As a result of the invasion of Ukraine on February 24, 2022, the Russian Federation came under significant international sanctions. Sanctions imposed on Russia are multi-faceted and relate to specific individuals, businesses, bank transfers, import-export and more. The European Union, the US, the United Kingdom and other countries have decided to impose restrictions on trade in various goods with Russia and Belarus. Additionally, strict sanctions were imposed on companies and individuals operating in Russia and Belarus.
At the very first stage of imposing international sanctions on Russia, Prime Minister of Georgia Irakli Gharibashvili stated that Georgia was not going to join the financial and economic sanctions. This statement, as well as the subsequent statements of individual officials, were quite vague in content and did not present a clear explanation of Georgia's official stance and policy regarding the sanctioning of the Russian Federation. However, later developments and statements of various agencies (National Bank, Revenue Service, Ministry of Economy) indicated that, despite the fact that Georgia did not impose its own sanctions on the Russian Federation, it did not intend to become a country whose customs territory and/or financial institutions could be used to circumvent the international sanctions.
The responsible agencies stated that all the products included in the list determined by the countries participating in the international sanctions, as well as any customs operation (export, re-export) that may be carried out by sanctioned individuals or companies, were subject to special customs control. Furthermore, Georgia’s financial sector is a part of the global financial system, which automatically implies joining international sanctions.
IDFI requested relevant official information from various public institutions in order to study the cases of evasion of international sanctions imposed on Russia. At the initial stage, IDFI requested detailed information from the Revenue Service about the identified attempts to ship unauthorized cargo across the border of Georgia starting from February 25, 2022. In response, the Revenue Service provided copies of the certificates of registration of goods and vehicles, on the basis of which cargo destined for the Russian Federation and Belarus was returned to the sender, up until August 10, 2020.
- From February 25 to August 10, 2022, the Revenue Service issued a total of 204 goods and vehicle certificates of registration, which returned cargoes destined for the Russian Federation and Belarus;
- No movement of sanctioned cargo towards Russia and Belarus was identified during the customs control in the first 2 months after the start of the war;
- According to the certificates of registration, the largest share of the sanctioned cargo (or the cargo of a sanctioned person) was shipped from Turkey (39%) and Armenia (35%);
- In 50 out of 204 certificates of registration, the code of goods is not indicated, and the goods that are sanctioned are indicated verbally in 71 cases;
- On July 29, 2022, the Georgian customs checkpoint apprehended and returned a shipment of drones (sanctioned cargo) headed toward Russia;
- The analysis of the data obtained by the processing of certificates of registration shows that the most significant portion of returned goods (56 cases) belonged to the 84th group of the National Commodity Nomenclature of Foreign Economic Activity (machines and mechanical devices). Among them, was the sanctioned cargo of heat exchangers used for civil aviation;
- Among the most frequently returned goods are also vehicles and their parts (group 87 of the FEA). Nevertheless, according to Geostat data, the export of automobiles to Russia increased by 268% in the 9th month of 2022;
- Responsible agencies do not disclose information related to the implementation of international sanctions against Russia. For example, the Maritime Transport Agency did not provide any information related to the number of requests from sanctioned vessels to dock at the ports of Georgia. The Revenue Service withheld the identities of importers and exporters (including legal entities) on the grounds of customs confidentiality. Citing similar reasons, the National Bank also withheld information about the cases of non-compliance with the international sanctions identified in financial institutions.
In light of Russia's invasion of Ukraine, one of the most prominent show of support towards Ukraine from the international community was the imposition and enforcement of strict sanctions against the Russian Federation. The government of Georgia initially refused to join the imposed sanctions on Russia on the grounds of perceived economic and political threats facing the country.
The political decision to abstain from participating in sanctions, turned into an important moral and reputational obligation for Georgia not to become a means for Russia to evade international sanctions. In this regard, it is of particular importance that the Georgian authorities, in coordination with international partners, through a fully transparent process, ensure the prevention of any attempt to evade the sanctions on the customs territory of Georgia as well as the financial sector.
Unfortunately, the agencies in charge of enforcing the sanctions do not ensure the availability of relevant information, which would significantly increase the level of confidence of the international community in the process. For example, the Maritime Transport Agency does not publicly disclose the bare minimum statistical data related to their activities.
Furthermore, the presented analysis regarding the customs control of the sanctioned cargo is presented according to the documentation received from the Revenue Service, which was extensively limited by blacking out significant portions of data. The analysis raises certain questions related to the effectiveness of customs control on sanctioned goods at the initial stage. For example, the first instance of the sanctioned shipment being rejected by customs control was two months after the start of the war.
Lastly, individual attempts to ship drones and other similar products through Georgia point to Russia’s broader interest in using Georgian territory as a transit for such cargo, which increases the corresponding risks. In particular, the shipment of similar products to Russia through Georgia will cause significant damage to Georgia's reputation. Therefore, IDFI believes that, as a minimal effort, the relevant agencies should ensure the proactive availability of detailed statistical information on the enforcement of international sanctions against Russia.
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The analysis was prepared by the Institute for Development of Freedom of Information (IDFI). It was supported by a grant from Luminate. IDFI is responsible for the content of this document. Views expressed in therein do not reflect the position of Luminate.
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