The Backdoor Route: Russia’s Indirect Trade and Sanctions Evasion

The thesis examines whether Western sanctions imposed on Russia following the 2022 invasion of Ukraine reduced access to restricted goods or merely redirected trade through intermediary countries. Specifically, it investigates the role of Armenia, Kazakhstan, Türkiye, China, and India in facilitating indirect trade flows of machinery (HS84), electronics (HS85), and vehicles (HS87). Chapter 1 reviews the theoretical and empirical literature on economic sanctions, trade diversion, and gravity models of international trade. Chapter 2 presents country case studies and examines the mechanisms through which intermediary countries may have facilitated sanctions circumvention. Chapter 3 provides the empirical analysis using bilateral trade data for 2002–2024 and gravity models estimated with both Ordinary Least Squares and the Poisson Pseudo-Maximum Likelihood (PPML) estimator. The results indicate that intermediary countries substantially increased exports of sanction-sensitive goods to Russia after 2022. In the PPML specification, relative to other countries, exports of machinery (HS84) increased by approximately 468%, electronics (HS85) by 347%, and vehicles (HS87) by 1,741%. The strongest effect is observed in the vehicle sector, suggesting that indirect trade channels played a particularly important role in maintaining Russia’s access to restricted goods. These large proportional increases occurred within selected intermediary corridors and sanction-sensitive categories and should not be interpreted as implying that indirect trade replaced most lost EU–Russia trade in absolute terms.