Sanctions fears as Kyrgyzstan shutters companies suspected of aiding Russia

The mountainous, landlocked Central Asian nation of Kyrgyzstan has historically been one of the region’s poorest economies, much of it reliant on remittances from migrant workers abroad. But four years ago, its fortunes got an unexpected boost.

After Western governments and their allies slapped Russia with sanctions over its 2022 invasion of Ukraine, Kyrgyzstan immediately emerged as a key hub for goods bypassing embargoes. From 2021 to 2022, the annual value of Kyrgyzstan’s exports to Russia leaped from $393m to $1.07bn, including products such as luxury cars and microchips.
Some of those products, such as microchips, are known as “dual-use,” meaning they are imported to third countries like Kyrgyzstan as civilian goods, and then re-exported to Russia, where they may be utilised in military hardware such as missiles and drones.

But last week, Kyrgyz authorities declared that 50 companies believed to be helping Russia evade sanctions were being forced to shut their operations in the country. This announcement came weeks after the European Union imposed an embargo on certain electronic goods to Kyrgyzstan for rerouting such products to Russia. It is the first time the Central Asian nation has made such a move.

Last year, the EU blacklisted two Kyrgyz banks while the United Kingdom imposed sanctions on senior Kyrgyz officials.

“It’s an open secret in Kyrgyzstan that entrepreneurs and companies are benefitting from international and Western sanctions on Russia by helping Russia circumvent them,” Erica Marat, a Kyrgyz scholar at the College of International Security Affairs, told Al Jazeera.