The timing was a little uncomfortable. On the eve of a visit paid by the European Union’s special envoy for sanctions to Astana, the OCCRP published an investigation tracing how a Kazakh company, among other companies in Turkey and Kyrgyzstan, has served as an intermediary in a vast network enabling a Belarusian company to bust sanctions in supplying microchips to the Russian military-industrial complex.

"Ghost" companies that re-export goods to Russia are a high-priority concern for O'Sullivan (Credit:Barbara Milkowska / MSZ, cc-by-sa 3.0).

"This year, we are not ruling out the possibility of other companies being placed under sanctions," said David O'Sullivan, responding to questions on the matter at a press conference in the Kazakh capital on January 30.

This is the fourth visit made to Kazakhstan by the bloc’s special envoy since the February 2022 start of Russia's full-scale war in Ukraine. Although Kazakhstan has chosen not to join the Western sanctions programme targeting Russia, the Central Asian country does work alongside the Europeans in efforts meant to ensure that it does not become a hub via which Russia can circumvent the penalties. The O’Sullivan visit was partly about ensuring continuity in that joint work, however, Kazakhstan has been identified as one of the countries where “ghost” companies have been created since the start of the Ukraine conflict to import European products for re-export to Russia.

“In this area we have requested and obtained very useful cooperation with the Kazakh authorities,” remarked O'Sullivan.

The EU’s Common High Priority Items list, setting out “dual-use” goods that can have both civilian and military uses and advanced technology items, includes 50 categories of items identified in Russian weaponry found on the battlefield in Ukraine. Although these goods represent less than 1% of Kazakhstan's total trade volume, O'Sullivan emphasised their potential impact: “These are deadly products that are killing innocent Ukrainian citizens,” he said.

Telescopic sights are among the hundreds of items on the EU's Common High Priority Items list of export goods that it aims to stop reaching Russia  (Credit: Chabster, cc-by-sa 3.0).

In 2024, two Kazakh companies were sanctioned by the EU, namely Elem Group LLP, devoted to wholesale trade in electronic and telecommunications equipment and components, and Da Group 22, said to have acted as an intermediary for the delivery to Russia of thousands of electronic chips.

The US Treasury, meanwhile, last June blacklisted CBD-Technologies LLP, registered in North Kazakhstan region. It was accused of repeatedly supplying components for the assembly of drones. Last autumn, the Almaty-registered branch of Turkish company All Global Trading Elektronik Dis Ticaret Ltd Sti, was also sanctioned by the US Treasury.

The EU encourages Kazakh authorities to take tough measures against third parties using the country's trade channels. One main achievement to date was the halting of ball bearing system exports to Russia. Used, for instance, in tank production, they are categorised as “battlefield items”. The ball-bearing goods were produced by a plant in Stepnogorsk, a Kazakh single-industry town heavily reliant on the Russian market.

“It's not easy for Kazakhstan in general, given its proximity to Russia, through the Eurasian [Economic] Union... but it seems to be playing the game,” confided a high-ranking European diplomat.

“We have already seen a considerable reduction in circumvention [in terms] of these products by Kazakhstan, and I am convinced that with the good cooperation we have, we will be able to resolve any other problems in this area,” said O'Sullivan following a meeting with Kazakhstan’s Deputy Prime Minister and Minister for the National Economy Serik Zhumangarin and Deputy Minister for Foreign Affairs Roman Vassilenko, the EU's direct contact in Astana on sanctions, and other officials in political and banking circles.

To date, the EU has adopted 15 sanctions packages designed to undermine Russia's economic base. Brussels is currently working on the 16^th.

There have been rumours that European imports of Russian gas could be further targeted with a ban on the “transshipment” of Russian liquefied natural gas (LNG) to ships docked in European ports. However, there are reports that, despite strong calls from EU hawks on the war, no general ban on Russian LNG imports will be proposed.

Kazakhstan, an exporter of gas to Europe via Russia, will keep a close eye out for any consequences. Recently, hundreds of tankers containing liquefied petroleum gas (LPG), made from gas drawn from Kazakhstan’s Tengiz field, were reportedly blocked at the Belarus-Poland border by Polish customs. Customes officers were said to be constantly extending the list of documents they required for passage and asking for confirmation that the gas was produced in Kazakhstan and not in Russia, Kazakh media reported.

Without confirming this chain of events, O'Sullivan stated that “the Polish authorities have every right to demand documents, if there are difficulties in proving that the product is Kazakh and [there are suspicions it] might be Russian”.

“This would be a bilateral issue between the Poles and the Kazakhs, just as the border with Belarus is a sensitive issue for Warsaw,” added a European diplomatic source. Energy was not discussed [during 7O’Sullivan’s visit], but it could be in the near future,” he observed.