BREAKING: Georgia Mentioned Among Countries Helping Russia Circumvent Sanctions

On June 8, 2023, Jim O'Brien spoke at an event hosted by the European Council on Foreign Relations (ECFR). As head of the Office of Sanctions Coordination with the U.S. Department of State, he was asked about which countries are involved in circumventing sanctions against Russia. His answer raised questions about regional security in the Caucasus.

Specifically, he identified five countries contributing to Russia's ability to circumvent sanctions. Those countries are Armenia, Georgia, Kazakhstan, Turkey, and the United Arab Emirates (U.A.E.). These countries are importing materials from European manufacturers, including sensitive electronics and chips used to manufacture modern weapons of war, and then allowing their export to Russia. Because of these loopholes, since the beginning of 2023, Russia has been able to import critical components from these five countries at levels similar to those before their war of aggression against Ukraine.

Speaking publicly, O'Brien said, "It's a substantial problem. That's why I'm going to Kazakhstan. That's why I'm going to Georgia, Armenia, and other places."

In response, the Georgian Ministry of Finance issued a public statement regarding comments made by Mr. O'Brien, reaffirming their commitment to upholding sanctions and working with international partners. Specifically, the Ministry of Finance said they have recorded over 1,200 customs rulings rejecting sanctioned goods and over 800 refusals of verbal and written applications.

The Ministry of Finance declared that Georgia fully adheres to international sanctions and actively cooperates with partner countries to prevent sanctions regime violations as much as possible.

However, sanctioned Russian companies continually relocate to Georgia and other countries, exporting their goods under new names. Because the countries these shadow companies operate from are not under sanctions, they can work within the safety of sanction-free borders. By abusing the goodwill of host nations, Russian criminals sidestep what would otherwise be economic impediments to the Russian war of aggression.

While no one is disputing the steps the Ministry of Finance took and its efforts to enforce sanctions, the most cursory overview of the national security landscape in Georgia makes it immediately apparent that the Ministry is incapable of genuinely enforcing sanctions. Russians opened over 15,000 companies since the war of Russian aggression, and corrupt lawyers and third parties create shell entities daily.

Taking active measures to prevent the circumvention of sanctions is one thing. But actively combatting Russian disinformation, corruption, and outright incompetence is another. Unfortunately, the Ministry of Finance and its Georgian support partners are ill-equipped to prevent the circumvention of sanctions at the scale they currently face. Combatting the fact of this deficiency requires recognition and admission of the problem from the Georgian side and active assistance on the part of external partners.

Ignoring the national and regional security threats these deficiencies present is a threat to Georgia and the Greater Caucasus Region.

Source: ECFR