On a dusty road on the outskirts of Dubai, Sohrab Fani is profiting from the West’s response to the war in Ukraine: His workshop installs seat warmers in cars that are re-exported to Russia.
Twelve thousand heating pads languished in his warehouse for years, he said, until the invasion of Russia and resulting Western sanctions drove American, European and Japanese automakers out of the Russian market. Now the Russians import those cars through Dubai in the United Arab Emirates, and because the cars shipped to the Middle East tend to be made for hot climates, accessory stores like Fani’s are doing a big business by equipping them for winter weather.
“When the Russians came, I sold out,” Fani said, ordering several thousand more heated seat pads. “In Russia, they have sanctions. Here, there isn’t. There is business here.”
More than a year after President Vladimir V. Putin’s invasion, Western sanctions have damaged the economy of Russia but not stop it. The web of world trade has tightened, allowing the Russian leader to largely deliver on a key promise: that the war will not drastically disrupt the consumer lifestyles of Russia’s elites.
Russia continues to import coveted Western products, thanks to a global network of intermediaries.
In Moscow, the latest iPhones are available for same day delivery for less than retail price in Europe. department store still stock Gucci, Prada and Burberry. car sales sites list new Land Rover, Audi and BMW.
Virtually all of the major Western electronics, auto and luxury brands announced last year that they were pulling out of Russia. Technically, not all of its products violate sanctions, but trade with Russia has become very difficult in the face of public outrage, pressure from employees and restrictions on semiconductor exports and financial transactions.
Still, Russian demand for luxury goods remains strong, and merchants in Dubai and elsewhere are meeting it.
“Rich people always stay rich,” said Ecaterina Condratiuc, director of communications for a luxury car showroom in Dubai, who recently shipped a $300,000 Porsche Cayenne Turbo GT to a Russian dealer. The war, she added, “did not affect them.”
In Dubai, buyers roam the showrooms of a sprawling auto market, haggling for Western cars — the Dodge Ram is a recent favorite — to buy cash and ship to Russia. Some are wealthy Russians buying vehicles for themselves, or small businessmen looking to resell cars for a quick buck.
In other cases, Russian car dealers, having lost their official affiliations with Western brands, are arranging their own imports, sometimes from hundreds of cars at a time.
The Russian analysis company Autostat reported that such indirect imports accounted for 12 percent of the 626,300 new passenger cars sold in Russia in 2022.
Electronics also takes circuitous routes to the Russian market. In Dubai’s old commercial district of Deira, electronics wholesalers have scrambled to hire Russian-speaking staff.
“It’s an open secret,” said the owner of Bright Zone International General Trading LLC, a few stores down from a hair extensions wholesaler. “The competition is very tough right now for Russia.”
The owner, who asked to be identified only by his last name, Tura, said he shipped hundreds of smartphones and laptops to Russia last year ahead of the Christmas season. A potential buyer wanted a listing for 15,000 iPhones, Tura said, but apparently found a better deal elsewhere.
At another nearby electronics store, an Afghan salesman, Abdullah Ahmadzai, said he had arrived in Dubai less than a year ago and had since learned enough Russian to do business with his Russian-speaking customers. Across the street, a man from Tajikistan, a former Soviet republic, said he and his colleague quickly found jobs at a store that sold phones, laptops and drones.
“All the stores here are looking for people who speak Russian,” he said. “We had luck”.
After many Western companies withdrew from Russia, the Putin government encouraged unauthorized imports of their products from other countries. Russia’s Ministry of Commerce published a list of dozens of companies whose products could be imported without the consent of their manufacturers, including Apple, Audi, Volvo and Yamaha.
“Whoever wants to bring any luxury item can do so,” Putin promised last May.
a russian report estimated that such “parallel imports” of laptops, tablets and smartphones totaled $1.5 billion last year. At the same time, Chinese cars and electronics flooded the Russian market.
“You can bring whatever you want, as long as you have money,” said Pyotr Bakanov, a Moscow-based motoring journalist. “Everyone who isn’t lazy is bringing cars.”
The new trade routes largely pass through countries that have friendly relations with Moscow. Western analysts and officials have pointed Turkey, China and former Soviet republics such as Armenia and Kazakhstan as countries that redirect Western products to Russia. They say the Kremlin is taking advantage of those imports not just to appease a population accustomed to foreign phones and cars, but also to obtain microchips for weapons used against Ukraine.
Bakanov, like other Russian auto bloggers and journalists, has gone into business himself: he posts ads on the messaging app Telegram, offering to import cars “on demand from anywhere in the world.” He said foreign auto parts are also arriving via parallel import: some are now available in Russia at lower prices than before the war, when those parts were sold by authorized dealers charging high premiums.
Workarounds have become so widespread that Russian auto publications regularly publish reviews of cars made for foreign markets. The multimedia console of the Toyota Camry made for China only works in Chinese, a popular car website warned in February; the reviewer suggested holding a smartphone translation app to the screen.
At the Dubai auto market one night in March, Sergei Kashkarov sat in the passenger seat of a parked gray Toyota, negotiating his latest deal: to ship six Mitsubishi cars to a dealer in the Siberian city of Novosibirsk by ferry and truck, through Iran and Kazakhstan. Mr. Kashkarov had moved to Dubai from Siberia in 2021, and after the invasion, he established himself as a middleman connecting Russian car dealers with Dubai suppliers.
“I have a lot of work,” he said. “I’m not really complaining.”
New trade patterns appear in international statistics; European Union car exports to Russia, for example, fell to around €1 billion in 2022, from €5 billion in 2021.
But EU exports to Kazakhstan almost quadrupled, to more than 700 million euros, and exports to the Emirates increased by 40 percent, to 2.4 billion euros. Armenia reports that its car imports more than quintupled to $712 million last year.
Western car companies generally deny knowledge of their cars going to Russia in significant numbers or of increased sales in the Emirates.
“We haven’t seen any of that,” said Jim Rowan, Volvo’s chief executive.
Paul Jacobson, General Motors’ chief financial officer, said: “I’m not aware of anything going to Russia.”
Automakers would have trouble tracking vehicle sales through intermediaries, industry officials say. And US officials responsible for enforcing the restrictions have focused more on goods that can be used for military purposes.
The United Arab Emirates has been identified as a “focus country” by US officials for its role as a hub for products shipped to Russia in violation of sanctions. Electronics are of particular concern, officials say, because their chips can be repurposed for military use.
“The UAE has strict measures governing import and export permits for dual-use materials to prevent their exploitation for military purposes,” an Emirati official said in a statement.
Browsing the Dubai car market, a group of three men said they split their time between Russia and Armenia. They declined to say what they did, but described importing and reselling cars as a lucrative side business; one said he had bought about 100 cars in the past year.
“Dubai is a three in one,” joked a man who gave his name as Aik. “You go on vacation, you buy a car, and you buy some to resell.”
Anton Troyanovsky reported from Dubai and Jack Ewing from New York. The report was contributed by viviana nereim from Riyadh, Saudi Arabia, Ahmed Al Omran from Jeddah, Saudi Arabia, and Oleg Matsnev of Berlin