Russia has turned to new trading partners to maintain high-priority goods imports, finds S&P Global paper

The paper, authored by Jeremy Domballe and titled ‘Navigating sanctions evasion − Trade analysis of high-priority goods exports to Russia’, details the intricate trade dynamics that have allowed Russia to sustain and even increase some critical imports.

The study also reveals how Russia’s strategic shifts in trade partners and transport modalities have played a role in circumventing sanctions and maintaining a steady flow of essential goods.

Surge in military-related imports

The paper explains that prior to its invasion of Ukraine, Russia saw a marked increase in the import of critical items essential for military equipment.

According to the trade data, there was a 21% rise in the trade value of these items in 2021 compared to 2020, constituting 4.3% of Russia’s total imports that year.

However, the subsequent year saw a dramatic 38% decline in these imports, which accounted for 3.5% of total imports in 2022. Then, in 2023, there was a slight rebound with a 10% increase.

Diversification of trade partners

Another area covered in the paper is the manner in which Russia’s trade partners have changed over time.

The paper states that during the past two decades, Russia’s network of import partners has expanded significantly, from 82 in 2000 to 147 in 2020.

This diversification, says Domballe, reflects a strategic shift from European to Asian markets. In 2000, 73% of Russia’s high-priority goods imports originated from Europe, compared to just 12% from Asia. By 2020, these figures had shifted to 26% from Europe and a dominant 68% from Asia.

This trend is said to underscore Russia’s growing dependence on Asian markets, particularly mainland China and Hong Kong, which saw substantial increases in trade with Russia—41% and 18%, respectively, in 2022.

Key export and re-export Players

In addition to the above, Domballe’s analysis identifies Thailand, India, and Turkey as significant contributors to Russia’s import activities. Last year Thailand’s exports to Russia surged by an astonishing 1,083%, while India’s and Turkey’s exports increased by 200% and 60%, respectively.

Conversely, Kazakhstan experienced a 4% decline. In the same year, mainland China, Hong Kong, Thailand, India, Turkey, and Kazakhstan, all together accounted for 92% of the reported exports and re-exports of high-priority goods to Russia, up from 66% previously.

Türkiye’s key role

According to the S&P Global paper, Türkiye, on the fringe of the European Union, has also emerged as an important player in the export of high-priority goods to Russia. The country’s shipments to Russia in 2023 were 314% higher than in 2022.

However, the paper additionally states that market share of Turkish-origin goods decreased from 71% in 2022 to 50% in 2023, with the rest originating from various other countries, including EU member states (notably Germany), the UK, and other regions.

Air freight surge

The report also highlights a significant increase in air freight as a transport mode for goods imports to Russia. Between 2022 and 2023, air freight volumes rose by 263%.

This mode, which constituted a mere 6% of shipments in 2021, climbed to 19% in 2022 and further to 29% in 2023, with Istanbul New Airport being a major port of lading.

Strategic implications

Finally, Domballe’s analysis highlights the strategic adjustments Russia has made to navigate the stringent sanctions imposed by Western nations.

By leveraging a broader array of trade partners and increasingly utilising air freight, the paper suggests that Russia has managed to keep importing critical high-priority goods, albeit with significant adjustments in sourcing and logistics.