UK Experts Warn Manufacturing Exporters of Sales Spike to Russia-Friendly Countries
During a hearing on the effectiveness of sanctions against Russia, a sanctions expert told Members of Parliament that UK companies seeing a significant increase in sales to countries friendly with Russia should be cautious.
Tom Keatinge, director of the Centre for Finance and Security at the Royal United Services Institute, advised that such spikes in sales should not be celebrated, stating, “You should have had it drilled into you by now that if suddenly sales are rising to Kazakhstan, or suddenly sales are rising to Armenia, that is not a reason to go to the pub and celebrate, that is a reason to question why your sales are rising.”
Keatinge’s warning comes after Sky News identified a surge in sales of UK-made cars to Russia’s neighbors, particularly Azerbaijan, with luxury vehicles appearing in Moscow showrooms this year. According to analysis, the UK exported £273m of vehicles to Azerbaijan in 2020, a 1,860% increase compared to the five-year period prior to Russia’s invasion of Ukraine. Separate data also revealed a significant rise in car exports from Azerbaijan to Russia.
The Society of Motor Manufacturers and Traders (SMMT), a lobby group for the UK car industry, has denied any wrongdoing and insists that British carmakers are in full compliance with the sanctions regime.
Keatinge also stressed that the responsibility should not solely fall on banks to flag concerns about their corporate clients’ activities. He called for a review of the sanctions regime to ensure that penalties against Russia are effective and not causing unnecessary harm to UK businesses. He also urged for the private sector’s expertise to be utilized more effectively in enforcing sanctions.
While acknowledging the recent reports of luxury cars being sold to Russia, Keatinge emphasized that the focus should be on critical high priority items that could potentially resource Russia’s military. He added, “I don’t think we should be saying no business with the Eurasian economic area. That seems to me to be counterproductive but I do think we need to be making it much, much clearer to manufacturers and exporters in the UK that if you start to see an increase in trade with those countries then that is a reason to file a suspicious transaction report, raise a red flag and seek assistance.”
The Treasury Select Committee’s inquiry continues to investigate the effectiveness of sanctions against Russia and their impact on UK businesses.
