After the Ukraine War, Russia's Most Popular Job: 'Smuggler'... "Sanctions Won't Be Lifted Until Putin Dies"

Various Methods Including Third-Country Routing and Use by US Residents
Concerns Over Rapid Economic Collapse if High Oil Price Trend Breaks Down

[Image source=Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] As sanctions against Russia prolong, shortages of parts among major manufacturers within Russia are worsening, leading smuggling operators to emerge as a prominent occupation, according to foreign media reports. Extensive smuggling is taking place, ranging from sanction evasion through neighboring countries to smuggling linked with Russian residents living in the United States and Europe.

However, with official import routes cut off and parts being imported only in a limited manner, the Russian economy remains trapped in a recession. Amid the ongoing high oil price trend barely sustaining the Russian economy, warnings are emerging that the economic difficulties will become very severe if next year’s economic downturn in major economies such as the U.S. and China coincides.

Russian Smuggler Living in New Hampshire Arrested for Diverting Ammunition in the U.S.

[Image source=Reuters Yonhap News]

On the 14th (local time), according to CBS News in the U.S., the U.S. Department of Justice announced the sudden arrest of a Russian smuggling group consisting of five Russians and two Americans in New Hampshire. They are charged with purchasing ammunition and military equipment, which are prohibited from export to Russia, through shell companies in the U.S., and then smuggling them into Russia via the Russian border area in Estonia.

This smuggling group, named the so-called 'Serniya Network,' is reported to include some Russian government intelligence agents. They have purchased weapons and equipment worth millions of dollars and repeatedly smuggled them into Russia.

It was revealed that until last month, they had been smuggling weapons into Russia by circumventing the U.S., Europe, and several Asian countries. To evade U.S. government smuggling tracking and sanctions against Russia, they transported goods through multiple countries.

The ammunition and military equipment they smuggled are presumed to have been delivered to the Russian military, which is suffering from ammunition shortages on major frontlines with Ukraine. Since Russia’s invasion of Ukraine in February, sanctions against Russia have accelerated, making it difficult to import parts for major weapons, causing severe ammunition shortages.

"Smuggling via Neighboring Countries Flourishes... 'Import-Export Specialist' Occupation Popular"

[Image source=AP Yonhap News]

In Russia, smuggling is taking place across a wide range of fields, from military equipment to manufacturing parts such as chemicals and automobiles, as well as food products. Within Russia, since the war with Ukraine, smuggling operators have emerged as one of the promising occupations.

According to the Financial Times (FT), smugglers in Russia are called so-called 'import-export specialists' and smuggle almost all goods, from small and medium-sized home appliances to chemicals, automobile, and aviation parts.

They evade sanctions by setting up shell companies with the nationality of friendly third countries such as Turkey, Estonia, Belarus, and Kazakhstan, and then ordering goods from Eastern European countries like Austria and Poland to re-import them into Russia.

Currently, Russia relies mostly on China for imports due to sanctions, but as China also faces difficulties importing key parts due to U.S. sanctions, dependence on smuggling for parts imports is increasing. One smuggler told FT in an interview, "As long as President Vladimir Putin does not die, this situation will continue for the next 15 to 20 years. Fundamentally, nothing changes."

Russian Economic Recession Deepens... Barely Sustained by High Oil Prices

[Image source=Reuters Yonhap News]

The Russian economy, with official parts imports cut off, continues to stagnate. According to the Russian Federal State Statistics Service’s announcement last month, Russia’s GDP growth rate for the third quarter recorded -4.0%, marking a consecutive decline of over 4% following the previous quarter. Typically, two consecutive quarters of negative growth are considered a technical recession phase.

Considering that the high oil price situation has continued and that oil imports from China and India have persisted, concerns are raised that if the economic recession deepens next year, Russia’s economy could collapse. Since February, Russia’s imports have decreased by more than 25%, and if the war prolongs further, manufacturers are expected to struggle to survive.

Russian economic analyst Yevgeny Shatov said, "2023 will be the most difficult year for the Russian economy," adding, "In 2023, sanctions will begin to affect almost all sectors, and once the price cap on oil is implemented, the shortage of foreign investment will be felt in earnest."

This content was produced with the assistance of AI translation services.