Chief among the West’s failures in its support for Ukraine must rank the porousness of the sanctions regime against Russia. The policy has manifestly failed to be watertight and universal but – equally damaging – it remains hypocritical and unimaginative. Every day brings new examples of how even Western economies cheat on sanctions by exporting to intermediary countries. Here is a graphic offering a snapshot on the situation with the comment, “There’s only 2 Western countries that clamp down on exports to Russia via third countries like Kyrgyzstan: the UK (green) and the US (orange). The EU is a free-for-all, where Germany (black) and Italy (purple) export like crazy. South Korea (grey) is also very bad.” If our own contractual allies actively profit from sanctions, how do we expect countries with economies dependent on Russian trade to do otherwise? This is especially true of the Central Asian ‘Stans which have few other geographical options than Russia, China and Iran.

Here’s where the imaginative or creative part comes in. Sanctions tend to be blunt instruments for punishment, bureaucratic and clunky, rather than dynamic and inventive. Sanctioned companies are formally excluded from the global dollar economy and any entity doing business with them will find it harder to bank with Western dollar banks. Which inevitably leads to money laundering and the strengthening of alternate currencies to the dollar. The US State Department constantly announces lists of sanctioned companies around the world. So why not bring a carrot to the game to balance the stick? Why not praise and encourage companies that adhere to the sanctions regime against all the odds? Announce their virtue to the world and incentivize Western or other companies to work them? And for those that take a serious hit by being law-abiding perhaps offer compensation, new deals, publicity for good behavior and the like. Turkiye used to have an annual award ceremony for the company or individual that paid the most taxes into its treasury. The State Department should deploy some thing similar internationally for the most heroically sanctions-compliant entities, heroic because of the business environment they inhabit, where easier profits would ensue from breaking sanctions. This would be especially effective in smaller countries such as the Stans where the US needs diplomatic allies. And where too much negative pressure can create a backlash.

Politicians in such countries tend to be under popular pressure to defend their own economies. In response to a question from members of the European Parliament (MEPs) advocating for sanctions against Azerbaijan, including on gas imports, Elman Nasirov, a member of the ruling party who sits on the Azerbaijani Parliament’s International Relations and Interparliamentary Relations Committee, told the local news agency Turan: “They will not be able to achieve anything with sanctions against Azerbaijan. Consider this, sanctions were imposed on Russia, yet its economy is experiencing growth today.

What we see is a deadpan stream of lists of blacklisted companies and individuals. For example, on February 23, 2024, the U.S. government published a new package of sanctions, which included not only Russian enterprises, but also companies from Kazakhstan, Uzbekistan, Azerbaijan, Kyrgyzstan, Turkey and Armenia. Here is a partial itemization headlined “Central Asian Companies Find Themselves On Russia-Related Sanctions Lists”. Then there’s EU sanctions.

Remember that a chunk of this trade directly feeds the Russian war effort in Ukraine. In Kazakhstan, since the invasion, the number of Russian companies registered there has increased from fewer than 8,000 to 13,000. In 2022, a $2 billion increase in Kazakh exports to Russia meant that at least a tenth of sanctioned goods received by Russia were channelled via Kazakhstan, including microelectronics and mechanical engineering equipment. In Kyrgyzstan, dozens of cargo flights have been used to transport foreign products, mostly from the United Arab Emirates (where many Russian importers have registered companies), to Russia. This includes electrical components, aircraft parts, video cameras and remote control equipment for drones that find their way onto the battlefield. Uzbek producers are supplying cotton pulp to Russia. Russian gunpowder factories that manufacture ammunition and artillery rounds for Russian troops in Ukraine use cotton pulp. In January to August 2023 alone, Russia imported cotton pulp to a total value of 7.2 million USD, 87% of which came from Uzbekistan. In Armenia, exports to Russia rose by 85% over the first nine months in 2023, of which 80% were re-exports. Here is the source for the above details.

But context is everything, especially geo-strategic context. Uzbekistan, for instance, has always supplied cotton to Russia as it did to the Soviet Union. In fact, the Soviets turned Uzbekistan into a cotton plantation and the Uzbeks have fought to develop and diversify their economy, with significant success, ever since independence. We want the Uzbeks to prosper. We should help Uzbekistan to become a less Russia-dependent economy. As this column repeatedly points out, the West wants the Central Asian ‘Stans to become stronger and wealthier. To that end, Uzbek President Mirziyoyev has led the field in creating a trading bloc entity of the ‘Stans which generates prosperity outside of the Russia/China nexus. The ‘Stans sit in the blind spot of Russia and China. A more independent and forceful Central Asia creates a brand new challenge in that blind spot. In the same way, that is why Israel has forged an alliance with Azerbaijan in Iran’s blind spot. You might argue, aren’t the ‘Stans then, in the long run, defeating themselves by providing Moscow with vital supplies rather than letting Russia grow weaker? It’s a delicate balancing act, one that the US and its allies should help perfect with close attention.

This was, at the most basic level, clearly an initiative intended to avoid incurring secondary sanctions. With the Kazakhs and Kyrgyz both, compliance is largely motivated by fear of sanctions and secondary sanctions, the effect on their economy and multi-level repuational damage from individuals to companies to political parties. Again, the context is that compliance is often balanced against the age-old political, historical, and economic ties with Russia, ties which they are quietly loosening, as well as the intermittent desire to be perceived as neutral in the conflict.

Perhaps the poorest of the Turkic ‘stans is Kyrgyzstan where, understandably, trade with Russia plays a strong part in the economy. It’s in just such a country that the West should loudly praise and publicize the efforts of any significant commercial entity that resolutely abides by sanctions. Take the example of Bakai bank. Bakai Bank was one of the first Kyrgyz financial organizations to condemn Russia’s aggression against Ukraine. Here’s an article about how Bakai Bank gained Moody’s recognitions and reaffirmed its commitment to following OFAC and other top sanctions regimes. Furthermore, Bakai Bank banned all operation with Mir, the Russia-based fund-transfer card, becoming the first in the country to do so. This, despite the potential for significant profits from servicing these cards, a route most of Kyrgyzstan’s banking system took. After international sanctions were imposed against the Moscow Exchange, Bakai Bank became one of the few banks in the region to ban the exchange of rubles.