How the War in Ukraine Changed Kazakhstan's Trade with Russia
What Photo Products Does Kazakhstan Supply to Russia
What Mechanical Devices Does Kazakhstan Supply to Russia
What Electrical Machines and Equipment Does Kazakhstan Supply to Russia
After the onset of the war in Ukraine, the share of Kazakhstani exports in the trade turnover between Kazakhstan and Russia significantly increased. This does not necessarily imply that Kazakhstani companies are helping to circumvent sanctions. Trade could have changed for other reasons. Kursiv Research investigated which products experienced sharp changes and what these transformations might be attributed to.
How the War in Ukraine Changed Kazakhstan's Trade with Russia
Three years ago – on February 24, 2022 – a military conflict began between Russia and Ukraine. In response, Western countries imposed new sanctions on Russia. Along with sectoral, financial, and personal sanctions, trade restrictions were introduced. In other words, the supply of dual-use goods and high-tech products to Russia was banned. Additionally, the possibility of imposing secondary sanctions on companies and countries that assist Russia in circumventing these restrictions was included. Furthermore, several Western countries, as well as Japan and South Korea, suspended the most favored nation status in trade with Russia, which retaliated with its own sanctions.
Kazakhstan chose to remain neutral. However, trade between Kazakhstan and Russia could not help but change. This is due to long-standing strong economic ties and the longest land border in the world. The weight of Kazakhstani exports in the trade turnover between Kazakhstan and Russia significantly increased. Its share for the year 2024 reached 34%. This is slightly less than the record 38% recorded the previous year, but it is significantly higher than the average of 28% over the five years leading up to the war.
This does not necessarily mean that Kazakhstani entrepreneurs (or companies registered in Kazakhstan by Russians) are helping to circumvent sanctions. Trade could have changed for other reasons.
- First, Kazakhstani producers may have penetrated into the newly opened niches of the Russian market, supplying domestic products that were previously unavailable there.
- Second, the share of standard products in Kazakh-Russian trade could have increased.
- Third, the re-export of non-sanctioned goods could have risen.
Kursiv Research analyzed the export of goods from Kazakhstan to Russia (import flows will be analyzed separately) and in this material focused on three consolidated product groups (by two-digit HS code), under which a common denominator can be identified – over the past three years, Kazakhstan has exported products in these categories more than it imported at least once. That is, it became a net exporter for these products.
The product groups in question are: "Photo and Cinematographic Goods" (HS Code 37), "Nuclear Reactors, Boilers, Machinery and Mechanical Devices; Parts Thereof" (HS Code 84), "Electrical Machines and Equipment, Parts Thereof; Sound Recording and Reproducing Apparatus, Apparatus for Recording and Reproducing Television Images and Sounds, Parts and Accessories Thereof" (HS Code 85). To identify the reasons for the rapid growth, Kursiv Research broke them down to six-digit codes, analyzing the product flow separately.
What Photo Products Does Kazakhstan Supply to Russia
Before the start of the military conflict, Kazakhstan exported photo and cinematographic goods to Russia in negligible volumes. For instance, in 2021, Kazakhstan shipped $1.1 thousand worth of these products to Russia, while the northern neighbor supplied us with $3.1 million worth of goods in this category (HS Code 37).
0 Kazakhstan has always been a net importer of photo and cinematographic goods, primarily imported from Belgium, the USA, Japan, China, and Russia. The share of these importers changed, but the composition remained relatively stable. However, since 2022, Kazakhstan, while remaining a net importer overall, has started supplying more of these products to Russia than it receives from there. By the end of the first year of the war, our exports of photo and cinematographic goods to Russia increased to $5.4 million (or 5,000 times the level of 2021). The volume of supplies continued to grow dynamically in 2023-2024, reaching $10.3 million and $11.4 million, respectively.
If we break down trade flows to six-digit HS codes, we find that over the past three years, we have primarily supplied flat X-ray films, roll X-ray films, and ready-to-use photochemicals, i.e., toners and cartridges (exports of other goods do not exceed $1 million). Kazakhstan has not yet learned to produce such products – at least, this conclusion is suggested by the data from the National Statistics Committee of Kazakhstan, the aggregated statistics of which do not provide a clear picture of whether we have such producers.
Indicators of re-export are also suggested by the fact that over the past three years, Kazakhstan has actively imported this product from other countries. The volume of imports of photo and cinematographic goods (including X-ray films), which had been declining from 2019 to 2021, began to rise at double-digit rates in 2022 (+98%), and by the end of 2023, a record volume of $24 million was recorded (+52%).
For the past three years, Kazakhstan has remained a net exporter of photo and cinematographic goods to Russia – apparently due to re-exported products. In this sense, this product category is an excellent example of how the war has impacted trade between Kazakhstan and Russia. However, its share in Kazakhstan's total exports to Russia accounted for only 0.1% last year, making it not the most representative example.
Significantly larger export flows began to be recorded after the war began in two other product categories, which will be discussed below.
What Mechanical Devices Does Kazakhstan Supply to Russia
Kazakhstan has significantly increased shipments to Russia of goods categorized by customs statistics as "Nuclear Reactors, Boilers, Machinery, and Mechanical Devices" (HS Code 84; hereinafter referred to as "mechanical devices"). If in 2021 the share of this group in Kazakhstan's total exports to Russia did not reach 2% (or $128.2 million), by the end of 2024, it grew to 10.4% (or $996.2 million). We achieved the status of net exporter of mechanical devices to Russia in 2023 and ceased to be one by the end of the following year.
1 If we break down this product category to six-digit HS codes, Kazakhstan actively supplied bearings and fittings to Russia before the war. For example, in 2021, two items – cylindrical roller bearings (HS Code 848250) and pipeline fittings (HS Code 848180) – accounted for half of the exports of "mechanical devices" from Kazakhstan to Russia.
It should be noted that the Kazakhstani economy possesses the manufacturing infrastructure and engineering expertise to produce them. In 2021, Kazakhstan ranked 15th in global exports of cylindrical roller bearings. Stable supplies are ensured by the Stepnogorsk Bearing Plant, established during the Soviet era, which produces roller and radial bearings for railway transport. The Ust-Kamenogorsk Plant for Industrial Fittings is one of the largest machine engineering enterprises producing pipeline fittings and oilfield equipment – it is an approved supplier for Russian Transneft, Rosneft, Gazprom, and Lukoil.
However, with the onset of the war, Kazakhstan began supplying to Russia goods that previously had a negligible share in the "mechanical devices" category. Moreover, we do not have accumulated competencies for their production. In 2022, Kazakhstan shipped computing machines (HS Code 847130) to the north worth $147.4 million (compared to $210 thousand in 2021). Customs usually assigns this product nomenclature to personal computers and laptops. The volume of exports decreased in 2023 and 2024, but remained significant: $60.6 million and $38.9 million, respectively.
Additionally, shipments of the following products grew at an extremely