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Reexports To Russia: How The Ukraine War Made Trade Boom In Kyrgyzstan

Bishkek's Dordoi bazaar was a massive hub for exports across Eurasia but fell into decline after the creation of the Moscow-led Eurasian Economic Union. But Russia's war in Ukraine has given Kyrgyz reexporters new opportunities.
Bishkek's Dordoi bazaar was a massive hub for exports across Eurasia but fell into decline after the creation of the Moscow-led Eurasian Economic Union. But Russia's war in Ukraine has given Kyrgyz reexporters new opportunities.

BISHKEK -- Exports to Russia more than doubled, imports from next-door China almost tripled, and a whole range of products that Kyrgyzstan was not known for exporting in the past were sent abroad.

And that is just what can be gleaned from the often incomplete official data.

The year that Russia launched a full-scale invasion of Ukraine and became the target of extensive Western-led sanctions turned out to be a strange one for Kyrgyzstan's external trade.

That is in no small part due to an apparent spike in reexporting -- the process of exporting imported goods to third countries, typically with minimal delay.

Historically this type of trade has benefited countries suffering under the weight of international sanctions, and this time is no different, according to Temir Shabdanaliev, head of the Association of Carriers and Logisticians of the Kyrgyz Republic lobbying group.

"If goods from Europe were previously sent to Russia, now they are registered as deliveries to Kyrgyzstan and Kazakhstan. But as soon as they are unloaded here they are immediately taken to Russia," Shabdanaliev told RFE/RL's Kyrgyz Service.

And although reexports have been an important source of income for Kyrgyz businesses in the past, Shabdanaliev is one of a number of business leaders voicing fears that his country -- a member of the Moscow-led Eurasian Economic Union (EES) -- could be targeted with secondary sanctions if it isn't careful.

"Russia forced us into this union…. There is a risk here, and no one knows how it will turn out. If this is uncovered and can be proved, Kyrgyzstan could have a hard time," Shabdanaliev said.

From Ukraine To Russia Via Georgia And Kazakhstan?

Recently released Kyrgyz trade data showed that Russian-Kyrgyz trade grew strongly in 2022, with Kyrgyzstan's exports to Russia growing by 2.5 times and Moscow positioned as Kyrgyzstan's No. 1 trade partner.

A lot of this growth is in categories that have traditionally dominated Kyrgyz exports, such as textiles.

Kyrgyz border guards check a truck at the Torugart checkpoint along the Kyrgyz-Chinese border.
Kyrgyz border guards check a truck at the Torugart checkpoint along the Kyrgyz-Chinese border.

But the sixfold rise in that category for 2022 can hardly be considered normal and may partly explain the spike in imports from China, which is Kyrgyzstan's top supplier of both raw and finished textile products.

Other products reaching Russia from Kyrgyzstan by the ton in 2022 were not exported at all in 2021 -- among them shampoo, toothpicks, soap, and car parts.

Kyrgyzstan's official trade data rarely provides a full picture.

One discrepancy regularly noted by government critics is the gulf between figures shown in Chinese customs data and Kyrgyz data on trade with its neighbor.

Chinese customs stats for 2021 showed trade with Kyrgyzstan -- almost completely dominated by Chinese exports -- at an all-time high of $7.5 billion.

The Kyrgyz figure was just over one-sixth of that.

While Kyrgyz officials tend to refer to different methods for evaluating goods in Kyrgyzstan and China by way of an explanation for the gap, media investigations by RFE/RL and other outlets have spotlighted the giant scale of smuggling at that border.

Sometimes trade data can change from month to month.

When RFE/RL's Kyrgyz Service reviewed official trade data for the first 11 months of 2021 it found a 170-fold increase in imports to Kyrgyzstan of one category of medicine from Russia.

By the time data for the full year was published this month, the figure was more than 10 times smaller.

"When they input the data there is sometimes a human error. The latest data is the freshest," Aizhara Mamoeva, the leading expert at the National Statistical Committee, told RFE/RL's Kyrgyz Service.

But Kyrgyz on the front lines of the country's international trade testify to some of the perplexing routes that goods now take to circumnavigate the sanctions placed on Russia and its closest ally, Belarus.

One long-distance truck driver, Asylbek Kochkorov, told RFE/RL's Kyrgyz Service that he had driven a consignment of chicken meat produced in Ukraine from Georgia all the way to Kyrgyzstan, bypassing the shortest route through Russia.

At least part of the shipment was ultimately bound for the country that Kyiv is at war with, he said.

"In Kyrgyzstan, customs clearance takes place, after which the products are shipped as Kyrgyz goods…. A part [of this chicken shipment] will remain in Bishkek and, if there is a lot of it, the surplus is sent to Russia," Kochkorov said.

Good Wood, Bad Wood

One of the bigger trade scandals of last year affecting Central Asian countries saw large quantities of wood reach the European Union from Belarus labeled as Kyrgyz and Kazakh cargo.

Wood exports from these countries to Europe had been negligible in the past.

Journalists from the Belarusian Investigative Center (BIC) subsequently uncovered a sanctions-busting scheme worth more than 30 million euros ($32 million) to its organizers, wherein Kyrgyz and Kazakh companies helped Belarusian partners export sanctioned Belarusian wood to Europe.

"The founders of these companies include Belarusian citizens as well as Kazakh and Kyrgyz citizens," BIC's Alyaksandr Yarashevich told RFE/RL's Kyrgyz Service of the scheme that ran between June and October 2022, after which customs officials in Latvia and Lithuania began foiling the practice.

"Moreover, the wood didn't even travel through Kyrgyzstan," he added.

Kyrgyzstan's trade data for 2022 shows a significant rise in exports of a number of wood products that were not listed among exports in 2021, including "wood briquettes."

In June, the Financial Crimes Enforcement Network and the U.S. Department of Commerce's Bureau of Industry and Security included Kyrgyzstan and 17 other states on a list of countries "through which restricted or controlled exports have been known to pass before reaching destinations in Russia or Belarus."

The document was framed as guidance for sanctions enforcement and did not entail any punishments for the listed countries.

But some say that is not enough if the aim is to prevent the sanctions regime against Russia from being critically undermined.

In March, Drew Sullivan, an investigative journalist who co-founded the Organized Crime and Corruption Reporting Project, wrote that Ukraine's allies would "have to" sanction other members of the Russia-led EES if sanctions were to be effective.

"It's essentially a free-trade zone," he said. "Goods come in from China and can move to Russia with no paperwork. It's a hole in the sanctions. [The countries] must quit it or face the same sanctions as Russia."

Sullivan's social media post drew angry reactions from Kyrgyz and other Central Asians, who argued that their countries were already set to face the sharp end of geopolitical fallout from the war.

Kyrgyz businessmen interviewed by RFE/RL's Kyrgyz Service moreover argued that they are merely reacting to circumstances that have in many cases destroyed supply chains that once benefited their businesses.

One entrepreneur, Jyrgalbek Jorobai-uulu, admitted to RFE/RL that last year he regularly reexported large quantities of chicken byproducts, mostly originating in Uzbekistan, to Belarus.

These goods were then sent on to European Union countries, he said.

After a time, however, this line of business dried up, with his Belarusian business partners telling him they no longer needed his help.

"At the start they would contact us, even asking for fuel and other goods. But then these same partners told us: Now the sanctions have been lifted, we can export ourselves," he said.

Jorobai-uulu said he was skeptical of that explanation.

He concluded instead that the real reason that Kyrgyz customs clearance was no longer necessary was that European countries were "selectively" applying sanctions to Belarusian goods.

Written by Chris Rickleton based on reporting by RFE/RL Kyrgyz Service correspondents Kubatbek Aibashov and Aibek Biybosunov
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    Kubatbek Aibashov

    Kubatbek Aibashov is a correspondent for RFE/RL'sKyrgyz Service.

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    Aibek Biybosunov

    Aibek Biybosunov is a correspondent for RFE/RL's Kyrgyz Service in Bishkek. In 2015, he graduated from Kyrgyzstan's Jusup Balasagyn National University.

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    Chris Rickleton

    Chris Rickleton is a journalist living in Almaty. Before joining RFE/RL he was Central Asia bureau chief for Agence France-Presse, where his reports were regularly republished by major outlets such as MSN, Euronews, Yahoo News, and The Guardian. He is a graduate of the University of St. Andrews in Scotland. 

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