The Effects of Trade Related Sanctions on Russia on Kazakhstan’s International Trade in Goods

Abstract

The aim of this study is to explore the effects of sanctions on the international trade of Kazakhstan using data from TradeMap database. The Russia-Ukraine conflict has brought instability to the broader Eurasian continent and significantly affected neighboring states. Kazakhstan and Russia share the second-longest international land border and both participate in the Eurasian Economic Union with a high level of economic integration. Given Kazakhstan's landlocked status, the country relies on Russian territory for its main export routes. Despite expectations of potential issues with oil and gas transportation for Kazakhstan due to sanctions on Russia, there was an increase in mineral exports from Kazakhstan in 2022, resulting in a positive trade balance. High energy prices and inflation in the EU at the start of the invasion led to the delay of oil and gas import bans by the bloc until late 2022. There is also evidence of sanction evasion by Kazakhstani companies, reflected in changes in the structure of exports to Russia. This has prompted visits by officials from sanctioning countries and increased monitoring. Overall, the conflict and subsequent comprehensive sanctions have created uncertainty for investors and require scenario-based long-term planning and additional compliance costs. It is recommended to improve awareness of local companies about the possibility of violating sanctions through corporate training and cooperation with business associations. This will help local businesses to prevent the risk of being subjected to secondary sanctions.