Copying Iran’s Tactics, Here’s How Russia Cleverly Gets Around Western Sanctions

JAKARTA – Iran and Russia are the countries currently subject to Western sanctions. Both have ways to get around these sanctions. An energy and commodities opinion columnist from Bloomberg, Javier Blas, explains how Iran can avoid even though it has been hit Western sanctions for almost 40 years longer than Russia.

Iran has exported twice as much crude oil to Malaysia to be renamed and then distributed from that country to China. By renaming Iranian oil, Malaysia became China’s fourth-largest foreign oil supplier last year, behind Saudi Arabia, Russia and Iraq.

“China doesn’t import a single barrel from Iran. But they import more from Malaysia. According to official Chinese customs data, somehow this country buys more than twice as much Malaysian oil as Malaysia actually produces,” he said, as reported from news, Sunday (5/5/2024).

For years, Iran has used the United Arab Emirates (UAE) as a hub to evade sanctions. Dubai, one of the seven emirates in the UAE, is a gateway for prohibited goods other than oil entering Iran.

Tehran has long modified its supply chains so that almost all goods embargoed by the United States (US) or European Union can be obtained through trade and financial hubs such as Dubai. Meanwhile, Russia is building similar trade routes to ensure the supply of goods important to the country’s economy.

The former Soviet republics of Central Asia have proven ideal for circumventing embargoes, as countries such as Kazakhstan or Kyrgyzstan are part of a customs union with Moscow. In addition, Kazakhstan’s very long distance from Russia, more than 7,500 kilometers (4,660 miles) makes sanctions control nearly impossible.

Through this strategy, Armenia, for example, experienced an increase in imports of German cars and components by almost 1,000% last year.

Russia is the most embargoed country globally, according to the latest data provided by Castellum a global sanctions tracking database. However, the Russian economy remains resilient. According to Russian Finance Minister Anton Siluanov, the country posted strong growth of 3.6% last year and the Kremlin expects the growth rate in 2024 to be at the same level.

The International Monetary Fund (IMF) also shares Russia’s growth expectations, setting the Gross Domestic Product (GDP) expansion rate at 3.2%, and noting that high state spending and investments related to the war against Ukraine will drive growth. Strong revenues from oil exports will continue to support Moscow’s finances.