For over three years now, I’ve been tracking the surge in exports from across the EU to countries in Central Asia, the Caucasus and Turkey. This surge has nothing to do with genuine exports to these places. It started right after the invasion of Ukraine, so this is about circumvention of Western export controls, with the ultimate destination for these goods being Russia. When you add up all these exports - from across the EU to all the main transshipment hubs in Central Asia, the Caucasus and Turkey - their rise is so massive that it more than offsets the drop in direct exports from the EU to Russia. Putin and his war economy want for nothing.
What’s so scandalous about all this is that it’s an open secret in the EU. Some countries, like Poland and the Baltics, went to great lengths to stop this trade. Others, like Sweden or France, never allowed it to take off in the first place. Then there’s Germany and Italy who - more than three years after the invasion - have a massive transshipment problem and pretend like nothing’s wrong. The costs to this duplicity are obvious. They send a signal that short-term growth and profits are more important to these countries than medium-term security. Putin no doubt loves this signal. The fact that he’s growing bolder by the day in his attacks on the EU is evidence of this.
The panel of charts above is what I call the EU “Wall of Shame.” Each chart shows monthly exports in millions of Dollars to Kyrgyzstan, the most outlandish of all the transshipment hubs because it’s so remote. Indeed, when you look at German exports to Kyrgyzstan, for example, they have little overlap with what Kyrgyz data show for imports from Germany. This is because Kyrgyzstan is just a word that gets written on the export invoice. Most of these goods go directly to Russia.
Countries that have cracked down on transshipments to Kyrgyzstan or that never allowed this trade to take off in the first place are in orange. Countries that turn a blind eye are in blue. The fact that some countries manage to control this trade while other don’t shows that this is entirely about political will. If Germany and Italy have an ongoing transshipment problem more than three years after the invasion, this says their governments are fine with it. Whether that’s because of indifference, corruption or greed is unclear. The only thing that’s clear is that this is very much an active choice these countries are making.
At the heart of all this is EU governance. As I’ve shown in joint work with Ben Harris at The Brookings Institution, almost half of Russia’s shadow fleet consists of oil tankers that were sold to Putin by Greece’s shipping oligarchs. Such tanker sales continue to this day, helping Russia in its quest to subjugate Ukraine. Transshipments to Russia from across the EU are the same thing. They make Russia’s economy stronger and help Putin in his war on Ukraine. The EU has to stop sending these mixed messages and that has to start with a cold, hard look at itself. The “Wall of Shame” would be a good place to start.
It’s not a "Wall of Shame"; It’s a "Window of Survival."
Robin, the data is undeniable, but the moral framing misses the industrial reality.
Why are Germany and Italy the biggest "offenders" in blue? Because they are the only ones left in Europe with a Real Industrial Base. France sells luxury bags; Sweden sells services. Germany and Italy sell Machines. Machines need a market that converts atoms into energy. Russia is that market. This isn't "Duplicity"; this is "Hydraulic Pressure." When politicians build a dam (Sanctions) between a desperate seller and a desperate buyer, the market inevitably digs a canal (Kyrgyzstan).
"Kyrgyzstan is not a destination; it is a Pressure Valve. Germany isn't choosing to support Putin; it is choosing not to de-industrialize itself into oblivion. Morality is a luxury of the solvent."
The Alpha: This is the "Shadow Fluidity" of the global trade system. Sanctions can stop Swift, but they cannot stop Physics. For how this shadow network operates globally, see my "The Physics of Shadow Trade."
"Oh, how refreshing to see such moral clarity! Let me get this straight - Germany selling machine parts that might end up in Russia through Kyrgyzstan is a 'Wall of Shame,' but America bombing six countries last year and invading Venezuela on day two of this year is just... what? Spreading democracy?
I must have missed the part where you called for sanctions on the US for its military adventures. Or is there a special exemption in your outrage framework for American bombs versus European ball bearings?
It's fascinating how 'mixed messages' and threats to 'medium-term security' only seem to apply when it's Europeans doing business, but American military interventions get a free pass. Perhaps you could explain this moral calculus to those of us less enlightened - is there a specific body count threshold where we're supposed to start caring? Or does it simply depend on which flag is on the weapons?