Connectivity

As Viktor Orbán’s government suffered a landslide defeat in Hungary last month, one of the main questions was how Prime Minister Péter Magyar’s new and much more pro-EU government would affect the EU’s ability to enact punitive measures against Russia, in particular the severity of sanctions that it could apply to the Kremlin and those indirectly supporting its war effort in Ukraine. With Hungary no longer stonewalling these efforts, the EU adopted its 20th sanctions package against Russia on the 24th of April. For the first time, the EU has used its ‘anti-circumvention’ tools and applied them to Kyrgyzstan. These are secondary sanctions on countries helping the Kremlin bypass the primary sanctions imposed upon it as a consequence of the full-scale invasion of Ukraine. While individual Kyrgyz as well as other Central Asian banks and entities have been targeted before, this is the first time they have been applied to an entire country. Kyrgyzstan’s imports of European dual-use technologies, in particular telecommunications equipment and metalworking machinery, far exceed its domestic demand and are being re-exported to Russia, according to EU Sanctions Envoy David O’Sullivan. This is also greatly facilitated by Ruble-backed cryptocurrency, allowing re-export transactions with Russian entities to better circumvent sanctions, which is why Kyrgyz cryptocurrency company TengriCoin has also been included, along with two major Kyrgyz banks. While this re-export business is surely profitable for Kyrgyz companies, it remains to be seen whether this sanctions package will have any immediate noticeable effect on the Kyrgyz economy. Past EU sanctions have already been criticised by the Kyrgyz government, with President Sadyr Japarov previously describing EU sanctions against individual Kyrgyz entities as “baseless” and interfering in internal affairs. First Deputy Cabinet Chair of Kyrgyzstan, Daniyar Amangeldiev, also pointed out that sweeping sanctions against Kyrgyzstan will have consequences for its image on the global stage. Regardless, the EU has now pushed through its 20th sanctions package, which is undoubtedly an escalation from previous iterations and presents a difficult situation for the Kyrgyz government to navigate. So far, Kyrgyzstan has responded by calling for transparent talks with the European Commission, and is reportedly in direct consultations with the EU, as well as US and UK officials, who have also levied their own sanctions against Kyrgyz entities.