UK manufactured goods exporters seeing jumps in sales to Russia-friendly countries should “raise a red flag”, a sanctions expert has told MPs.
Tom Keatinge, director of the Center for Finance and Security at the Royal United Services Institute, said, in evidence to an inquiry into the effectiveness of sanctions against Russia, that UK companies seeing such spikes should not go “to the pub” to celebrate.
He was speaking generally amidst Sky News work which identified an increase in sales of UK-made cars to Russia’s neighbors, most notably Azerbaijan, with luxury vehicles seen in Moscow showrooms this year.
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Analysis showed that the UK exported £273 million worth of vehicles to Azerbaijan last year, an increase of 1,860% compared to the five-year period before Russia invaded Ukraine.
Separate data highlighted an unprecedented increase in Azerbaijani automobile exports to Russia.
The UK car industry lobby group SMMT has insisted that British car manufacturers do not sell cars to Russia and fully comply with the sanctions regime.
Keatinge told the Treasury select committee inquiry that exporters of industrial products should be more proactive in policing their sales, rather than placing the onus on banks to flag concerns about the activities of their business customers.
He explained that this was especially prevalent in the United States, which issued an executive order to this effect in December.
Keatinge said of manufacturers’ responsibilities: “You should have learned by now that if suddenly sales are increasing for Kazakhstan, or suddenly sales are increasing for Armenia, that’s no reason to go to the pub and celebrate, that’s a reason to question why your sales are increasing.
“I think this is the crux of our failure right now.”
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Big questions about Russian sanctions violations remain over UK car exports
It called for a review of the sanctions regime to ensure that sanctions against Russia were effective and did not just unnecessarily harm UK businesses, with private sector experience being used more effectively.
“If luxury cars are coming to Russia, which has obviously been a popular Ed Conway story on Sky News in recent weeks, we accept that we need to investigate those stories, but that will not be our priority.
“We were told this explicitly by a customs agency in a European member state. We are focused on the high priority critical items because these are the items Russia needs to resource its military.
“I don’t think we should say anything about the Eurasian economic area. That seems counterproductive to me, but I think we need to make it much, much clearer to UK manufacturers and exporters that if they start to see an increase in trade with those countries, so that’s a reason to – in the context of the banking world – file a suspicious transaction report, raise a red flag and say can anyone help me here, because I’m feeling uncomfortable about a sales boom that we’re witnessing.”
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