Policy

From the financial capital to the smuggling zone: Hong Kong has become a key accomplice of Russia in circumventing sanctions

Hong Kong, one of the world’s key financial centers, plays a central role in helping Russia obtain the parts it needs to manufacture weapons. This is stated in the report of The Committee for Freedom in Hong Kong (CFHK Foundation), reports "Komersant Ukrainian"

After the start of the full-scale war in Ukraine, Hong Kong’s exports to Russia initially decreased, but then within a few months almost doubled compared to the pre-war period. In October 2022, Hong Kong Chief Executive John Lee announced that the territory would not comply with global sanctions against Russia.

Already in 2023, almost 40% of exports from Hong Kong to Russia ($750 million out of $2 billion during August-December 2023) consisted of goods from the list of priorities, which are vital for Russian aggression. Among them are semiconductors and microcircuits, necessary for the production of high-tech weapons and communication systems.

Sanctions circumvention is facilitated by Hong Kong’s regulatory environment, which makes it easy to hide company ownership and quickly set up and dissolve legal entities. The report provides specific examples of sanctions circumvention. In particular, the Hong Kong company Piraclinos Limited, which pretends to be a seller of fertilizers and coal, sent microcircuits to the sanctioned Russian company VMK.

In addition, Hong Kong firms help circumvent sanctions not only of Russia, but also of North Korea and Iran. The report notes that Hong Kong, once considered a leading financial center alongside New York and London, has turned into a “rogue” that serves the world’s most brutal regimes and harms international security interests by smuggling military technology, money and prohibited goods.

Hong Kong is not the only one benefiting from the situation around Russia. For example, India and Russia plan to expand trade. Meanwhile, 44 European countries supported the plan to combat the Russian “shadow fleet”.

More news in the Telegram channel “Komersant Ukrainskyi” – https://t.me/komersant_ukrainskyi.

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