Russia invaded Ukraine in 2022, causing huge economic destruction in Central Asia and the Caucasus. The financial crisis in these nations became worse with the sanctions imposed on Russia. However, these regions have had to smartly adopt different strategies to cope ‌with the financial crisis. Many nations have not directly allowed the sanctions laws, but they are aligning with these laws to avoid the threats that came from ‌Western nations. 

On one side, these sanctions destroy many businesses connected to Russia, but on the other hand, they also create new opportunities. Trade rates in the region have been enhanced, particularly with Russia. This is due to the rerouting of goods previously sent from Europe. Back in 2022, when exports to Russia increased by about 30% in Kazakhstan and 193% in Armenia. However, major concerns are being raised due to the involvement of the goods in trade under the leadership of Western nations. This shifting in ‌trade increased the importance of the region. At the same time, it also enhanced the threats to future economic relations with the West. 

Central Asia and the Caucasus faced both challenges and opportunities in economic sectors due to the Russia-Ukraine war. Many Russians were displaced from Russia to places like Georgia, Armenia, and Kazakhstan. So, the war proves beneficial for these countries, especially to grow their economies. Additionally, these nations have also had to respond to international sanctions. Many of them don’t become ‌part of international sanctions but follow the rules properly. For example, Georgia’s central bank issued a warning to all local banks to ‌follow ‌international financial sanctions. 

The region’s governments have a difficult task. For example, Georgia is under political pressure to manage its relationship with Russia while maintaining ties to the West. Sanctions have been used by the US to caution other regional leaders against becoming too close to Russia. These countries are having difficulty striking a balance between sticking with the West and backing Russia. 

The difficulties in containing Russia’s influence in Central Asia and the Caucasus are highlighted by recent sanctions imposed on the country. Even if individuals like Russian oligarch Makarov haven’t significantly changed the policy of nations like Kazakhstan and Uzbekistan, they do demonstrate a more sophisticated approach to sanctions. The complexities of the situation are demonstrated by Makarov’s connections to Russia’s energy plan and Turkmenistan’s. Enterprises established to circumvent sanctions have been the focus of Western sanctions; enterprises in Kazakhstan, Uzbekistan, and Armenia have been singled out for enabling trade with Russia. Regional authorities haven’t yet been found completely responsible, though. Secondary sanctions and other recent US and European actions are putting more strain on regulators and financial institutions. The true problem, though, is with Western businesses that manufacture vital technologies. 

They have to take the initiative to make sure trade sanctions are followed. These sanctions might not be successful in reducing Russian influence in the area if they don’t work. There are contradictions in the sanctions imposed by the West on Russia, especially in the natural gas markets. While the US and Europe have placed restrictions on Russian gas, they have permitted neighboring nations like Uzbekistan and Azerbaijan to acquire more Russian gas. For instance, to fulfill its obligations to Europe, Azerbaijan agreed to acquire Russian gas in 2022. Similarly, with no resistance from the West, Uzbekistan is expanding its purchases of Russian gas by 2030. Despite EU sanctions on Russian petroleum, Kazakhstan is still reliant on Russian pipelines in the oil markets. 

This demonstrates regional pragmatism because, despite being threatened by Russia in 2022, Kazakhstan decided to keep exporting its oil via Russian channels. Although sanctions have harmed Russia, they have also given Central Asian nations more clout by redistributing energy dominance throughout the area. Sanctions are still complicated, though, as some nations contest Russian influence without directly participating in them. The West needs to bolster its approach to navigating conflicts and thwarting China’s expanding regional influence.