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Ukraine war
OpinionWorld Opinion
Hao Nan
Hao Nan

Opinion | How the West’s sanctions against Russia are fuelling a protracted war

For hubs of transit trade from Armenia to the UAE, economic self-interest is best served by having sanctions on Russia in place indefinitely

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A “Give peace a chance” mural depicting musician John Lennon overlooks anti-drone nets along a road in the city of Izyum in Ukraine on December 12. Photo: EPA
Hao Nan
As Washington, Kyiv, Moscow and European capitals negotiate an agreement for a Ukraine-Russia ceasefire, debate has snapped back to familiar questions: how much land Ukraine should surrender, what security guarantees can be offered and when sanctions might be lifted. Lost in this argument is a quieter reality. After more than three years of war, the sanctions regime has created a profitable shadow economy from the South Caucasus to the Gulf – one that now has a vested interest in keeping the conflict simmering rather than ending it.
When the West imposed unprecedented sanctions on Russia, the goal was clear: cripple its war machine and force a retreat from Ukraine. Paradoxically, Russia’s economy, though wounded, continues to function and countries such as Armenia, Kazakhstan, Turkey and the United Arab Emirates are witnessing surging trade and economic growth.

This is not a sign of the sanctions’ failure, but an unintended consequence of their design. By closing the front door to Russia, the West has inadvertently flung open the side and back doors, creating a perverse economic ecosystem that may be incentivising a prolonged, low-intensity war.

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As studies like the European Bank for Reconstruction and Development’s “The Eurasian roundabout” have detailed, the moment exports of sanctioned goods to Russia plummeted, exports of the exact same products to several of Russia’s neighbours exploded. For instance, while EU vehicle exports to Russia fell by 78 per cent in 2022, those to Kazakhstan surged by 268 per cent.

Western goods are taking a detour and giving rise to a hierarchy of transit states. The first tier comprises nations like Armenia, Kyrgyzstan and Kazakhstan, neighboured by and bound to Russia by history and economic ties through arrangements like the Eurasian Economic Union’s customs union.

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Armenia’s exports to Russia nearly tripled in 2022, helping to propel GDP growth to 12.6 per cent. For Kyrgyzstan, value-added tax revenues on re-exported goods accounted for nearly 2.6 per cent of gross domestic product.

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