Armenia And Western Sanctions Against Iran And Russia – OpEd
Armenia is a leading country assisting Russia to evade Western sanctions introduced in response to the Russian invasion of Ukraine. Armenia learnt the trade of sanctions evasion after assisting Iran to evade Western sanctions imposed in response to its attempts at building nuclear weapons.
Armenia Assisting Iran
In 2007-2008, a major scandal in US-Armenian relations took place when two US laws were broken, and Washington threatened the triggering of sanctions against Armenia. This was ‘part of a wider U.S. effort to block Iran’s access to the global arms and weapons, and technology market.’ US National security adviser John Bolton continued to raise the importance of squeezing Iran during his 2018 visit to Armenia.
The Armenian Ministry of Defence purchased from the Bulgarian company Metalica a total of 1,000 RPG-22s, produced by the Bulgarian Vazovski Mashinostroitelni Zavodi (VMZ), and 260 PKM machine guns, produced by the Bulgarian Arsenal company. The company ZAO Veber acted as an intermediary. The end user certificate was signed by then Defence Minister Serzh Sargsyan who promised they were for Armenia’s use (Bulgaria was unaware of the Iranian destination).
No documents were ever found on the Armenian shipment to Iran suggesting it was undertaken confidentially. When confronted with the evidence Armenian leaders and state officials categorically denied they had transferred weapons to Iran. For over four months former Armenian Defence Minister and from 2008, President Serzh Sargsyan denied the transfer had taken place saying, ‘it did not happen and could not have happened.’ A US diplomatic cable explained ‘The direct role of high-level Armenian officials and the link of the weapons to an attack on U.S. forces make this case unique and highly troubling.’
The funds for the arms were sent from an Iranian front company through an Armenian bank to Bulgaria. In the view of the US government, the weapons were found to have been used by the pro-Iranian Islamic Resistance of Iraq – Hizballah Brigade in terrorist attacks against US forces, killing 1 soldier and wounding 2. Some parts of the weapons were recovered after the attacks tracing them back to Bulgaria and Armenia.
After the US provided irrefutable evidence, the US demanded Armenia reform its export controls as one of the conditions of not imposing sanctions. Washington hoped the Armenian authorities would implement the reforms and halt Armenia ‘from becoming a source of weapons for Iran or other states or groups involved with terrorism and/or weapons proliferation.’ Despite Armenian promises Washington remained concerned and, a US diplomatic cable warned it could be a ‘Soviet style calculation that they can sign the MOU, but probably won’t really have to implement it.’
Armenian engineers and scientists assisted Iran in building new military facilities. It’s been reported that Armenian Lizin biochemical company supplied biochemical equipment to the Iranian front company Al-Ahd Sadeq Trading company in the UAE.
Despite denials of the trade between the Armenian Lizin and Iranian front companies’ military cooperation continued to grow. In January 2017, Armenian Defence Minister Vigen Sargsyan held talks with Iran’s National Security Council in Tehran to discuss further military and ‘scientific’ cooperation and visited military enterprises. ‘Armenia seeks to expand its cooperation with Iran in the defence sphere and we believe that this visit will promote further cooperation,’ Sargsyan told Iranian Minister of Defence and Armed Forces Logistics Hossein Dehghani.
Armenia assisted in deception schemes to provide aircraft which mysteriously undertake ‘emergency landings’ in Tehran and are then corporate raided into the country’s civilian airline fleets. Iraq’s Al-Naser Airlines purchased a fleet of A340 aircraft which were destined to fly for ‘maintenance’ repairs to Kazakhstan. They also undertook an ‘emergency landing’ in Tehran and joined Iran’s Mahan Air.
Mahan Air has been used by the Iranian Revolutionary Guard Corps – Quds Force (IRGC-QF) to fly its units, mercenary fighters, and military equipment to Syria in support of the murderous Assad regime. The IRGC-QF have been designated by the US as a ‘foreign terrorist organisation.’ President Donald Trump said, ‘This unprecedented step, led by the Department of State, recognizes the reality that Iran is not only a State Sponsor of Terrorism, but that the IRGC actively participates in, finances, and promotes terrorism as a tool of statecraft.’ Trump added, ‘The IRGC is the Iranian government’s primary means of directing and implementing its global terrorist campaign.’
The US Treasury Office of Foreign Assets Control imposed sanctions against Mahan Air and an Armenian company providing services to the airline ‘in support of the IRGC-GF’s destabilising regional operations.’ Mahan Air transported IRGC-GQ commander Quassem Soleimani to oversee operations in Syria, who had been sanctioned by the UN and was assassinated by the US in January 2020. The US Treasury department noted, ‘Mahan Air plays an integral role supporting the IRGC-QF and its proxies in Syria by transporting personnel and weapons.’
The Armenian-based Flight Travel LLC was included in these US sanctions for providing Mahan Air with sales, marketing, administrative and financial services. The US Treasury reported, ‘Flight Travel LLC has refused to heed warnings about the risk of sanctions exposure due to commercial support to Mahan Air.’ Meanwhile, ‘The designation of Flight Travel LLC demonstrates the U.S. Government’s commitment to denying foreign support for Mahan Air and other designated Iranian airlines and reinforces multiple warnings to the aviation community of the sanctions risk for individuals and entities maintaining commercial relationships with these airlines.’
Armenia has been criticized by the US for providing banking services to the Iranian government to evade international sanctions. A report by a U.N. panel of experts monitoring compliance with the sanctions ‘concluded Iran was constantly searching for ways to skirt restrictions on its banking sector. One state bordering Iran informed the Panel of requests from Iran to open new financial institutions.’ U.N. diplomats confirmed the unnamed state was Armenia.
The US believed, former Congressman Dan Barton said, ‘Armenia has assured the West that its banking sector is under increased control and Iran will not be able to launder money through Armenian banks. However, according to American officials, Iran has free access to Armenian banks operating in Nagorno-Karabakh. Iran can use these banks to finance its nuclear and missile programs and even finance terrorist groups in the Middle East.’
An investigation by Reuters found that Iran looked to Armenia as a means to evade sanctions against Iranian banks. Armenia was attractive not only because it is a regional ally but also because its ties to the European Union ‘could make it easier for Tehran to obfuscate payments to and from foreign clients and deceive Western intelligence agencies trying to prevent it from expanding its nuclear and missile programs.’
Armenia Assisting Russia
Although the pro-Russian ‘Karabakh clan’ is no longer powerful in Armenia, Yerevan continues to be a leading country assisting Russia to evade Western sanctions, together with Georgia, Kazakhstan, and Kyrgyzstan. Sanctions evasions strengthen corrupt Armenian-Russian networks and cement Armenia’s links to Russia.
According to Robin Brookes, former chief economist at The Global Association of the Financial Industry and chief FX strategist at Goldman Sachs, Armenia’s exports to Russia are up 430% from before the 2022 invasion, which are composed of re-exports from the EU and China to Russia. Armenia’s exports to Kazakhstan increased to1,200%, to Kyrgyzstan 1,600%, to Uzbekistan 250% and to the UAE 900%, all of which are being re-exported to Russia.
During a visit to Yerevan in summer 2022, CIA Director William Burns warned Armenia about assisting Russia to evade Western sanctions, including high technology, imposed in response to the invasion of Ukraine on 24 February. In March 2023, the US listed Armenia as a country involved in smuggling to Russia. A recent EU sanctions package ‘focused on preventing third-country circumvention also lists entities in Armenia among the culprits.’
The US Treasury Department’s Office of Foreign Assets Control (OFAC) has been slow to act against Armenia and other Eurasian sanctions busters. Two Armenian registered companies with Russian owners, TAKO LLC (registered in Yerevan in May 2022) and AO PKK Milandr have been sanctioned.
The US Treasury Department’s OFAC ruled that TAKO, ‘materially assisted, sponsored, or provided financial, material, or technical support for, or goods and services to or in support of Radioavtomatika.’AO PKK Milandr is a Russian microelectronics company that is part of the Russian military research and development defence technology firm Radioavtomatika that supplies electronic goods to the Russian military.
Armenian banks (e.g., AreximBank, GazpromBank Group, VTB Bank, Bank Mellat) are profiting from the war in Ukraine. Armenia and Georgia have experienced a huge influx of refugees from Russia, many of whom have brought capital and launched new business ventures. Financial transfers from Russia to Armenia reached 3.5 billion US dollars in 2022, a massive increase from 865$ million US dollars in 2021.
In 2022, the first year of the invasion, EU exports to Russia declined by nearly half (47%). In the same year, imports from the EU to Armenia, Georgia, Belarus, Kazakhstan, and Kyrgyzstan grew by 48%. These five countries do not have the populations and purchasing power to consume such a large volume of products and therefore there is little doubt these imports were re-exported to Russia.
Armenia’s exports to Russia almost tripled in 2022, growing by 187% over the previous year. At least half of this trade consisted of the re-export of Western goods with the remainder Armenian products. Some of these were dual use goods, such as washing machines, for the consumer market and military. In 2022, Armenia imported more washing machines than all the member states of the EU!
Armenia’s economy boomed in 2022, growing by a record 14.2%. Under the impact of Russia’s invasion, Ukraine’s economy declined by a third. Armenia’s economy had been expected to decline due to its heavy reliance on Russia and yet grew by a record figure.
Imports into and exports from Armenia grew by record figures in 2022. Armenia’s trade turnover increased by 68.8% in 2022 over the previous year while imports grew by 63.5% over 2021. This included a two-fold increase of goods imported from the EU. Armenian exports to Russia grew three-fold in 2022, at least half of which were reexports.
In addition to dual use consumer goods, microchips, transportation equipment, technical components, old and new cars, smartphones, and computers are re-exported to Russia. Tens of thousands of cars in Armenia and Georgia are destined for Russia. Armenia does not produce cars; nevertheless, exports of cars to Russia increased from $800,000 in 2022 to $180 million a year in the following yearer.
Armenia increased its import of precious metals and stones by a whopping 200%, new vehicles by 170%, electronics by 100%, iron and steel by 76%, machinery and mechanical devices by 52% and technical and medical equipment by 42%. In the same year, Armenia increased the export of precious metals and stones by a suspiciously high 200% and technical and medical equipment by 400%.
Armenia’s 2.8 million population does not have the capacity to purchase such large quantities of commodities. In addition, these commodities were not traditionally found in Armenian exports to Russia. Re-exports to Russia are the only answer explaining Armenia’s massive growth in trade. For example, Armenia increased its imports of microchips from the US by 515% and from the EU by 212% in 2022. Nearly all of these (97%) were reexported to Russia where they are used by Russia’s military industrial complex.
Assisting Russia to evade Western sanctions contradicts Armenia and Georgia allegedly pro-European foreign policies. The Kremlin views the war in Ukraine as an indirect war against Western democracies with the goal of destroying the so-called US-led unipolar world and replacing it with a vague multipolar world.
Armenia is using methods and networks that it cultivated in assisting Iran to evade Western sanctions for the purpose of assisting Russia to evade sanctions. These practices make Armenia an indirect ally of the Russian-Belarusian-Iranian-North Korean axis fighting against the West in Ukraine and Israel.
The views expressed in this article belong to the authors alone and do not necessarily reflect those of Eurasia Review.
