Russia’s Axis of Sanctions Evasion

As Russian troops poured into Ukraine in 2022, the international community imposed sanctions, both unilaterally and multilaterally. Multinational companies withdrew from Russia. Within a week of Russia’s invasion, Western countries had frozen $1 trillion worth of Russian assets. While Russia’s economy declined 2.1 percent in 2022, it recovered in 2023, more than offsetting the previous year’s loss. The International Monetary Fund believes that Russia’s economy will grow faster this year than France, Germany, or the United Kingdom. Meanwhile, Russian propagandists regularly pump out videos suggesting Moscow to be a city of affluence and luxury.

How Is Russia Trying to Beat Sanctions?

Either Russia has adjusted to U.S. and European sanctions and/or Western sanctions have been more symbolic than real. Either way, as the war in Ukraine enters its thirty-first month, policymakers should consider how and why Russia’s economy has been so resilient.

The answer is Russia’s axis of evasion. Absent Turkey, Azerbaijan, and Kazakhstan’s assistance in laundering Russian oil and gas exports and facilitating the Kremlin’s sanctions circumvention, Russia’s economy might be a shadow of its current self.

Each of the three axis countries helps Russia evade sanctions for separate reasons.

Turkey has two motivations. The first is profit. Turkey helped Iran evade sanctions a decade ago by trading gold for oil. Dealing in Russian gas and oil augments President Recep Tayyip Erdogan’s bottom line by purchasing from Moscow at a discount but then selling at market prices. Erdogan also remains ideologically hostile to the West. While the United States and European nations see Russian President Vladimir Putin’s war on Ukraine as revanchist and illegitimate, Erdogan both shares Putin’s expansionist goals and seeks to roll back the classical liberalism that drives Ukrainian President Volodymyr Zelensky and much of the support he engenders in the West. Erdogan may separately sell some goods, including drones, to Zelensky, but at best, he seeks to play both sides, and, in reality, he also seeks to profit diplomatically by suggesting falsely he is on the West’s side.

Azerbaijan’s motive is pure profit. Less than a week before Russian forces poured into Ukraine, Russia’s Lukoil bought a 9.99% stake in Azerbaijan’s Shah Deniz natural gas project for almost $1.5 billion. This means that much of the gas Azerbaijan sells to Europe benefits a major Russian company. Then, as Russian forces mobilized on Ukraine’s border, Azerbaijani President Ilham Aliyev visited Putin to upgrade relations. While many Western officials recognize the close ties, if not mentorship, between Erdogan and Aliyev, they forget that Aliyev has as much in common with Putin. Putin spent his early years in the KGB; Aliyev’s father, Heydar, was both head of the KGB in the Azerbaijan Soviet Socialist Republic and later a central committee member of the Soviet Politburo. Aliyev, like Erdogan, has also mastered the art of convincing the West he is on their side when his goals lie elsewhere. In 2001, for example, he leveraged a decision to allow Azerbaijan to serve as a transit hub for Afghanistan-bound shipments into a waiver to Section 907 sanctions, bringing Baku tens of millions of dollars in profits and military aid.

Kazakhstan is the third component of Russia’s axis of sanctions evasion. Kazakhstan produces more natural gas than Azerbaijan, much of which it shipped westward toward Europe. That is changing, especially as European countries begin to balk at Kazakhstan’s partnership with Gazprom and other Russian gas interests. Gazprom Kazakhstan is the local affiliate of the Russian energy conglomerate. In June 2024, Gazprom signed a contract with QazaqGaz to transport Russian gas across Central Asia via Uzbekistan and Kyrgyzstan.

While it may be easy to dismiss Kazakhstan’s assistance to Russia as rooted in greed, another dynamic is likely at play: Putin likely made Kazakhstan Kassym-Jomart Tokayev an offer he could not refuse. Tokayev understands the price of Russia defiance, especially in a world where the United States is no longer actively willing to defend other countries’ sovereignty. With much of northern Kazakhstan being ethnic Russian, albeit in declining numbers as Russians emigrate from the country, Tokayev fears Russia could treat the Kostanay and North Kaz provinces as the new Donbas, sponsoring unrest to provide an excuse for Russian intervention, referenda, and annexation.

What Should The West Do Now?

The question for the Washington, Brussels, and Kyiv is how to fracture Russia’s axis of sanctions evasion. Calibrating policy to reality rather than wishful thinking or local rhetoric matters here. The United States and Europe might sanction Turkey and Azerbaijan for their laundering of Russian gas and call out the cynicism and insincerity of Turkish aid to Ukraine. Zelensky himself, for example, has said Turkish drones were not as decisive as the bragging of Turkish officials suggested.

Unraveling Kazakhstan from the axis requires a different strategy. The Kazakhstan problem is not unique. It is a landlocked country under threat from a neighbor’s aggression, not unlike what Armenia and Moldova face. Whereas France both provides advanced weaponry and monitors them to ensure there is no leakage to Russia, the United States does little to help these states under threat to defend their sovereignty. Prior to Russia’s invasion of Ukraine, the White House declassified and revealed intelligence to shine a light on looming aggression. The same may be necessary with regard to Kazakhstan. Shining a light on Russian bullying can have a deterrent effect.

The default position in the White House, State Department, and European Parliament appears to virtue signal with sanctions announcements but does nothing to ensure their effectiveness. Sanctions absent enforcement are meaningless. To return Russia to recession, it is necessary to tackle the Turkey, Azerbaijan, and Kazakhstan problems.

About the Author: Dr. Michael Rubin

Michael Rubin is a senior fellow at the American Enterprise Institute and director of policy analysis at the Middle East Forum. A former Pentagon official, Dr. Rubin has lived in post-revolution Iran, Yemen, and pre-and postwar Iraq. He also spent time with the Taliban before 9/11. For more than a decade, he taught classes at sea about the Horn of Africa and Middle East conflicts, culture, and terrorism to deployed US Navy and Marine units. Dr. Rubin is the author, coauthor, and coeditor of several books exploring diplomacy, Iranian history, Arab culture, Kurdish studies, and Shi’ite politics.