Interview: Dr Paolo Sorbello “Slow Sanctions”

July 2024

Hana Raci Shillova

THRI Research Fellow

Dr. Paolo Sorbello

Journalist and Researcher

Dr Paolo Sorbello is a journalist and researcher living in Almaty, Kazakhstan. He is also the English-language editor at the independent media outlet

For a broader understanding for our readers, could you briefly describe the current situation in Kazakhstan concerning the evasion of Russian sanctions? Where do things stand now?

So now we’re in a new phase where the West is now finally addressing the elephant in the room, the issue of secondary countries helping Russia circumvent sanctions. Recently, we’ve seen action against such activities with Kazakhstan. For instance, in June, the U.S. Treasury Department sanctioned at least four companies, and more recently, Japan also followed suit and then the EU implemented their 14th sanction package.

This response comes extremely late compared to when journalistic investigations first uncovered these companies. It highlights how slow Western bureaucracies have been in implementing effective sanctions against Russia. This delay is also evident in other areas, not only when it comes to Central Asia, but for instance such as the late banning of gas and oil shipments, which occurred more than a year after the war began.

These delayed sanctions show the West’s dependence on certain Russian supplies and their reluctance to impose sanctions. This delay, especially from the EU is triggered by the veto system. Each country must approve the sanctions packages, leading to lengthy and at times feisty negotiations. This means that only a limited number of companies are sanctioned. This slow response is detrimental to the war’s outcome, the lives lost daily, Ukraine’s defence, and the overall war effort. While Ukraine has received the weapons and financial support that they have asked for, the West has not sufficiently weakened Russia’s finances enough to hinder its war efforts in Ukraine.

There’s been considerable discussion among Kazakhstan analysts about this issue. They often argue that the West only imposes sanctions when it’s convenient for them and doesn’t consider the difficulties faced by countries like Kazakhstan. Kazakhstan has maintained a position of not imposing sanctions on Russia and continuing trade, but they also don’t want to “disrespect” Western countries.

It is a very delicate equilibrium for Kazakhstan because of its dependence on trade. But at the same time, from the beginning, Kazakhstan has made clear its opposition to the war, as evidenced by its stance in the UN General Assembly and its cold remarks during meetings with their Russian counterparts. Tokayev met the most with Putin in 2023 than any other leader and their frequent meetings, phone calls, and diplomatic exchanges indicate ongoing negotiations and coordination on what to do and what to expect from each other.

The EU envoy on sanctions, David O’Sullivan, travels to Kazakhstan at least a couple of times a year, trying to convince the prosecutor’s office and ministries to implement tighter monitoring of companies. This is crucial because there is a significant lack of accountability and transparency in Kazakhstan’s government. When companies are sanctioned, government ministries often claim they didn’t know the companies, saying they were unaware of them having export licenses. These justifications do not align with reality.

As the press, we consistently denounce this because it’s impossible for the government not to be aware, especially since the names of these companies and their beneficiaries became public knowledge thanks to our investigations long before sanctions were imposed. So, the slow response from the West in sanctioning these entities and the Kazakhstan government’s surprise when sanctions are finally imposed highlights a double standard. It’s an age-old tale of passing the buck.

Over time, we journalists, civil society, and the broader public recognize that the shortcomings come from both Western and Kazakhstan governments. The interests behind sanction evasion are powerful, involving business leaders, government officials, and criminal syndicates. This puts us in danger when we uncover these activities and also exposes a nerve that could threaten the survival of the regime or certain elite members.

What other factors or elements play a role in this situation? I’ve read that Kazakhstan has implemented a new border monitoring system, but some experts argue that the border remains too porous due to the lack of customs checks. What do you think about these issues?

There are a couple of key issues. While there is a customs union, there are still customs checks. Trucks going in and out can be monitored, so claiming the border is too porous to control is an excuse to avoid accountability.

Another crucial aspect is trade with EU companies, which will likely never be fully checked due to its complexity and danger. Trade statistics show spikes across Central Asia and the Caucasus, indicating masked exports to Russia from Europe. Companies established in Kazakhstan that use these channels are often founded by Russian citizens or people with strong ties to Russia, to facilitate this trade. Monitoring this could be straightforward, but it’s unlikely to happen.

This is because the bulk of Kazakhstan’s wealth from the oil sector over the past 30 years has also moved through these channels. Two of the major consortiums, operating oil and gas fields at Kashagan and Karachaganak, are both registered in the Netherlands, even at the same address, due to favourable tax regimes and lack of transparency in the Dutch registries. This makes the Netherlands appear as one of Kazakhstan’s biggest investors and trade partners, but in reality, these are round-tripping schemes to keep profits offshore.

Therefore, uncovering these issues is unlikely because it would open a Pandora’s box, forcing many to explain their wealth and how they made it onto the Forbes list. It is a well-oiled machine. People get crafty during times of change and instability, but many of these methods have long-standing precedents and have been tested before. That’s what we are seeing now.

the West is still viewing this situation through a Cold War lens, which is outdated. As you’ve likely seen, and from my experience of over ten years, Kazakhstan has changed. The society has evolved, fueled by a stronger decolonial discourse and increased hostility towards the Russian government due to the war in Ukraine.

Now, the EU, the US, and even Japan have started imposing secondary sanctions on Kazakh companies. However, this has been downplayed in the media and by officials. Do you agree with this assessment? Should there be concern, or do you think it will not happen due to the nature of the sanctions?

No, I believe the secondary sanctions on Kazakhstan-based companies involved in sanction evasion are very timid. These sanctions meet the minimum requirements, making everyone appear satisfied. The Kazakhstan government agrees to these sanctions, and the Western governments claim they have sanctioned secondary partners involved in sanction-busting schemes, so on paper, everyone is content.

However, I don’t see any incentive for the EU and the US to impose additional sanctions without further journalistic investigations uncovering new schemes. They fear that stricter sanctions could push Kazakhstan closer to Russia, though I disagree with this viewpoint. Kazakhstan cannot be pushed further into the Russian orbit. The West is still viewing this situation through a Cold War lens, which is outdated. As you’ve likely seen, and from my experience of over ten years, Kazakhstan has changed. The society has evolved, fueled by a stronger decolonial discourse and increased hostility towards the Russian government due to the war in Ukraine. Even pushing the ‘relokanty’ to openly disassociate from the Kremlin. This shift reflects a growing unwillingness among Kazakhstanis to tolerate Russian influence.

Yes, there are still trade dependencies, oil routes, language interconnections, and cultural and educational exchanges, but Kazakhstan is no longer just an appendage of Russia. It should have been recognized as independent much earlier, but now it’s clear. In foreign policy, Kazakhstan has shown much more independence. While Kazakhstan won’t send troops to Ukraine or host Western bases, it is no longer a satellite of Russia and doesn’t have to bow to Russia for everything. The past two and a half years have demonstrated this.

Considering how Kazakhstan has managed the sanction situation, how do you think President Tokayev and his government have balanced keeping both sides happy, especially compared to Kyrgyzstan, which has openly aligned with Russia?

The key difference between Kazakhstan’s President and Kyrgyzstan’s populist leader is evident in their governance styles. Domestically, both have continued restricting freedoms, though these actions have occurred at different times and under different circumstances. Despite Kazakhstan showing some progress and independence in foreign policy, there has been a noticeable increase in the stifling of civil society, press freedom, and human rights. This trend can be traced back to events like the Qandy Qantar, the January protests and the subsequent trials, as well as new laws on media and propaganda that enforce regulations on spreading false information. Recent attacks on opposition journalists illustrate ongoing concerns regarding press freedom.

President Tokayev and his administration appear to be preparing for a future transfer of power, including constitutional changes, with Tokayev indicating he will step down after his current seven-year term. This succession planning, aimed at preserving the elite and the current government’s legacy, mirrors strategies used by previous leaders like Nazarbayev. These preparations have coincided with significant restrictions on freedoms, similar to those seen in 2017-18 before Nazarbayev’s resignation.

The current environment in Kazakhstan raises questions about future political stability and leadership succession, especially given uncertainties about who will succeed Tokayev. Overall, this situation highlights a notable contradiction: while Tokayev’s foreign policy efforts are commendable, criticisms persist regarding the limitations on freedoms imposed during his tenure.

What do you foresee as the next steps? Do you anticipate more companies, as you mentioned, being exposed and added to the sanctions list? Additionally, what other actions do you expect from Kazakh authorities, as well as from the EU and US?

So, regarding the next steps, I’ve observed a cautious approach recently, especially during the transition between the EU elections and before the formation of the new European Commission. The EU envoy on sanctions, David O’Sullivan, has been hesitant to condemn Kazakhstan, before announcing new sanction packages. Diplomatic sources indicate efforts to quicken the sanctioning process and garner broader support among member states for more comprehensive measures. The recent announcement of a new package signals an intent to move forward decisively, which puts secondary governments on notice.

However, if the Estonian President assumes the role of the new EU Special Representative, there could be a shift. She appears keen on countering Russia by all means necessary, potentially advocating for stricter sanctions. This scenario remains to be seen, with the new commission and changes in NATO leadership. With upcoming elections in France, the UK, and the US, foreign policy usually temporarily takes a backseat to domestic issues. Nevertheless, these elections will significantly influence future foreign policy decisions once the electoral dust settles.

Something that stood out to me after Putin’s visit to Kazakhstan was discussions on Telegram channels among Kazakh analysts about Uzbekistan potentially becoming an alternative partner. While Uzbekistan has also been reported to help Russia bypass sanctions to some extent, it hasn’t been as widely reported as Kazakhstan. Hypothetically, do you think Uzbekistan could serve as an alternative partner?

I think geography and international agreements, like the Eurasian Economic Union, have played into the hands of Kazakhstan and Kyrgyzstan being chosen as partners. I don’t anticipate a significant change in the situation there. Uzbekistan, I believe, won’t risk exposing itself more than it already has in assisting Russia to evade sanctions. However, we should keep an eye on Uzbekistan because it continues to assist Russia in this regard.

Logistically, Uzbekistan may be less appealing and more costly, but it remains a significant factor, especially with China also playing a role. China’s presence in Central Asia has made it easier for sanction evasion and the flow of dual-use goods, which contradicts efforts by the EU, the US, and others who are in favour of peace and want this war to stop.

Share this on social media