To weigh sanctions, close the back door to the Russian economy
Defiantly proclaiming his plans to resist mounting pressure to sanction Russia, Serbian strongman Aleksandar Vučić made his country notoriously visible last week as the only country in Europe not to impose sanctions on Ukrainian invaders.
But to set aside his country’s EU aspirations in a naked attempt to appease Moscow – long seen domestically as a guarantor of Serbian sovereignty – seems an odd choice. An Orthodox people, Serbs harbor cultural sympathies for their Slavic cousins. But ethnolinguistic and religious ties belie the whole story.
With Serbia’s presidential and legislative elections a month away, Vučić and his comrades are both politically indebted to Vladimir Putin and petrified by the Serbian electorate. By refusing to sanction Russia, Serbia – with its foreign banks, its association agreement with the European Union and its free trade agreement with Russia – has presented itself as a wide open back door and a gaping hole whereby illicit money and illegal goods from Moscow can go unnoticed in European cities.
Let’s be clear: Vučić’s defiance of US sanctions was not a heroic act of Russian allyship, it was a thinly veiled ploy to enrich himself. His brother and best friend – cited by the US-sponsored Organized Crime and Corruption Reporting Project – would soon be “high on the US sanctions list”. Meanwhile, Freedom House reports that “Russia has been accused of trying to influence Serbian politics through its state media and a range of smaller pro-Russian parties, media outlets and civil society groups. in Serbia”.
Just when the Kremlin needed a place to hide its money – and with the populist Serbian Progressive Party (SNS) vying for re-election – Vučić bowed down to his Russian benefactors. This is hardly surprising: his presidency was marked by repeated allegations of Soviet-style corruption and repression.
The same can be said for Armenia, a country that has both military and financial ties to Russia and through which sanctioned Russian funds are already flowing faster than a burst pipeline. As a member of the Eurasian Economic Union (EAEU) – an EU imitator for a handful of post-Soviet states that remain in Russia’s orbit – trade flows freely and there is no customs borders between members.
Armenia’s potential to serve as a vehicle for Russian money is perhaps even greater than Serbia’s, and the country’s politicians aren’t dampening their enthusiasm. “Armenia is open to Russian business!” proclaimed Armenia’s economy minister, with his investment agency staff boasting on Twitter that “dozens of Russian companies and dozens more” are already moving their headquarters and funding to Armenia.
In many ways, Armenia presents a more dangerous conduit for sanctioned Russian trade than Serbia. With its diaspora in France and the United States, financial flows of aid, investment and remittances already flow easily between them via the SWIFT international payment system to Armenian banks. Allowing this colossal black hole to remain open means Western sanctions will be breached successfully and repeatedly.
The US, UK or EU have no excuse to hold back against the lackeys of the Russian nation-state or the Kremlin. If they claim that there are genuine reasons to refuse to cut these financial flows, no credible excuse exists. Indeed, not all post-Soviet states are so intoxicated; some even show remarkable sobriety.
Take the examples given by Hungary and Azerbaijan.
Hungary, an EU member which itself suffered a Russian invasion, was one of the very first Western governments to not only condemn the invasion, but to demand sanctions against Russia, as well as to insist for his ejection from SWIFT. Long considered Putin’s poster boy for Europe, Hungarian Prime Minister Viktor Orban was quicker than Germany, Italy and France to pledge action amid the escalating crisis in Eastern Europe. Is.
Another such example is Azerbaijan, which this week banned all banks from making commercial and financial payments in Russian rubles. The country even supplies Ukrainian emergency services and humanitarian agencies with free fuel through its network of state-owned SOCAR gas stations in Ukraine. They further proposed their capital Baku as a place of peace talks.
Azerbaijan’s independence is both ancient (they refused membership in the EAEU and left the Russian military alliance of the Collective Security Treaty Organization) and exceptional in that it has a garrison of Russian ‘peacekeeping’ troops stationed within its borders – a remnant of a 2020 conflict with Armenia that Russia ended through a combination of negotiations and threats. And unlike Armenia and Serbia, the country has demonstrated autonomy from Russian influence despite sharing a border of more than 200 miles with the country, from Georgia to the The Caspian sea.
In the days and weeks to come, we will certainly hear apologies from Serbs and Armenians. Both will claim their options are limited—while doing everything to keep money from Moscow flowing into their coffers.
But the excuses are as cowardly as they are dishonest.
While reminding Serbs that Russia supported them, at least in spirit, when they were bombed by NATO in the 1990s, Vučić showed no solidarity with the Ukrainian people who are himself the target of bombs daily. When Armenia’s economy minister proclaimed open arms to Russian business, he failed to mention that it is the Russian-dominated UEE that has long impoverished its people. And neither did what they really do: aid and abet sanctions evaders.
Contrary to popular media narratives, Russia has friends and is quietly redirecting financial flows and business to allies in a determined effort to evade Western sanctions. US, UK and European officials should tighten the noose around Moscow’s neck by sanctioning countries that intend to provide a backdoor for the Russian economy.
Professor Ivan Sascha Sheehan is the executive director of the School of Public and International Affairs at the University of Baltimore. The opinions expressed are his own. Follow him on Twitter @ProfSheehan