Time for US, EU to act: Putin continues to circumvent Western sanctions

For more than two and a half years, Russia has managed to circumvent many Western sanctions imposed after the Kremlin launched its full-scale military aggression against Ukraine.

This has been possible thanks to allied countries. Among the countries benefiting from Russia’s evasion of sanctions, Armenia stands out. Although the Armenian government claims to be “reorienting” towards the West, the facts show that Yerevan remains an important economic partner of Moscow.

Political sabotage of ‘Western’ efforts

Yerevan, which declares a policy of “reorientation” toward the West, did not join the resolution of the Council of Europe that supports the International Criminal Court’s arrest warrant for Russian President Vladimir Putin, Armenian Foreign Ministry spokesperson Ani Badalyan confirmed on September 7.

Thus, Yerevan, which pompously demonstrates to the world community its “distancing” from the Russian Federation, did not support the initiative of the US and the EU to create a tribunal “for crimes of aggression against Ukraine.”

Official Yerevan, pursuing a “best-of-both-worlds” aka “two-chair” policy, is strenuously creating the impression of reorientation toward the West  on the one hand, while on the other hand, it is in no hurry to break off relations with Putin.

This is especially eloquently demonstrated by Armenia’s participation in bypassing anti-Russian sanctions and in boycotting anti-Putin political resolutions in the international arena.

“Despite deteriorating political relations between Armenia and Russia, bilateral trade has flourished, leaving Western partners wondering over Yerevan’s approach to sanctions,” pan-European publication Euractiv noted.

Since the beginning of 2024, the EU has adopted the 13th and 14th packages of anti-Russian sanctions. In total, they include 310 individuals and legal entities from eight countries “actively involved in circumventing EU sanctions.” However, as before, Putin’s main logistics hub, which has helped him circumvent sanctions for more than two years, is still missing.

“Pro-Western” Armenia is allowed to violate the sanctions regime, despite the loud motto of the European Commission about “relentless pursuit of those who help Russia circumvent sanctions.”

Back in May 2023, the Director of the US State Department’s Office of Sanctions Coordination, Jim O’Brien, directly stated that Washington considers Armenia to be a country helping Russia to circumvent sanctions. But it was just lip service: the US has still not taken any action to prevent the supply of sanctioned goods to the aggressor country through Yerevan. There are more than enough facts indicating that Armenia is one of the main Russian channels for circumventing sanctions.

The ‘Diamond’ scheme

According to the  UN Comtrade Database (UN International Trade Statistics Database), in 2023, Armenia imported 3.5 million carats of processed and rough diamonds worth approximately $561 million.

Moreover, 48 per cent of the stones came from the Russian Federation. In the same year 2023, a record amount of diamonds were exported from Armenia – approximately 4.5 million carats. In this regard, in July the Organized Crime and Corruption Reporting Project (OCCRP) concluded: “Trade data indicate that exports are mostly rough stones, not diamonds cut by Armenian craftsmen. That is, Armenia has become a re-exporter, a transit country.”

It is emphasized that the re-export of Russian diamonds continued in the first half of 2024: “The main export market was the UAE, and Russia remains the main source of imports.”

Even Armenian economists acknowledge the facts of re-export.

“If Armenia exported 4.5 million carats of diamonds in 2023, which is 30 times more than was produced in the republic itself, this is already a blatant fact of the growing re-export,” economist Aghasi Tavadyan summed up in an interview with Deutsche Welle.

‘Economic miracle’ with Russian money

In 2022, when Russia invaded Ukraine, exports from Armenia to Russia increased by an unprecedented 187 per cent. At that time, Armenian Finance Minister Vahe Hovhannisyan admitted that “a significant part is re-export.” In the same year, there was a whopping jump in GDP growth, the first in the history of the Republic of Armenia – by almost 15 per cent.

In April 2023, UK newspaper The Telegraph called such economic expansion absurd: “it makes it a candidate for third-fastest growing economy in the world…With a population of barely three million and a GDP per capita of less than a tenth of the average Briton, these are impossible numbers. But they are real…Sanctions simply are not working as they should. The Kremlin has been able to swiftly and neatly bypass nearly every barrier placed in its way.”

In 2023, according to official statistics from Armenia, the largest number of goods were again exported to Russia – an increase of 40 per cent.

“Re-export has significantly contributed to the growth of exports of goods from Armenia to Russia in 2023,” admitted Deputy Minister of Finance Vahan Sirunyan.

As of February 2024, since the start of the war in Ukraine, exports from Armenia to the Russian Federation have increased by 430 per cent. The data was released by Robin Brooks, director of the Institute of International Finance and a former Goldman Sachs strategist.

In March, Brooks called on the EU to take action to combat Armenian-Russian cooperation that runs counter to the interests of Washington and Brussels: “Armenia’s exports to Russia are up massively. That rise is almost entirely about reexporting goods from China and the EU to Russia. Not much the EU can do about Chinese goods, but it can certainly stop the flood of European exports to Armenia.”

Calls to action in the global information field

For almost three years, the problem of parallel imports to Russia through such countries as Armenia, in defiance of the US and the EU, has been covered many times by authoritative international media.

According to The New York Times, US and EU representatives reviewed documents in April 2024 indicating an increase in imports of electronic components used in the military industry through Armenia to Russia. But for unknown reasons, sanctions against Yerevan were not even discussed at that meeting.

According to The Wall Street Journal, “compliance with the sanctions is complicated by Armenia’s membership… in the Russia-led Eurasian Economic Union, which largely eliminates customs borders between its members.”

Despite clear data, statements by economists and coverage of this problem by major world media, the West is taking absolutely no measures against Armenian re-export.

Back in May of last year the American The Washington Post called: “The West could turn up the heat on Armenia, from which the re-export to Russia of a range of critical goods, including electronics, has spiked… Washington should flex the muscle it has”.

In 2024, the media continued to call for the elimination of the Yerevan “loophole”.

“Despite the coverage in the world media of the problem of re-export of sanctioned goods from Armenia to Russia, the international community did not take any action, and Armenia did not suffer any consequences,” noted leading Greek publication Protothema. Romania’s number one publication Digi24 echoes this: “The West is taking absolutely no action against Armenian re-export.”

The above facts allow us to assert that Armenia’s “reorientation” to the West is nothing more than a decoration. Under the cover of it, Yerevan continues to serve as an important economic partner of Moscow. If the West really wants the war in Ukraine to end as soon as possible, then the US and the EU should stop ignoring Yerevan’s role in Moscow’s circumvention of the sanctions they themselves imposed.

(Photo: kremlin.ru)