Armenia and Kazakhstan are currently importing a surprising number of refrigerators and washing machines. Most devices come from Europe. Will this circumvent sanctions so Russia can build new tanks and missiles for its attack on Ukraine?
Dirty laundry seems to be piling up in Armenia. In the first eight months of this year alone, the small country in the Caucasus imported more washing machines from the EU than in 2021 and 2020 combined. In April and May, the laundry baskets and chests in Armenia were apparently so full that the washing machines had to be flown in from the EU.
There was also an acute shortage of washing machines in Kazakhstan. In April alone, almost six times as many washing machines were bought from the EU this year as a year ago. Refrigerators are apparently also in short supply: up to and including August, the Central Asian giant imported refrigerators worth more than 21 million US dollars from the EU. That is more than three times as much as last year from January to August.
This is the result of data collected by the European statistics agency Eurostat and evaluated by the American finance portal Bloomberg, because these seemingly amusing import figures have a serious background: there are suspicions that refrigerators and washing machines are being smuggled to Russia via Armenia, Kazakhstan and other neighboring countries , so that Vladimir Putin can cannibalize them and use them to build new tanks and rockets. The Russian President seems to be running out of them.
A few weeks ago, NATO and British intelligence independently confirmed that Russia was running out of equipment and ammunition. In some cases, the Russian army is said to have lost up to 40 tanks a day in October. In order to absorb the losses, tanks are bought in Belarus.
The stock of precision-guided ammunition is also said to have shrunk sharply, i.e. modern guided missiles such as cruise missiles. They have only been used sparingly in the attack on Ukraine for some time. Instead, the Russian army is currently attacking with missiles that are actually intended for air defense.
The cause is no big secret: The US Department of Defense had already reported in May that the Russian army had “burned” many precision-guided missiles in the first days and weeks of the war. And for the necessary replenishment, important components are said to be missing because of the sanctions, as with tanks. After all, cruise missiles also need modern chips so that they can reliably find their target. In many cases, however, these come from Europe or the USA. Material that Russia can no longer draw on.
Instead, household appliances are apparently cannibalized. Because it also has chips built in that can apparently be used for drones, tanks and rockets. “We have received reports that Ukrainians are finding Russian military equipment in the combat zone filled with semiconductors from dishwashers and refrigerators,” US Commerce Secretary Gina Raimondo said in May.
Do Armenia and Kazakhstan import household appliances from Europe and then import them illegally into Russia? If that’s the case, it would be a clear case of parallel imports: A technical and legal term for illegal imports, explains political scientist Alexander Libman from the Free University of Berlin.
Electronic household appliances are not per se on the EU sanctions list. But many companies have voluntarily withdrawn from the Russian market. In addition, the sale of dual-use goods to Russia is prohibited. This can apply, for example, to semiconductors that are built into washing machines, but also to rockets. Parallel imports are the fastest way to get essential goods despite these restrictions – and the reason why Russians can still buy iPhones in electronics stores, even though Apple has pulled out of the country.
“Parallel import means that Russia says: We need 20,000 iPhones,” political scientist Libman explains the concept. “Some company then buys them somewhere in the world. Not necessarily from Apple and not even with Apple’s permission. You just buy and sell goods without the permission of the brand owner.”
The Russian government created the legal requirements for illegal imports months ago. At the beginning of May, the Ministry of Industry and Trade published a list of products from around 100 categories of goods for which the manufacturer’s approval is no longer required. The ban on parallel imports, which is intended to protect manufacturers and brand owners, has thus been lifted.
An offer that seems to be accepted. Because in Kazakhstan not only the import of refrigerators has increased. Data from the government in Astana shows that at the same time, deliveries of refrigerators, washing machines and electronic breast pumps to Russia have also skyrocketed: this year Kazakhstan has already exported washing machines worth 7.5 million euros. In the two previous years, exports were almost 0. Exports of refrigerators increased tenfold compared to the previous year.
Whether refrigerators, washing machines and electronic breast pumps are actually shipped to Russia to be cannibalized for tanks, rockets or fighter jets cannot be proven. It’s not even clear if that would even work on a large scale. Kazakh and Armenian traders may simply want to fill a supply gap created by the sanctions and make some money selling household goods.
But the concept of using parallel imports to get popular consumer goods like iPhones or important components for modern computers or weapons is not new. Iran and North Korea have been doing this to circumvent Western sanctions for many years. And the Russian armaments factory Ulyanovsk is said to have tried in April to smuggle urgently needed components for its rockets, which come from Germany, into the country via Kazakhstan. This plan is said to have failed at the time due to the high costs that would have arisen from the new and significantly longer delivery route and “would have blown the available budget,” according to unconfirmed reports.
