mediators, who gave wrong information, this war started. The presidents of both states were misled. Now provocateurs are escalating the confrontation. But if calls to comply with the terms of the Minsk agreement had been made instead, there would not have been this war. The Minsk agreements were signed not only by Russia and Ukraine, but also by Germany and France”.
Since 24 February 2022, Kyrgyzstan has “abstained” on all UN resolutions on Russia’s war against Ukraine [1], [2], [3], [4], [5], [6], [7], [8]. Despite its declared ‘neutral’ position, Kyrgyzstan has actively increased cooperation with Russia bilaterally and within the Eurasian Economic Union (EEU), the Collective Security Treaty Organisation (CSTO) and the Commonwealth of Independent States (CIS) [1], [2], [3], [4]. During the ninth interregional conference between Kyrgyzstan and Russia in June 2022, Russian Minister of Economic Development Maxim Reshetnikov “stressed that new opportunities are opening up for Kyrgyz companies in the Russian market, which can occupy vacant niches in Russian markets, master new directions. For example, we will sign three agreements at the conference to promote regional cooperation. This includes agreements on postal and logistics services, agriculture and fishery“.
During an official visit to Moscow in April 2023, the Speaker of the Kyrgyz Parliament, Nurlanbek Shakiyev, met with the Chairman of the Russian State Duma, Vyacheslav Volodin. The Speaker of the Kyrgyz Parliament thanked Vyacheslav Volodin for the invitation and gave a positive assessment of the dynamics of relations between the two countries: “I would like to note the positive dynamics of Kyrgyz-Russian relations that are developing on the principles of alliance and strategic partnership. We are interested in expanding and deepening our co-operation further in all areas”.
3. Russia’s aides at the Victory Parade in Moscow on 9 May 2023
On 9 May 2023, the heads of state of the EEU, CSTO and Central Asian states – Armenia, Belarus, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan – visited Moscow to participate in the “Victory Parade“. The Victory Parade has a special symbolic meaning as a “triumph over Nazism” and is used by the Kremlin as propaganda in framing the war against Ukraine as a “war against neo-Nazism”. Therefore, the participation of the heads of states of from CSTO, EEC and Central Asia shows that they are Russia’s aides in the war against Ukraine and the entire free world. The participation of the heads of Armenia, Belarus, Kazakhstan, Uzbekistan, Tajikistan and Turkmenistan were reported on 8 May 2023 [1], [2]. The American Institute for the Study of War suggested that the “belated announcement of the participation of Central Asian leaders probably indicates their reluctance to show direct and public support for the war, despite the Kremlin’s attempts to project force“.
In reality, the timing of the confirmation of their visit is of little importance, since the participation of the heads of states of the CSTO, EEC and Central Asia in the Victory Parade demonstrates to the world that they are together with Russia in the war against Ukraine. This is further demonstrated by practical actions such as helping to circumvent sanctions, financing the war and providing military equipment and territories to wage war against Ukraine. This indicates the strategic course taken by these countries to maintain and strengthen relations with Russia.
In his speech at the Victory Parade, Russian President Putin once again accused the West of “provoking bloody conflicts and coups” and alleged the people of Ukraine were “hostages of a coup d’état and the established criminal regime of their Western masters“. He also thanked the heads of the CSTO, EEC and Central Asian states for coming to Moscow for the parade.
9 May 2023 – should be a watershed moment for the West and Ukraine in their policies towards Russia’s aides in the CSTO, EEU and Central Asia. The CSTO should be recognised as a terrorist organisation and sanctions should be imposed against it.
4. Parallel imports
Overview of Kyrgyzstan’s foreign trade
In 2022, Kyrgyzstan’s total foreign trade increased by 41.8% compared to 2021. At the same time, imports of goods to Kyrgyzstan increased from USD 5.5 billion to USD 9.6 billion, which is 72.6% more than in 2021.
Particularly noteworthy is the growth in exports and imports of goods in the following categories (see Annex 2 for a full table):
- In 2022, Kyrgyzstan almost doubled (compared to 2021) its exports in the “machinery, equipment and apparatus” category from USD 101 million to USD 197 million.
- Exports of textiles and textile products have increased more than fourfold.
- Total imports in the “machinery, equipment and apparatus” category rose from USD 770 million to USD 1.6 billion, or more than double.
Trade with Russia
Russia is Kyrgyzstan’s second largest trading partner, with a share of 27.4% of Kyrgyzstan’s total trade turnover with all countries. Kyrgyzstan’s foreign trade turnover with Russia in 2022 increased by 40.3% compared to 2021, while exports from Kyrgyzstan to Russia increased by 245% from USD 393 million to USD 963 million in 2022. Russia is the largest export destination for Kyrgyzstan with a total share of 44.1%, making Kyrgyzstan economically dependent on Russia.
Re-export of sanctioned goods
As a member of the Eurasian Economic Union (EEU), Kyrgyzstan, like Kazakhstan, plays an important role in ensuring the supply of banned goods to Russia to circumvent international sanctions. Given the small volume of the country’s GDP (about USD 10.5 billion for 2022), it is important to consider export growth for 2022 rather than the total amount of goods delivered when analysing exports from Kyrgyzstan to Russia, as it is export growth that reflects the Kyrgyz authorities’ policy to help Russia circumvent sanctions.
Exports of radar, radio navigation and remote control military equipment
Exports of radar, radio navigation and remote control military equipment in 2022 were USD 169,800, representing a 60% increase compared to 2021.
In turn, Kyrgyzstan imported such equipment from Australia, Germany, USA, China and other countries. Germany (+ 623.5%) and the USA (+ 247.2%) showed the largest growth in exports to Kyrgyzstan.
Exports of telescopic sights
The amount of exports of telescopic sights (for weapons) from Kyrgyzstan to Russia in 2022 is USD 199,700, which is 13 times more than in 2021 (USD 15,700). Kyrgyzstan imported sights from China (+ 2,213%), Austria (+ 1,148%), Japan (298.2%), USA (+ 200.1%).
Exports of components for lasers, devices and optical instruments
In 2019-2021, Kyrgyzstan did not export components for lasers, devices and optical instruments to Russia, but in 2022 exports amounted to USD 193,100. Kyrgyzstan imported most of these goods from Germany, the US and Turkey.
Exports of semiconductors
In 2022, Kyrgyzstan supplied USD 315,700 worth of semiconductors to Russia, 109 times more than in 2021 (USD 2,900). It is noteworthy that in January-February 2023, shipments exceeded USD 930,000, which is almost three times more than for the whole of 2022. The largest semiconductor exporters to Kyrgyzstan in 2022 were China, Taiwan, USA and Mexico.
Exports of integrated circuits
Shipments of integrated circuits from Kyrgyzstan to Russia in 2022 amounted to USD 612,800, 104 times more than in 2021. At the same time, shipments in January-February 2023 alone exceeded USD 2.4 million, 4 times more than for the whole of 2022.
The largest increase in exports of integrated circuits to Kyrgyzstan was shown by: USA (+ 37,455%), Taiwan (+ 17,939%), South Korea (+ 4,406%), China (+ 3,108%), Vietnam (+ 159.1%). The UAE and Malaysia, which did not supply integrated circuits to Kyrgyzstan in 2021, exported in 2022 integrated circuits to Kyrgyzstan in the amount of USD 347,800 and USD 179,700 respectively.
Exports of printed circuit diagrams
Exports of printed circuit diagrams in 2022 amounted to USD 23,700 – 11 times more than in 2021. Kyrgyzstan imported the largest volumes of printed circuits from China, the USA and Georgia.
Exports of automatic computing machines
In 2022 the export of automatic computing machines from Kyrgyzstan to Russia amounted to USD 2.5 million, which is almost 7 times more than in 2021 (USD 370,900). We note that for the first two months of 2023, the amount of deliveries (USD 651,400) is almost 2 times higher than for the whole of 2021. Kyrgyzstan imported automatic computing machines from Switzerland (+ 9,958%), Malaysia (+ 3,577%), the Netherlands (+ 2,907%), the UAE (+ 2,349%), Taiwan (+ 686%) and other countries.
Exports of electrical machinery and special-purpose equipment
Exports of electrical machinery and special purpose equipment increased 9-fold, from USD 40,700 in 2021 to USD 367,300 in 2022. Kyrgyzstan imported such goods from Germany (+ 8,275), USA (+ 1,748), Singapore (from zero to USD 212,800), Malaysia (+ 132.3%).
Kyrgyzstan has also sharply increased exports of consumer electronics to Russia. Russia uses consumer electronics for components to produce weapons.
Exports of cooling and freezing equipment
Exports of cooling and freezing equipment for 2022 amounted to USD 210,300, which is 9 times higher than in 2021 (USD 23,600). Kyrgyzstan imported refrigeration and freezing equipment from Germany (+ 10,237%), Turkey (+ 328.2%), China (+ 210.2%), Poland (from zero to USD 455,500) and other countries.
Exports of TVs, monitors and projectors
In 2022, exports of TVs, monitors and projectors amounted to USD 634,600, 24 times more than in 2021. This group of goods was exported to Kyrgyzstan in 2022 by Belgium (+ 132,700%), Turkey (+ 500.4%), China (+ 396%) and other countries.
Exports of smartphones
Phone shipments from Kyrgyzstan to Russia in 2022 exceeded USD 2.7 million – six times more than in 2021. The countries which imported smartphones to Kyrgyzstan includes: South Korea (+ 35,855%), Czech Republic (+ 10,693%), Turkey (+ 989.9%), India (+ 623.5%), China (+ 166.0%), Vietnam (+ 109.3%).
Exports of passenger cars
In 2022 passenger car exports from Kyrgyzstan to Russia reached USD 15.7 million – three times more than in 2021. In the first two months of 2023, Kyrgyzstan exported almost USD 9 million worth of passenger cars to Russia, a 67% increase over the full year 2021. A sharp increase in passenger car exports to Kyrgyzstan in 2022 was shown by: Great Britain (+ 3,971%) Germany (+ 3,668%), Japan (+ 1,461%), UAE (+ 912.6%), South Korea (+ 630.6%), USA (+ 470.6%) and others.
Exports of internal combustion engine parts
Exports of internal combustion engine parts in 2022 amounted to USD 7.8 million, 350 times more than in 2021 (USD 22,400). In January-February 2023, shipments of internal combustion engine parts exceeded USD 670,000. The largest increase in imports of such goods into Kyrgyzstan in 2022 was from Lithuania (+ 3,276%), Germany (+ 700.6%), Japan (+ 627.2%), USA (+ 602.1%), UK (+ 383.0%) and Brazil (+ 283.4%).
Exports of bearings
Kyrgyzstan exported USD 89,000 worth of bearings to Russia in 2022, 21 times more than in 2021, and exports in January-February 2023 exceeded USD 120,000. However, Kyrgyzstan is not a bearing manufacturer.
Bearings are essential in the manufacture of tanks, aircraft, submarines and trains.
Kyrgyzstan’s imports of bearings from Japan (+ 1,113%), Poland (+ 694.9%), India (+ 498.4%), Germany (+ 468.7%), the USA (+ 222%) and Turkey (+ 193.9%) have risen sharply.
Exports of electric detonators
Kyrgyzstan exported 115,920 electric detonators worth USD 882,400 to Russia in 2022, although it did not make any shipments in 2021. Electric detonators are used in the production of anti-personnel and anti-tank mines. For its part, Kyrgyzstan imported 193,536 electric detonators from Canada in 2022, worth USD 3.7 million.
Exports of components for aircraft, helicopters, drones
Shipments of aircraft, helicopter and drone parts from Kyrgyzstan to Russia increased from zero in 2021 to USD 1.5 million in 2022. The largest exporters of such goods to Kyrgyzstan in 2022 were the United States (from zero to USD 2.7 million), France (from zero to USD 190,700 thousand), and the UAE (from zero to USD 121,900).
Given the 72.6% increase in total imports into Kyrgyzstan and the 245% increase in exports from Kyrgyzstan to Russia, it can be concluded that the increase in imports into Kyrgyzstan plays into Russia’s favour as imported goods, including sanctioned goods, are re-exported to Russia.
Kyrgyzstan receives upfront payments from Russia for the purchase of sanctioned goods. It is important to note the growth dynamics of re-exports of a number of goods from Kyrgyzstan to Russia in January-February 2023. For example, re-exports of semiconductors from Kyrgyzstan to Russia in January-February 2023 were 3 times higher than in all of 2022, and re-exports of integrated circuits were 4 times higher.
This points to an established system of upfront payments from Russia to Kyrgyz companies, since Kyrgyzstan itself does not have sufficient financial resources to increase deliveries of goods to Russia several times, and for a number of goods by tens or hundreds of times. This system of upfront payments creates a sustainable negative trend for Kyrgyzstan to increase its capacity to help Russia circumvent the sanctions, thereby widening the gaps in the sanctions regime. This runs counter to the aspirations of democratic countries to close the loopholes in the sanctions regime.
5. Kazakh and Kyrgyz authorities widen the gaps in the sanctions regime
Kyrgyzstan’s GDP for 2021 was about USD 10.5 billion, while Kazakhstan’s reached USD 224 billion. At the same time, Kyrgyzstan’s GDP per capita is just over USD 1,600, while Kazakhstan’s is over USD 11,700. Therefore, Kyrgyzstan does not have the financial resources, as Kazakhstan does, to provide large-scale supplies of sanctioned goods to Russia. In addition, the size of Kyrgyzstan’s GDP per capita indicates that it is one of the poorest countries in the world. Accordingly, this size of GDP per capita indicates a low level of welfare of the population, so there is no economic justification for a surge of imports into Kyrgyzstan and a surge of exports from Kyrgyzstan to Russia. In 2023, Kazakhstan and Kyrgyzstan, abusing the trust of democracies and taking advantage of impunity, have significantly increased shipments of sanctioned goods to Russia. This trend can be seen in the supply of integrated circuits from the two countries to Russia:
- The amount of re-exports of integrated circuits from Kazakhstan to Russia in 2022 exceeded USD 18 million, 74 times the amount of re-exports for 2021. For January-February 2023, the amount of re-exports was USD 4.6 million, 18.5 times higher than for all of 2021. And if current volumes of supply are maintained, the amount of re-exports of integrated circuits from Kazakhstan to Russia for 2023 will exceed the amount of re-exports for 2022.
- As noted earlier, in 2022 Kyrgyzstan re-exported integrated circuits to Russia for USD 612,800, which is 104 times more than in 2021. At the same time, the volume of supplies of integrated circuits in January-February 2023 alone exceeded USD 2.4 million, 406 times more than for the entirety of 2021.
With a sevenfold difference in GDP per capita, in January-February 2023, Kazakhstan re-exported to Russia only twice as many integrated circuits as Kyrgyzstan. This confirms that Kyrgyzstan receives additional resources in the form of upfront payments from Russia to purchase sanctioned goods for subsequent re-export to Russia. Thus, both Kazakhstan and Kyrgyzstan, contrary to the aspirations of the West, are only increasing their exports of sanctioned goods, expanding the vessels that feed the Russian economy and military-industrial complex.
6. Kazakhstan is the only transport corridor for re-exports from Kyrgyzstan to Russia
It is important to emphasize that re-export of sanctioned goods from Kyrgyzstan to Russia is possible only through the territory of Kazakhstan. Such deliveries are possible only with the cooperation of the top leadership of the two countries, as the customs authorities of Kazakhstan and Kyrgyzstan must receive instructions from President of Kazakhstan Tokayev and President of Kyrgyzstan Saparov, respectively.
Insiders of the Open Dialogue Foundation report that some of the goods imported into Kyrgyzstan are not actually delivered to their declared destination. As these goods are delivered to Kyrgyzstan from Europe via Russian territory, the truckers leave the goods in Russia and simply receive stamps in Kyrgyzstan that the goods have allegedly been imported into Kyrgyzstan. This is confirmed by the Finnish publication Yle, which reported in March 2023, quoting the head of Finnish customs control, that some of the goods either remain in Russia on their way to Kyrgyzstan or are re-exported from Kyrgyzstan to Russia.
7. Circumventing financial sanctions
Due to Western financial sanctions, Kyrgyzstan’s banks have become a “lifeline” for Russians wishing to have access to international payment systems and financial transactions. A number of banks in Kyrgyzstan continue to service the Russian national payment system, Mir, despite warnings from the US about its use to participate in sanctions circumvention.
Kyrgyzstan’s banks issued 39.4% more bank cards in 2022. During the first 9 months of 2022 alone (from January to September), Kyrgyzstan’s banks issued 37.4% more Visa and Mastercard international payment systems cards than during the same period in 2021. Profits of Kyrgyz banks in 2022 increased by more than 5 times and amounted to about USD 270 million. The record growth in Kyrgyz banks’ profits was driven “by growth in operating income and foreign exchange transactions – bank card issuance, cash withdrawals and currency conversions,” said financial analyst Arslanbek Kenenbayev.
Back in April 2022, it became publicly known that the Commercial Bank of Kyrgyzstan’s representative office in Moscow had offered to issue Visa cards to Russians. The banks hastened to deny this information, saying that the office in Moscow “does not issue cards”: “It should be noted that the Commercial Bank KYRGYZSTAN provides consulting services to Russian citizens on registration of VISA cards, but the procedure for registration and issuance of the card is performed only when a non-resident client personally visits the office of the Bank in Kyrgyzstan. The card is issued only after a full package of documents is provided in accordance with the requirements of the National Bank of the Kyrgyz Republic and a mandatory check of the compliance control of each client. Opening accounts for non-residents, including citizens of the Russian Federation, is a normal practice in any country“.
In November 2022, the Economist, a financial publication in Kyrgyzstan, published an analysis of the performance of Kyrgyz banks in issuing debit cards to non-residents of the country:
- Eight banks in Kyrgyzstan, including Bai-Tushum, Demir Bank, KICB, Keremet Bank, RSK Bank, Finca Bank, Bank Asia and Bakai Bank issued cards to non-residents without restrictions. At the same time, as noted in the analysis, Finca Bank, Bank Asia and Bakai Bank also issued Visa debit cards.
- Kompanion Bank, Aiyl Bank, Doskredobank and Bank Kyrgyzstan opened accounts to non-residents with certain restrictions and only after approval of applications. In particular, Kompanion Bank, Aiyl Bank, Doskredobank provided debit cards only in the national payment system Elcard, and Bank Kyrgyzstan allowed opening Visa Gold, Visa Platinum and Visa Infinite cards.
In December 2022, the Kyrgyz publication Kloop published an article describing a method of remotely opening Visa cards through intermediaries. The article identifies two Kyrgyz banks (Keremet and Bakai) and two Kazakh banks (Freedom and CenterCredit). Journalists discovered a Telegram channel whose administrator offers to help Russians remotely open a bank card at one of the banks listed above using a power of attorney, after which the bank card is sent to the customer along with an activated SIM card to receive messages from the bank. The banks themselves deny opening bank cards to non-residents by means of power of attorney.
8. Western policy concerning sanctions circumvention through Kyrgyzstan
As in the case of Kazakhstan, the West continues to take a diplomatic approach towards Kyrgyzstan on the sanctions issue. However, the example of Kazakhstan demonstrates the ineffectiveness of the diplomatic approach in addressing the issue of sanctions circumvention.
During his visit to Kyrgyzstan in March 2023, the EU Sanctions Envoy David O’Sullivan stated that exports of sanctioned goods from the EU to Kyrgyzstan increased by 300% and exports of dual-use goods increased by 700%. The EU Sanctions Envoy underlined that the EU is keen to find solutions in “constructive dialogue to prevent the re-export of such goods to Russia“. At the same time, Sanctions Envoy David O’Sullivan called the scenario of imposing sanctions on Kyrgyzstan unlikely. Unfortunately, such public statements only encourage a sense of impunity for helping Russia circumvent international sanctions.
David Reid, the Director for Sanctions at the UK Foreign, Commonwealth and Development Office, said during a visit to Bishkek in April 2023: “Specific types of goods are of concern. These are high-tech products that can make a difference on the battlefield. We want the war to end as soon as possible. One way is to limit the supply of such goods to Russia. But we are seeing a dramatic increase in the flow of these goods into Russia from many countries. We are talking to these countries and calling for export controls to Russia. In talks with the Kyrgyz government we have discussed how to reduce the possibility of circumventing sanctions, particularly on high-tech goods that can be used for military purposes. The UK is counting on partners on this issue. We intend to work together with countries in the region to reduce the risks of sanctions circumvention. In talks today with the Kyrgyz government, we were assured that Kyrgyzstan will not become a hub for sanctions circumvention. We will continue our dialogue in the coming weeks and months. These sanctions are not aimed against Kyrgyz or Russians, they are measures taken to bring the end of the war closer”.
The above facts from the analysis of exports from Kyrgyzstan to Russia confirm that there is no point in trusting the “promises” of the authoritarian regimes of both Kyrgyzstan and Kazakhstan.
Representatives from the U.S. Departments of Commerce and Treasury also visited Kyrgyzstan in April 2023 to meet with local officials and businesses. Matthew Axelrod, Assistant Secretary for Export Enforcement of the Department of Commerce’s Bureau of Industry and Security, said: “We want to make sure that Russia is not trying to use companies in Kyrgyzstan, Kazakhstan and elsewhere to circumvent our laws and controls. So we are here to show people what is being observed in the data. To show that there is a real growth in components supplied from Kyrgyzstan to Russia today. We are concerned about that, and we want to make sure this trend stops”.
Assistant Secretary for Terrorist Financing and Financial Crimes at the U.S. Department of the Treasury, Elizabeth Rosenberg, commented on the outcome of the talks, expressing hope that they would yield results: “The talks were constructive. Our interlocutors were friendly, they showed interest in understanding the specific information we shared, they asked very good questions about sanctions and export controls. They asked difficult questions about how to navigate in a sanctions environment. I am very pleased that we had the opportunity for a good exchange of views”.
As in the case of Kazakhstan, attempts by democratic countries to convince Kyrgyzstan diplomatically not to support Russia in circumventing the sanctions have been unsuccessful. Approaching the question of sanctions circumvention through “dialogue” and “cooperation” with Kazakhstan and Kyrgyzstan, based on the aforementioned data, merely allows a build-up of Russia’s military capabilities and economy. Moreover, top state officials and their entourage, being the beneficiaries of the war against Ukraine and directly responsible for helping Russia bypass the sanctions, enjoy full impunity. Therefore, the continuation of existing democratic policies against Central Asian dictators gives Russia additional time to accumulate the resources needed to wage war against Ukraine.
The options being discussed in the EU to combat sanctions circumvention through third countries will not be successful for a number of reasons:
- Authorities in countries such as Kazakhstan, Kyrgyzstan, Uzbekistan and others can set up new shell companies or change some nominal owners of such companies and continue to supply sanctioned goods. One such example is a company from Uzbekistan, Alfa Beta Creative, which came under US sanctions on 12 April 2023 for helping Russia circumvent sanctions. The nominal owner of the logistics company Alfa Beta Creative is Oleg Grablin. In June 2022, the US imposed sanctions on another Grablin company, Promcomplektlogistic, which was involved in supplying microchips to Russia. This has not led to a halt in the re-export of sanctioned goods. Therefore, imposing sanctions on shell companies and their nominal owners will not have a positive effect.
- Due to the fact that Kazakh and Kyrgyz authorities purchase some of the sanctioned goods, including dual-use goods, in the “Global South” (Malaysia, Vietnam, Thailand, Mexico and others) for subsequent re-export to Russia, export restrictions against Kazakhstan and Kyrgyzstan will not be effective. For the same reason, a potential EU ban on the transit of sanctioned goods to Central Asian countries through Russian territory would not be successful.
In both Kazakhstan and Kyrgyzstan, the top leadership controls state agencies (customs service, financial regulator) as well as commercial banks and freight forwarders. It is these individuals, who have the necessary financial capacity, who generate additional demand for sanctioned goods for subsequent re-export to Russia. In view of the above, personal sanctions should be imposed on individuals and legal entities from Kazakhstan and Kyrgyzstan to actually, rather than aspirationally, stop the supply of sanctioned goods to Russia.
Read also:
- Report ‘The Beneficiaries of Russia’s War against Ukraine. How the Nazarbayev-Tokayev Regime is Helping Putin’, May, 2023
- Report ‘Everything for the Front. Everything for Victory. How Tokayev Helps Putin while Fooling Ukraine and the West’, March, 2023
- Report ‘The Secret of Tokayev and Putin: How to Circumvent the Oil Embargo’, December 2022
- Report, ‘Kremlin’s Secret Ally. How Tokayev is Helping Putin Circumvent Sanctions’, December 2022