Armenia continues to help Russia circumvent sanctions, FT says

Rows of cars stretched in every direction from a customs office building on the outskirts of Gyumri, Armenia’s second city, says an article in the Financial Times headlined "Armenia: on the new silk road for goods to sanctions-hit Russia".

According to Report, the article says many were missing a bumper; some had squashed wings or doors taped up with plastic bags.

"Young Russian men roamed between the vehicles. For them, this corner of the Caucasus has become a key stop on a booming trade route: bringing used cars to Russia, where sanctions over Moscow’s full-scale invasion of Ukraine have left western-brand cars hard to find," the author notes.

According to it, Armenia is not a car producer, but exports of cars from the tiny country to Russia have soared since last year’s invasion of Ukraine — from $800,000 worth of vehicles in January 2022 to just over $180mn worth of vehicles in the same month this year.

Cars are the starkest example, but exports of other goods from Armenia to Russia have also surged, leading to an almost two-fold increase in trade between the two countries in 2022.

Russian consumers have turned to third countries to search for what they are missing as a consequence of western sanctions and corporate departures, placing countries such as Armenia, Türkiye and Kazakhstan at the heart of a busy new trade route for consumer goods, the author notes.

For Armenia, this has contributed to a huge boom, with its gross domestic product growing a record 13 per cent in 2022, more than double the previous year’s rate.

Cars arrive primarily from the US via the Black Sea port of Poti in Georgia, brokers and buyers said. Many are then brought to Armenia for customs clearance, as the country shares a customs-free trade bloc with Russia.

The city of Gyumri is a key hub from where the vehicles head north to Russia by road, crossing through Georgia again.