In early 2022, there was a lot of optimism that sanctions on Russia would cripple its economy. Those predictions did not come true. A recent article in The Economist shows why:
Before 2022, Kazakhstan sold relatively few electrical machines to Russia. After the invasion of Ukraine, Kazakh exports increased more than sevenfold. How could Kazakhstan ramp up production so quickly? Note that at the same time this was happening, Kazakh imports of electrical machinery from the EU also increased sharply. It is quite clear that Russia used this former Soviet republic as a way to avoid sanctions.
This is all bad news for European policymakers. “We did expect some leakage,” says one official, “but not on the scale we know now.” In December the euThe twelfth round of restrictions targeted businesses in Armenia and Uzbekistan for the first time. Bureaucrats have since threatened more sanctions against third countries and Europeans exporting to them, but have taken action against only a few companies. For each company added to the blacklist, another company is registered elsewhere.
The same problem arises when countries try to diversify their supply chains. The US has imposed high tariffs on Chinese imports to reduce our dependence on that economy. As a result, US imports from neighboring countries such as Vietnam increased sharply. Not surprisingly, Vietnamese imports from China increased at the same time. We still buy a lot of stuff from China, but in a more cumbersome way with higher transportation costs.
None of this means that sanctions are necessarily a bad idea. It is likely that sanctions against Russia have at least somewhat reduced its ability to wage war. Rather, the point is that we should not expect sanctions to be leak-proof.
P.S. After writing this post I noticed it another example:
Interestingly, the US media blames China, but not Germany, for aiding the Russian war machine.