Russia is increasingly using Armenia as a backdoor to evade international sanctions, according to international analysts. The two countries have a very close relationship, despite the pro-Western statements of the Armenian authorities. Moscow is not just Yerevan’s biggest trading partner but also hosts two of its military bases on Armenian territory. Concerns have been raised that Russia is using Armenia’s relatively open economy to bypass sanctions imposed on it by Western nations.

The invasion of Ukraine triggered tough sanctions against Russia imposed by the European Union, the United States and other pro-Western states. They included restrictions on Russia’s financial industry, its central bank and its energy sector; thousands of foreign companies have withdrawn voluntarily from the Russian market. All of these measures were taken to make it harder for Russia to maintain its military operations in Ukraine and to sustain its wartime economy.

The issue of Moscow’s backdoor through Armenia was recently brought to light by several reports by leading Western mainstream media outlets.

According to The New York Times Armenian imports of electronic components, including eight particularly sensitive categories of semiconductor chips, increased sharply during the Russian invasion of Ukraine. Based on the US Bureau of Industry and Security data, the newspaper reported that between 2021 and 2022, Armenia’s imports of chips and microprocessors from the US increased by 515% and from the EU by 212%. 97% of these products ended up in Russia, being used for military purposes.

The British Daily Telegraph, brought up an investigation by a Berlin-based think-tank the German Centre for the South Caucasus, according to which exports from Germany to Armenia rose from €178 million to €505 million in 2022. “That’s from just one EU country. Exports from Armenia to the EU in the same twelve months doubled from €753 million to €1.3 billion. With a population of barely three million and a GDP per capita of less than a tenth of the average Briton, these are impossible numbers. Yet they are real. What is clear is that imports to and exports from Russia are being near-seamlessly diverted to the outside world via satellite states”, stated the article, adding that “Britain must also use its diplomatic credibility that rivals that of any country in Europe to apply both carrot and stick to countries such as Armenia… At the beginning of March two American citizens were arrested for skirting US sanctions to sell sophisticated aviation equipment to Russia through third party countries, including Armenia”.

“As supplies via Turkey and Central Asia become increasingly scarce, Russia is ramping up parallel imports via Armenia. Between January and March, trade between the two countries increased by 2.4 times. This is despite the fact that Armenian exports to Russia were already worth $2.4 billion in 2022 – an increase of 185.7% compared to 2021”, Polish news outlet Salon24 wrote. According to Salon 24, as early as March 2nd, a Trilateral Memo from the Department of Justice, the Department of Transportation, and the U.S. Treasury Department listed Armenia among “trans-shipment points commonly used for the illegal shipment of (sanctioned) restricted goods to Russia and Belarus”.

As noted by EU Reporter, the U.S. Department of Treasury sanctioned Armenia-based companies – a part of transnational network procuring technology that supports the Russian military-industrial complex. «To this end, the Armenia-based affiliate of Milandr, Milur Electronics LLC (Milur Electronics), was initiated for the purpose of placing orders from foreign factories, producing integrated microchips, and conducting overseas sales. Milur Electronics has been used as a Milandr front company as a means to conduct Milandr’s business with foreign partners. Another Armenian company – Taco LLC, wholesale of electronic and telecommunications equipment and parts, has been designated for supporting Radioavtomatika, a Russian company has been sanctioned, because Radioavtomatika pays Taco for importing components and handling the procurement process within Armenia».

The Guardian reported recently that Iranian drones of several types made their way into Russia using boats and an Iranian state-owned airline. According to the Polish-based NGO think tank Armenia played an integral part in these deliveries, allowing Iranian cargo planes to land in its airports before proceeding to deliver weapons to the Russian forces in Ukraine.

The Financial Times brought evidence that more than $1bn of EU exports targeted by sanctions have disappeared in transit to Russia’s economic partners, a flow of «ghost trade» that western officials believe has helped sustain Vladimir Putin’s wartime economy. One of the countries in the list of partners is Armenia.

The issue of Russia using Armenia to evade sanctions is not a new one. In 2018, the U.S. Treasury Department imposed sanctions on several Armenian individuals and entities for their involvement in a scheme to evade U.S. sanctions on Iran. The Treasury Department stated that the individuals and entities had «used a network of shell companies and intermediaries to establish a secret supply chain» to Iran.

The use of Armenia as a backdoor to evade international sanctions is a serious concern that requires urgent attention from Western governments. If Russia and other pariah countries can continue to use such intermediaries the effectiveness of these sanctions is significantly reduced. It is essential that Western nations work together to strengthen their monitoring of Armenian entities and to prevent the abuse of the country’s financial system.

One might claim that Armenia has no choice but to submit to Russian pressure.  The Telegraph answers this question: “Other former Soviet satellites such as Azerbaijan and the three Baltic states have since their independence escaped from under the Kremlin’s grasp – the former now a reliable supplier of an alternative to Russian gas, and the latter members of NATO and the EU. All four have managed this despite sharing land borders with Russia and significant Russian-speaking populations. With no land border and no less economic connections to Russia than the Baltic states, Armenia has little excuse when allowing itself to act as a third party transit point”.