On a dusty street on the outskirts of Dubai, Sohrab Fani is profiting from the Western response to the war in Ukraine: his shop installs seat heaters for cars re-exported to Russia.
12,000 heating pads, he said, languished in his warehouse for years until the Russian invasion and consequential Western sanctions pushed American automakers out. , Europe and Japan out of the Russian market. Now, Russians import those cars via Dubai, in the United Arab Emirates – and since cars shipped to the Middle East tend to be made for warm climates, so Accessory stores like Mr. Fani’s are doing well to equip them for winter weather.
“When the Russians arrived, I was sold out,” said Mr. Fani, so he ordered a few thousand more seat heating pads. “In Russia, they have sanctions. Not here. Here, there is business.”
More than a year after President Vladimir V. Putin’s invasion, Western sanctions have Russian economy is damaged but don’t paralyze it. The global trade network has adjusted, allowing the Russian leader to fulfill much of his key promise: that war will not drastically disrupt the consumer lifestyle of Russia’s elites.
Russia is still importing coveted Western goods, aided by a global network of intermediaries.
In Moscow, the latest iPhones are available for same-day delivery for less than retail in Europe. Department stores are still Share Gucci, Prada and Burberry. Car buying and selling website list New Land Rovers, Audis and BMWs.
Nearly all of the leading Western electronics, auto and luxury brands announced last year that they were pulling out of Russia. Not all of their goods technically violate sanctions, but trade with Russia has become very difficult in the face of public outrage, pressure from employees and restrictions on exports. semiconductors and financial transactions.
However, Russian demand for luxury goods remains strong, and merchants in Dubai and elsewhere are responding to that demand.
“Rich people recently shipped a $300,000 Porsche Cayenne Turbo GT to a dealership in Russia,” said Ecaterina Condratiuc, communications director of a luxury car showroom in Dubai. always rich. The war “doesn’t affect them,” she added.
In Dubai, buyers roam the showrooms of a vast auto market, haggling over Western cars – the Dodge Ram is a recent favorite – for cash and transport. moved to Russia. Some wealthy Russians buy cars for themselves, or small entrepreneurs looking to resell cars for a quick profit.
In other cases, Russian auto dealers, having lost their official links with Western brands, are organizing their own imports, sometimes hundreds of cars at a time.
Russian analytics company Autostat report that Such indirect imports account for 12% of the 626,300 new passenger cars sold in Russia in 2022.
Electronics also have winding roads to the Russian market. In Dubai’s old commercial district of Deira, electronics wholesalers race to recruit Russian-speaking staff.
“It’s a public secret,” said the owner of Bright Zone International General Trading LLC, a few blocks from a hair extensions wholesaler. “The competition is very tough for Russia right now.”
The owner, who asked to be identified only by his last name, Tura, said he shipped hundreds of smartphones and laptops into Russia last year before the holiday season. One potential buyer wanted a quote for 15,000 iPhones, said Tura, but appeared to have found a better deal elsewhere.
In another electronics store nearby, an Afghan salesman, Abdullah Ahmadzai, said he arrived in Dubai less than a year ago and has since learned enough Russian to negotiate with his Russian-speaking customers. me. Across the street, a man from Tajikistan, a former Soviet republic, said he and his colleagues quickly found work in a shop selling phones, laptops and drones. drive.
“All the shops here are looking for Russian speakers,” he said. “We got lucky.”
After many Western companies withdrew from Russia, Putin’s government encouraged the illegal import of their goods from other countries. The Russian Ministry of Commerce has published a list of dozens of companies whose products can be imported without the consent of the manufacturer, including Apple, Audi, Volvo and Yamaha.
“Anyone who wants to carry any luxury goods will be able to do it,” Putin pledged last May.
a Russian report estimates that “parallel imports” of laptops, tablets and smartphones totaled $1.5 billion last year. At the same time, Chinese cars and electronics have flooded the Russian market.
“You can bring whatever you want, as long as you have the money,” said Pyotr Bakanov, a Moscow-based auto journalist. “Who is not lazy, bring the car over.”
The new trade routes mostly pass through countries with friendly relations with Moscow. Western analysts and officials pointed at Türkiye, China, and former Soviet republics such as Armenia and Kazakhstan are the ones diverting Western goods to Russia. They say the Kremlin is exploiting those imports not only to appease a segment of the population accustomed to foreign phones and cars, but also to provide microchips for weapons used against Ukraine.
Mr. Bakanov, like other Russian auto journalists and bloggers, entered this business on his own: he posted an ad on the messaging app Telegram, offering to import cars “to order.” from anywhere in the world”. He said that foreign auto parts are also being imported through parallel imports – some are now available in Russia at lower prices than before the war, when those parts were sold by dealers. authorization with high premium.
Alternatives have become so popular that Russian automotive publications regularly post reviews of cars produced for the foreign market. The multimedia dashboard in the made-for-China Toyota Camry works only in Chinese, a well-known automotive website warning in February; The reviewer suggested holding a smartphone translation app up to the screen.
At the Dubai auto market one March evening, Sergei Kashkarov sat in the passenger seat of a parked gray Toyota, negotiating his latest deal: to send six Mitsubishi cars to a dealership in Novosibirsk in the southern city of Novosibirsk. Siberia by ferry and truck, via Iran and Kazakhstan. Mr Kashkarov moved to Dubai from Siberia in 2021 and after the invasion he established himself as a broker connecting Russian car dealerships with Dubai suppliers.
“I have a lot of work to do,” he said. “I’m not really complaining.”
New trade patterns appear in international statistics; Car exports from the European Union to Russia, for example, have fallen to around 1 billion euros in 2022, from 5 billion euros in 2021.
But EU exports to Kazakhstan have nearly quadrupled, to more than 700 million euros, and exports to the United Arab Emirates have increased by about 40%, to 2.4 billion euros. Armenia reports that its auto imports more than fivefold to $712 million last year.
Western auto companies often deny reports that their cars will arrive in Russia in significant numbers or sales spike in the Emirates.
“We haven’t seen any of that,” said Jim Rowan, Volvo’s chief executive.
Paul Jacobson, chief financial officer of General Motors, said, “I don’t know anything is going to come to Russia.”
Automakers will find it difficult to track vehicle sales through intermediaries, industry officials said. And the US officials responsible for enforcing the restrictions have focused more on goods that can be used for military purposes.
The United Arab Emirates has been identified as a “concentrated country” by US officials for its role as a hub for shipping products to Russia in violation of sanctions. Electronics are of particular concern, officials say, because their chips can be reused for military purposes.
An official from the United Arab Emirates said in a statement: “The UAE has strict measures to regulate import and export permits for dual-use materials to prevent their exploitation for commercial purposes. military.
Browsing through Dubai’s auto market, a group of three men said they split their time between Russia and Armenia. They declined to say what they do for a living, but they describe the import and resale of cars as a lucrative side business; One person said that he bought about 100 cars in the last year.
“Dubai is three in one,” quipped a man named Aik. “You go on vacation, you buy a car for yourself and you buy some to resell.”
Anton Troianovski reports from Dubai and Jack Ewing from New York. Report contributed by Vivian Nereim from Riyadh, Saudi Arabia, Ahmed Al Omran from Jeddah, Saudi Arabia, and Oleg Matsnev from Berlin.
