Kazakhstan Braces for Financial Sanctions as Tensions Rise with Russia and West
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As tensions between Washington and Moscow continue to escalate, Kazakhstan is increasingly at risk of facing financial sanctions and embargoes. The country’s deep economic ties to Russia, its membership in the Eurasian Economic Union (EAEU), and its geographic proximity to Ukraine have made it a potential target for secondary sanctions.
Growing Trade Ties with Russia
Recent reports indicate that exports from the EU, UK, and US to Kazakhstan surged by over 80% in 2022, while Kazakhstan’s exports to Russia jumped by more than 22%. A joint investigation by OCCRP, Important Stories, Der Spiegel, and Vlast revealed that Kazakhstan has become a key transit point for the import of electronic components and dual-use goods destined for Russia.
Lack of Effort to Combat Parallel Trade
Despite President Kassym-Jomart Tokayev’s personal guarantees, there is a lack of dedicated effort by Kazakh authorities to combat the issue of re-selling dual-use goods to Russia. Russian nationals continue to register in Kazakhstan without being physically present, allowing them to engage in trade and business activities. This has led to an estimated 300,000 to 1 million registered taxpayers from Russia in Kazakhstan.
Threat of Secondary Sanctions
The threat of secondary sanctions is real, as the US and EU have both announced plans to target companies, banks, and individuals suspected of undermining the effectiveness of sanctions. The imposition of such sanctions would aim to pressure Kazakh officials to push for a change in policy and close the loopholes used by Russian companies to circumvent trade restrictions.
Economic Implications
The economic implications of secondary sanctions on Kazakhstan could be severe, as the country’s businesses and banks would face disruptions in trade and investment with Western partners. However, some experts argue that targeting areas where Russia is asymmetrically dependent on foreign goods, technology, and finance could be a more effective approach.
Delicate Balancing Act
As tensions between Russia and the West continue to escalate, Kazakhstan will need to navigate its delicate balancing act between maintaining positive relationships with both Moscow and Washington. The country’s economic fate hangs in the balance as it seeks to avoid becoming a pawn in the larger geopolitical game.
Key Takeaways:
- Kazakhstan is at risk of facing financial sanctions and embargoes due to its deep economic ties to Russia.
- The country’s lack of effort to combat parallel trade has led to an estimated 300,000 to 1 million registered taxpayers from Russia in Kazakhstan.
- Secondary sanctions could have severe economic implications for Kazakhstan, including disruptions in trade and investment with Western partners.
- Targeting areas where Russia is asymmetrically dependent on foreign goods, technology, and finance could be a more effective approach.