Latvia's sanctions compliance examined

On March 8, the Latvian Ministry of Foreign Affairs held the eleventh meeting of the Sanctions Coordination Council, where the main topic for discussion was “The year since the war started by Russia in Ukraine and comprehensive sanctions imposed by the European Union against Russia and Belarus”.

The Chair of the Council, Head of the Legal Directorate of the Ministry of Foreign Affairs and representative of Latvia before international human rights organisations, Kristīne Līce, informed the members of the council about the state of play with regard to sanctions on Russia, according to an account of the meeting by the Foreign Ministry.

Līce pointed out that the imposition of new sanctions was currently decreasing, with the emphasis shifting to effective enforcement of sanctions and the prevention of circumvention attempts. The Financial Intelligence Service and the Bank of Latvia informed the participants about the lessons learned during the year and current tendencies in circumventing sanctions.

Trade data is being  analysed in Latvia in order to understand how much of the increasing cross-border trade with third countries can be attributed to legitimate trade diversification and to what extent those are attempts to circumvent sanctions. The Ministry of Foreign Affairs is planning to expand outreach to raise awareness of risks, especially among economic operators working in high-risk jurisdictions and industries.

As revealed by recent trade figures, recent months have seen surprisingly large increases in trade with countries such as Kazakhstan, Kyrgyzstan and Armenia. In 2022 exports to Kazakhstan has increased by EUR 70.4 million or 2.5 times, to Kyrgyzstan – by EUR 17 million or 3.5 times, and to Armenia – by EUR 15 million or 2.8 times.

While some of this may be accounted for by companies seeking new markets, concerns have been raised in some quarters that sudden, big rises in exports to countries bordering Russia may signal attempts to circumvent international sanctions with third countries acting as intermediaries.

In 2022, compared to 2021, imports from Kazakhstan grew by EUR 56.8 million or 8.9 times, from Kyrgyzstan – by EUR 6.7 million or 11.4 times, from Azerbaijan – by EUR 2.1 million or 2.7 times. 

The phenomenon was also examined in this recent analysis by the Latvian central bank.

 

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