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Study: Russia is copying Iran's tactics to evade sanctions

2023-06-06 16:50:11, Kosova & Bota CNA

Russia is copying Iran's tactics in trying to avoid Western sanctions, says a study by the Royal Institute of Defense and Security. Experts of this British policy institute say that Russia is trying to find ways to mitigate the consequences of Western sanctions.

Western countries have imposed tough sanctions on Russia since the start of its large-scale attack on Ukraine last year. Ukrainian President Volodymyr Zelenskyy warned on Sunday that Russia is circumventing the sanctions.

"Unfortunately, the terrorist state manages to secure the world's technologies through a network of suppliers and is able to circumvent international sanctions," he said.

Russia is learning to adapt to the reality of sanctions, says Tom Keatinge, author of the report for the Royal Institute of Defense and Security, a British non-profit policy research organization.

“The first most important thing is to find the kind of electronic components that they need to support their military. The second thing is obviously finding new markets for hydrocarbons and their oil exports, the main source of income for the country," he says.

Russia says its economy shrank by 2.1% in 2022, less than expected by Western analysts. Meanwhile, Russian crude oil imports from China and India posted the biggest increases in May.

This happened in part because the sanctions are only binding on Western governments and companies that do business with Russia.

"And for that reason, a bank in India could have financial ties to a Russian bank," says Mr Keatinge.

However, the US dollar is used for most global trade transactions. So how has Russia sidestepped Western attempts to cripple its economy?

Mr Keatinge says the Kremlin is increasingly using Iran as a model for evading sanctions. Tehran has faced various types of Western sanctions over its nuclear programs and support for terrorist groups, which Iran has denied.

"Iran, whose economy relies heavily on oil exports, has learned many tactics to avoid sanctions over the past few years, which we are now seeing Russia begin to use. For example, clandestine fleets of tankers, moving oil from one ship to another in the middle of the night, turning off the devices that indicate their location. Russia is also using companies from Turkey or the United Arab Emirates to try to hide the origin of the trade," says Mr Keatinge.

The two countries have also begun to link their financial systems to facilitate transactions outside the SWIFT global payments system. Last month, the second largest Russian bank, VTB, opened an office in Tehran.

How can Ukraine's allies prevent Russia from evading sanctions? The private sector is the front line in this battle, says Mr Keatinge.

"The private sector has been forced to rush to get to a point where it can know who its customers are, although it knows to whom it is exporting its products, what is allowed and what is not allowed. However, there are still big gaps in the system," he says.

The study calls for the West to assist the private sector in uncovering illicit trade.

He warns that Moscow will increasingly try to use Iran's tactics to avoid sanctions./ VOA