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 began to talk about a default of the Russian Federation in the near future. But there are countries that are helping Russia circumvent the bans.
China
The main country that Russia relies on to circumvent sanctions and mitigate their effects has been China. Against the background of the possible rejection of Russian oil and coal by European countries, China began to increase their purchases, paying in renminbi rather than dollars.
In addition, gas supplies to China through the Power of Siberia pipeline, part of a long-term contract between Gazprom and CNPC, are increasing. The largest oil and gas company, Sibur, intends to increase polymer supplies to China by 40%.
Moreover, Russia is counting on China to replace high-tech goods and spare parts previously supplied by European countries.
Why does China need this? China stands to benefit from the fact that it will be able to buy Russian raw materials and Russian companies at very cheap prices.
India
The second major country that, along with China, did not condemn Russia’s attack on Ukraine was India. It was India that in March began to actively buy Russian oil at discounted prices. Since the beginning of March, five shipments of Russian oil, or about 6 million barrels, have been shipped to India. In other words, India imported from Russia half as much oil in one month as it did in one year.
Moscow has given India a discount of up to $35 a barrel off the price it had been paying until the end of February. But Russia is offering to pay for oil in rubles using the Financial Message Interchange System, the Russian equivalent of SWIFT. Moscow and Delhi intend to expand the use of settlement mechanisms in national currencies, and are also working together to create an alternative to SWIFT, from which Russian banks have been cut off.
Georgia
The Main Directorate of Intelligence of Ukraine accused Georgia of setting up channels for smuggling sanctioned goods, including spare parts for machinery, through Georgian territory. In particular, according to the GUR, representatives of Georgian special services were instructed by the political leadership not to obstruct the smugglers’ activities.
“In order to circumvent sanctions, Russian agents set up smuggling channels, which pass through Georgian territory in particular. At the same time, representatives of Georgian special services received instructions from the political leadership not to impede the activities of smugglers,” the intelligence report said.
“To date, another channel for the supply of military goods to the Russian Federation is known – East Asia. Equipment parts, electronics and optical devices are supplied to the occupying country through it.”
The Georgian Finance Ministry has described the accusation as absurd and groundless, and Georgian parliament speaker Shalva Papuashvili called the Ukrainian intelligence service’s statements “lies”.
Ukraine, in turn, demanded proof from Georgia that it was not helping Russia to circumvent 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 ban on arms transit 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 Kazakhstan’s Altyn Bank, whose main shareholder is China CITIC Bank Corporation Limited, allows Russians to remotely issue virtual cards of the Visa and Mastercard payment systems and order plastic cards by courier delivery, bypassing sanctions.
Image credit: Petar Milošević
