Kyrgyzstan has shut down 50 companies suspected of aiding Russia in evading sanctions. This follows an EU embargo on electronic goods and marks a significant shift in the country's role as a hub for goods bypassing sanctions.
Key points
Kyrgyzstan has shut down 50 companies suspected of aiding Russia.
The country has become a hub for goods bypassing sanctions since 2022.
Exports to Russia rose from $393 million to $1.07 billion in one year.
The EU imposed an embargo on electronic goods to Kyrgyzstan.
This is the first time Kyrgyzstan has taken such action against companies.
Mentioned in this story
KyrgyzstanEuropean UnionUnited Kingdom
The mountainous, landlocked Central Asian nation of Kyrgyzstan has historically been one of the region’s poorest economies, much of it reliant on remittances from migrant workers abroad. But four years ago, its fortunes got an unexpected boost.
After Western governments and their allies slapped Russia with sanctions over its 2022 invasion of Ukraine, Kyrgyzstan immediately emerged as a key hub for goods bypassing embargoes. From 2021 to 2022, the annual value of Kyrgyzstan’s exports to Russia leaped from $393m to $1.07bn, including products such as luxury cars and microchips.
Some of those products, such as microchips, are known as “dual-use,” meaning they are imported to third countries like Kyrgyzstan as civilian goods, and then re-exported to Russia, where they may be utilised in military hardware such as missiles and drones.
But last week, Kyrgyz authorities declared that 50 companies believed to be helping Russia evade sanctions were being forced to shut their operations in the country. This announcement came weeks after the European Union imposed an embargo on certain electronic goods to Kyrgyzstan for rerouting such products to Russia. It is the first time the Central Asian nation has made such a move.
Last year, the EU blacklisted two Kyrgyz banks while the United Kingdom imposed sanctions on senior Kyrgyz officials.
“It’s an open secret in Kyrgyzstan that entrepreneurs and companies are benefitting from international and Western sanctions on Russia by helping Russia circumvent them,” Erica Marat, a Kyrgyz scholar at the College of International Security Affairs, told Al Jazeera.
“I know some individuals who – even though they disagree and are horrified with what Russia is doing in Ukraine – still trade with Russia, seeing it as an opportunity, saying that if they’re not going to do it, there will be others who will … So with the shutdown of the companies, it’s really not about any kind of moral judgement about Russia’s behaviour. It is absolutely a fear of being sanctioned by being spotlighted as sanction evaders.”
As part of the Soviet Union – and before that, the Russian Empire – Kyrgyzstan was beholden to Moscow for more than a century. But since independence in 1991, Kyrgyzstan’s economy and politics have been deeply connected to Russia.
“Kyrgyzstan held significant geopolitical significance for Moscow. The country was seen as a buffer against the spread of radical Islamism, especially against the backdrop of the civil war in Tajikistan and the rise of the Taliban in Afghanistan,” Mikhail Krishtal, associate professor at the Immanuel Kant Baltic Federal University in Kaliningrad, and a member of the Moscow-based Digoria Expert Club, told Al Jazeera. “These circumstances largely determined Moscow’s military-technical and financial support for Bishkek during that period.”
Russia and Kyrgyzstan have an “asymmetrical” trade relationship, Krishtal added. Russia is a vital market for Kyrgyz goods, while remittances from Russia account for between 15 and 26 percent of the country’s gross domestic product (GDP), according to various estimates.
Q&A
Why did Kyrgyzstan shut down companies aiding Russia?
Kyrgyzstan shut down the companies to comply with international sanctions and prevent the rerouting of goods to Russia.
What products were Kyrgyzstan exporting to Russia before the sanctions?
Kyrgyzstan was exporting luxury cars and microchips, with exports to Russia increasing significantly from $393 million to $1.07 billion between 2021 and 2022.
What are dual-use products and how are they related to Kyrgyzstan's exports?
Dual-use products, like microchips, are civilian goods that can be repurposed for military use, which is a concern for Kyrgyzstan as they were re-exported to Russia.
What actions have the EU and UK taken against Kyrgyzstan regarding sanctions?
The EU has imposed an embargo on certain electronic goods to Kyrgyzstan and blacklisted two Kyrgyz banks, while the UK has sanctioned senior Kyrgyz officials.
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“Of no small importance here is Kyrgyzstan’s membership in the Eurasian Economic Union (EAEU), which provides its citizens with significant benefits unavailable to migrants from neighbouring Tajikistan and Uzbekistan, even given Russia’s current tightening of migration policies,” noted Krishtal.
‘Largely in the Kremlin’s orbit’
Despite the recent sanctions, the current Kyrgyz government upholds close relations with Moscow.
Russia maintains an airbase and other military facilities in Kyrgyzstan, and the two countries have signed mutual defence agreements.
“Kyrgyzstan has had six presidents [since independence], but each one of them remained extremely loyal to Russia, and specifically to President [Vladimir] Putin,” said Marat.
“The government is largely in the Kremlin’s orbit. And in a way, they don’t really have a choice whether they want to support Russia or not. There isn’t enough manoeuvre space; unlike, for instance, Kazakhstan or Uzbekistan, that rely more and more now on Western interests and their minerals, or China is interested in trading with them.”
While the Kyrgyz public is broadly positive towards Russia, not everyone is happy with the influence exerted by the Kremlin.
“It’s depressing – the political situation here has been deteriorating already for a few years, and now we’re already like Russia,” said Khadija, a Bishkek resident in her mid-twenties who volunteers at an NGO. She asked not to be identified.
“Several years ago, if we pushed for something hard enough, [politicians] would listen to us. But now I really don’t know what there is for us to do – everything’s moving in the opposite direction. I don’t know how much Russia influences [Kyrgyzstan] but it’s the same playbook: foreign agents, and so on.”
Surrounded by neighbours often described as authoritarian, Kyrgyzstan was once considered the most open, if politically unstable, country in Central Asia, with freedom of speech and democratic elections.
However, under the current president, Sadyr Japarov, media freedom has been stifled, with the investigative website Kloop blocked and its journalists arrested.
A “foreign agents” bill similar to one in Russia has been passed, curtailing the work of NGOs, while Japarov’s personal, executive powers have been extended at the expense of parliament.
Another point of contention is history.
At a conference in Moscow earlier in May, Russian historians asked their Kyrgyz counterparts to refrain from using the word “colonial” to describe Russian rule in the late 19th and early 20th centuries. Some Kyrgyz historians, meanwhile, have long considered Russia’s actions in line with the behaviour of European colonial powers – for example, the merciless suppression of the 1916 Urkun revolt in which tens of thousands of Kyrgyz and Kazakhs perished, whether at the hands of the Imperial Russian Army or while escaping over the mountains to China.
“We see greater diversity of opinion and discontent, and discontent was Russia’s continued influence in Kyrgyzstan, from intellectual elites to activists and younger generations who don’t see Russia as necessarily a positive partner, and tend to see Russian dominance, including during the Soviet and Tsarist periods as colonialism destructive to Kyrgyz culture and identity, and those voices are becoming louder and louder,” said Marat. “After the full-scale invasion of Ukraine and the atrocities that followed, this discontent spilled into the mainstream and became the dominant discussion in the non-government circles.”
Russia is not the only power with an interest in Kyrgyzstan, positioned on the old Silk Road. Mikhail Galuzin, Russia’s deputy foreign minister, recently said in an interview with the newspaper Izvestia that the West – namely, the US, UK and certain EU countries – are seeking access to resources in the region in an attempt to undermine Russian influence in Central Asia by promoting the narrative of a “Russian threat”.
Another major player is China, which borders Kyrgyzstan to the east.
“Kyrgyzstan’s economic partnership with China has significantly expanded in recent years,” said Krishtal. “This has resulted in a significant increase in trade turnover, Bishkek’s participation in the Belt [and] Road logistics megaproject, and increased investment from China. Against this backdrop, Kyrgyzstan’s significant debt dependence on China is noteworthy: this situation could further lead to China being granted economic preferences in the country.”
