The ongoing conflict between Russia and Ukraine, coupled with stringent Western sanctions, has birthed an unexpected business avenue for individuals like 31-year-old Yaroslav Kolchenko.
Nestled in the shadows of the geopolitical turmoil, Kolchenko is capitalizing on the ban on vehicle exports to Russia imposed by the US and the EU. Despite the restrictions, a unique loophole has emerged—cars can still find their way into Russia through Armenia.
The Circuitous Route: From Auctions to Russian Roads
Kolchenko sheds light on the intricate process involved in this subversive trade. "Used, damaged, or inexpensive cars are acquired through online auctions in the United States."
From there, they embark on a convoluted journey: transported by sea to the Georgian port of Poti, rehabilitated, sent to Armenia for customs clearance, and finally making their way into Russia via land through Georgia. This practice operates in a legal gray area, challenging the very essence of the imposed sanctions.
Armenia’s Crucial Rule
Armenia, a small country in the Caucasus region, has emerged as a pivotal player in this circumvention strategy. With a free trade agreement with Russia and more economical customs clearance procedures, Armenia serves as a hub for re-exporting cars from the US to Russia, especially after Western car dealerships closed shop.
Economic Partnerships and Concerns
Last year, Armenia drew attention when President Vahagn Khachaturyan expressed solidarity with Moscow and pledged to strengthen economic ties. The nation's affordability in customs clearance has contributed to a surge in re-export activities. Trade statistics indicate a 2.4-fold increase in exports, reaching a record $2.4 billion, with car re-exports growing by a staggering 170 percent.
Profitable Ventures Amidst Chaos
Kolchenko's business partner, Andrei, highlights the profitability of this venture. Operating since the onset of the conflict last February, they sold eight cars in April alone and plan to expand. The financial gains are evident, with one car purchased for $13,000 potentially fetching $23,000 in Saint Petersburg after factoring in customs costs.
Navigating International Relations
Despite the lucrative opportunities, Armenia treads cautiously in the global arena. Prime Minister Nikol Pashinyan acknowledges the delicate balance required to comply with Western sanctions while maintaining amicable relations with Russia. Collaborating closely with EU and US representatives, Armenia aims to act responsibly on the international stage, avoiding objections or complaints from its global partners.
In the shadows of geopolitical tensions, a seemingly innocuous trade in used cars unfolds, shedding light on the complex interplay between sanctions, economic interests, and the resilience of enterprising individuals navigating a sanctioned market.
