After Russian troops invaded Ukraine, 60% of Russia’s foreign exchange reserves in international banks were frozen. And because of a number of other economic sanctions, the world started talking about a default of the Russian Federation in the near future. But there are countries that help Russia get around the bans.
The main country that Russia relies on to circumvent sanctions and mitigate their effects is China. Against the backdrop of a possible rejection of Russian oil and coal by European countries, China began to increase its purchases, paying in renminbi rather than dollars.
In addition, gas deliveries to China through the Power of Siberia pipeline, which is part of a long-term contract between Gazprom and CNPC, are increasing. The largest oil and gas company, Sibur, intends to increase China’s polymer supply by 40%.
Moreover, Russia relies on China to replace high-tech goods and spare parts previously supplied by European countries.
Why does China need it? China will benefit from being able to buy Russian raw materials and Russian companies at very low prices.
The second major country that, along with China, has not condemned Russia’s attack on Ukraine is India. It was India that in March began actively buying Russian oil at discounted prices. Since the beginning of March, five shipments of Russian oil, or about 6 million barrels, have been sent to India. In other words, India imported twice as much oil from Russia in a month as in a year.
Moscow gave India a discount of up to $35 a barrel from the price it was paying until the end of February. But Russia is offering to pay for oil in rubles using the Financial Message Exchange System, Russia’s equivalent of SWIFT. Moscow and Delhi intend to expand the use of national currency settlement mechanisms, and are also working together to create an alternative to SWIFT, from which Russian banks have been cut.
Ukraine’s Main Intelligence Directorate has accused Georgia of setting up channels for the smuggling of sanctioned goods, including spare parts for machinery, through Georgian territory. In particular, according to the GUR, representatives of the Georgian special services were instructed by political leaders not to hinder the activities of smugglers.
“In order to circumvent the sanctions, Russian agents have set up smuggling networks, which transit in particular through Georgian territory. At the same time, representatives of Georgian special services received instructions from political leaders not to hinder the activities of smugglers,” the intelligence report said.
“To date, another route of supply of military goods from the Russian Federation is known – East Asia. Parts of equipment, electronic and optical devices are supplied to the occupying country through it.
Georgia’s finance ministry called the accusation absurd and baseless, and Georgian parliament speaker Shalva Papuashvili called the statements by Ukrainian intelligence services “lies.”
Ukraine, in turn, demanded proof from Georgia that it was not helping Russia circumvent the sanctions.
Hungary and Kazakhstan
It is impossible not to mention Hungary and Kazakhstan. The Hungarian government never fails to demonstrate its friendship and loyalty to Russia, starting with the prohibition of the transit of arms for Ukraine through its territory and ending with its willingness to pay in rubles for a Russian contract, while ignoring the common position of the European Union.
And the Kazakh bank Altyn, whose main shareholder is China CITIC Bank Corporation Limited, allows Russians to remotely issue virtual cards of Visa and Mastercard payment systems and order plastic cards by mail, bypassing sanctions.
Image credit: Petar Milosevic