Seda Hergnyan, Miguel Angel Gavilanes (Spain)

In October 2023, Spanish customs officials, in a joint operation with the National Police and with support from the European Anti-Fraud Office (OLAF), seized thirteen tons of chemicals ready for smuggling at the Port of Barcelona.

The investigation, still ongoing, continued on February 10 with searches of three companies in Valencia and Barcelona and the arrest of four individuals, now released with charges. Authorities confirmed shipments of diethylamine, nitric acid—a precursor for explosives like nitroglycerin and TNT—and hexamine, which is crucial for missile propellants and warhead detonators.

Investigators identified a Spanish company run by individuals of Russian origin at the center of the scheme. To circumvent sanctions, the company concealed its final destination—a subsidiary in Moscow—through a network of shell companies in Armenia and Kyrgyzstan. These intermediaries never received the goods; instead, they were diverted by land to the Russian Federation. The so-called 'Probirka' operation remains classified and ongoing, according to sources.

The Spanish police are not releasing many details about this operation. They are also not disclosing information about the involvement of the Armenian side.

Since 2022, unprecedented numbers have been recorded in Armenia's foreign trade sector. After the start of the Russia-Ukraine war at the beginning of that year, the West has periodically imposed economic sanctions on Russia, including restrictions on trade in goods.

As a result, some goods that previously reached Russia directly from Western countries or were directly exported from Russia to Western countries, are now being re-exported through transit countries. This chain involves countries such as Kazakhstan, Kyrgyzstan, Armenia, Turkey, Serbia, Mongolia, and others. Three of these countries are members of the same customs union as Russia: the Eurasian Economic Union.

EU exports to Russia plummeted starting in March 2022. A month later, Moscow classified all foreign trade statistics as secret to prevent "improper evaluations, speculative trading, and misinterpretations where imports are concerned." As a result, verifying data from Rosstat, Russia’s statistical agency, is impossible. However, figures from sources like the International Monetary Fund (IMF) and the United Nations (UN) indicate that Russia’s neighboring countries have experienced a dramatic increase in international trade.

By the end of 2023, with less than two years of Russia’s parallel import mechanism in place, over $70 billion worth of goods had entered the country, according to Andrei Belousov, then Russia’s Deputy Prime Minister and current Minister of Defense. 

The EU and its partners have implemented measures to curb re-exports, requiring suppliers to certify that goods will not end up in Russia or Belarus. However, this bureaucracy seems somewhat naive. “European producers are well aware that the goods they send to Armenia will be re-exported to Russia. Sometimes importers are forced to formally sign that they will not export the goods to Russia, but they know very well they will”, said the manager of an Armenian accounting firm involved in these transactions since 2022. Speaking anonymously, he described how these trade hubs operate in Moscow’s backyard.

 The Armenian Case

In 2024, goods worth thirteen billion dollars were exported from Armenia. According to the Statistical Committee of Armenia, this is a 53.1% increase compared to the previous year. During the same period, Armenia imported goods worth seventeen billion dollars, which is a 33.8% increase.

Russian businessmen, who traditionally imported goods from Europe and the U.S. and had well-established partnerships, decided to open companies in Armenia—sometimes in their own names, sometimes through Armenian partners. Not just one, but multiple companies. These Armenian firms exchange goods, with some items ultimately registered as Armenian, according to our source. This process helps them avoid customs issues when exporting to Russia via a third company. “It is interesting that there have been cases where not only Western goods, but even Ukrainian-origin goods have been exported from Armenia to Russia,” our source adds.

 Registering a new company in Armenia is relatively quick and easy. Russian owners appoint Armenian directors and ensure tax and salary payments, according to the firm’s manager. “The state and customs services do not interfere with this process because there is nothing illegal about it. However, working with banks is quite difficult. Since almost all banks are capitalized by European or other foreign investors, they are very cautious. Most banks check several times to ensure that their clients are not circumventing sanctions or transferring payments for prohibited goods, etc. Banks are very cautious because they are linked to their parent companies and could quickly fall under sanctions,” he explains.

 Despite this, many of these companies do not have active business operations. This is because Russian businessmen also re-export via Kazakhstan and other countries that, unlike Armenia, have a land border with Russia. Armenian companies are the ‘plan B’ that comes into play when, for example, Astana prohibits certain transactions and these operations need to be quickly transferred to another territory. 

 The re-export business is not exclusive to newly established companies but also includes long-standing firms. According to the administrators of the contacted companies, these operations do not violate any laws: they involve goods that circulate freely, and in the case of dual-use products—those with both civilian and military applications—there are no restrictions.

The benefits for intermediary countries may be short-lived. Official statistics show an unprecedented increase in exports, but the reality is different, highlights economist and analyst Aghasi Tavadyan. Of Armenia’s total exports of $13.1 billion in 2024, around $9.3 billion (71%) consist of re-exports. If these products are excluded, actual exports amount to approximately $3.7 billion, comparable to the $3.0 billion recorded in 2021.

All of this has blown up Armenia's economy like a balloon, in the opinion of the Armenian expert, who warns: “All this carries great risks, because in the absence of these factors, Armenia's economy will become talkative”.  

The Armenian authorities claim that the country is not evading sanctions or violating laws, and that foreign trade has soared since 2022, increasing both imports and exports.

 The Armenian Ministry of Economy is confident that the export of Russian gold under sanctions is not a serious problem and can only threaten Armenia with secondary sanctions. However, no such cases have been registered to date, which, according to the ministry, testifies to the effectiveness of the tools introduced by the government.

 “The RA Ministry of Economy is constantly monitoring developments in order to respond more flexibly to the situation,” responded Haykaz Nasibyan, Secretary General of the Ministry of Economy.

 This phenomenon is bidirectional. Goods arrive in Armenia from other countries and are then sent to Russia; likewise, Russian goods enter Armenia and are exported to Western countries such as Switzerland, the United Arab Emirates, and China, among others. Gold, jewelry, and diamonds stand out as the most prominent items.

 As for European countries alone, imports to Armenia from these countries have not increased as much as, for example, imports of gold or diamonds from Russia. This means that in terms of re-exports, if we look only at absolute numbers, the weight of goods imported from Europe is not large. In 2024, 54% of Armenia's $17 billion imports went to Russia, and 10% to European countries.

 Foreign trade statistics show that re-exports from Armenia are gradually decreasing. According to the latest data, in January 2025, exports from Armenia decreased by 49.2%, and imports by 33.5%.

 Shocking revelations are regularly made in Europe

 In 2023, Spanish National Police officers arrested two women, one Russian and one Ukrainian, in the towns of Irún and Hondarribia (Basque Country) for smuggling military aeronautical equipment. The latest operation, Probirka—which means “test tube” in Russian—not only confirmed shipments of diethylamine, nitric acid, and hexamine but also led to the seizure of tons of NMP, a solvent used in the petrochemical, pharmaceutical, and electronics industries, particularly in the development of lithium-ion batteries.

 When it’s not components, it’s directly rifles and shotguns arriving from the European Union or the United States. Several investigations published by «The Insider» point to the Italian company Beretta, its subsidiary Russian Eagle, and the Czech manufacturer CZ, among other arms producers whose products continue to reach Russia despite the sanctions. Meanwhile, Western luxury goods, also subject to embargo, still find their way into Moscow’s boutiques.  

 Conversely, the flow of prohibited goods has also been detected in the opposite direction. Armenia is not among the world's diamond producers—Russia, which holds the largest reserves of this mineral, dominates that market. Yet, Armenia's diamond trade reached $589 million in 2023, a 457% increase in just two years, according to the United Nations Comtrade database. 

 Oil, another key element of the Russian economy—accounting for 42.1% of all its exports in 2021—stopped flowing massively to Europe. However, illegal hydrocarbon shipments have still been detected. In Spain, among other cases, customs authorities uncovered more than 65,000 tons of fuel that were unloaded at the port of A Coruña in 2023. Smugglers falsified certificates of origin to disguise it as Turkish. According to the Spanish Tax Agency, providing false documentation about product origin or misclassifying goods for tariff purposes are the most common tactics used.

Gas is also of key importance in Russia-West economic relations. In November 2024, Politico wrote that Western countries are looking to Azerbaijan to help end their reliance on Moscow’s fossil fuels, striking a string of natural gas agreements even during this year’s COP29 climate change talks.

«However, in order to increase its exports to Europe, Azerbaijan has dramatically upped its own fossil fuel imports from Russia. Some researchers suspect the country may be simply relabeling some imported Russian fuel and sending it along to Europe, although Azerbaijan insists the supplies are merely for domestic use. Either way, though, Moscow benefits," the article reads.

"Europeans see Azerbaijan as an alternative to Russia, but buying energy from Azerbaijan means buying energy from Russia," said Zhala Bayramova, an Azerbaijani dissident.

The EU’s Response

The European Union has regularly imposed restrictive measures against Russia. It has also imposed sanctions on Belarus, Iran and North Korea, accusing them of aiding Russia in its war against Ukraine.

The objectives are threefold: “First, to deny Russia access to western technology needed to make their weapons smarter and therefore more lethal; second, to hit the revenues available to the Russian government to fund this war; and third, to weaken the Russian military industrial complex in the medium to long term,” summarize sources from the European Commission.

“Circumventing sanctions is a crime and tackling it is a matter of priority,” states the European Commission’s Directorate-General for Taxation and Customs Union (FISMA). “We are keeping a close eye on third countries that are used as platforms for sanctions circumvention and in particular operators that are engaged in circumvention schemes.” They further emphasize that “Diplomatic outreach and constant engagement with these countries is a must. This is at the core of the mandate of the EU Sanctions Envoy David O’Sullivan.”

Brussels has attempted to bring countries in the Caucasus and Central Asia closer to its sphere of influence in an effort to isolate Putin. However, FISMA acknowledges that “in some cases, diplomatic efforts may prove to be insufficient” Kyrgyzstan is now in the crosshairs of Western countries. Last summer, a delegation from the U.S. Treasury Department visited Bishkek, threatening to expel its banks from the SWIFT system if they did not halt transactions with Russian operators. Meanwhile, the EU has been issuing warnings to businesses and individuals, threatening to blacklist them. But so far, these efforts appear insufficient.

Western countries have been engaged in a three-year game of cat and mouse, where, according to intermediaries interviewed for this report, European suppliers deliberately turn a blind eye. To make matters worse, Donald Trump has broken with years of U.S. diplomacy and is no longer the preferred partner of Ukrainian President Volodymyr Zelensky, demanding half of Ukraine’s rare earth reserves in exchange for continued military support.

The White House has proposed to Russia "potentially historic economic partnerships" and "incredible opportunities" if Moscow ends the war, according to The New York Times. 

Top photo: pixabay.com

This article was produced as part of the PULSE Thematic Networks, a European initiative supporting transnational journalistic collaborations.