For decades, Moscow’s Gorbushka market was one of the most popular places to buy electronics and recorded music in the Soviet Union. Few would have imagined that more than 30 years later after the USSR collapsed, sellers would be offering more unusual items, including 45 Starlink devices allegedly bought by a buyer linked to the Chechen Akhmat unit supporting the Russian army.
Hundreds of kilometres away, the atmosphere in a court in Riga was tense as four men, some of them strikingly young, faced charges of organising the purchase and transportation of 60 Starlink Mini Kits, produced by SpaceX, to support Russia’s military operations in Ukraine and violating international sanctions. The EU had banned the export of these items to Russia as the kits provided satellite internet access in remote areas, thereby being of strategic military use in Russia’s full-scale war against Ukraine. The total value of the smuggled goods was around €200,000 ($230,000).
Russian soldiers equip horses with Starlink satellite internet terminals. Photos via social media.
According to Latvia’s State Security Service, Ali Khalilov, an Azerbaijani citizen residing in Riga, was the main organiser of the scheme. In March 2026, Khalilov was sentenced to 11 years in prison for running a Starlink smuggling operation to Russia, plus three years’ probation, deportation from Latvia, and a five-year re-entry ban.
This is not an isolated incident. In the fourth year of Moscow’s full-scale war against Ukraine, Russia keeps adjusting its policies to get sanctioned goods via third countries. It has become obvious that in the South Caucasus, pre-existing transnational criminal networks and locals with connections linking Europe and Asia and Russian language skills have adapted quickly, exploiting sanctions evasion routes and weak governance in neighbouring states.
Armenian gold and used cars from Georgia
Speaking about illicit trade networks in the South Caucasus, Dr Alexander Kupatadze, a senior lecturer at the King’s Russia Institute at King’s College in London highlights how South Caucasus countries have capitalised on pre-existing areas of expertise and niche sectors that were already in place before sanctions and Russia’s invasion.
‘For example, Georgia’s number one export item was used cars even before the war, and this trade has since been reoriented toward facilitating the delivery of sanctioned Western-produced vehicles to Russia. Armenia has long had a specific niche in the gold and jewelry trade, which has similarly been repurposed in the context of sanctions evasion’, he tells OC Media.
Dr Erica Marat, an associate professor and chair of the Regional and Analytical Studies Department at the National Defence University, agrees with Kupatadze, telling OC Media that Armenia has emerged as a pivotal intermediary for illegal re-exporting Russian gold and jewelry, while Georgia has played a significant role in re-exporting Russian oil and facilitating the delivery of automobiles to Russia, circumventing international sanctions.
She further explains the situation in Georgia by highlighting a study by Transparency International Georgia on Georgian Dream founder Bidzina Ivanishvili’s network in Russia, and how it facilitates the business relationship with his family members and other businesspeople in Russia.
A report by the Organised Crime Reporting Project (OCCRP) alleged that Ekaterina Khvedelidze, the wife of Georgian Dream founder Bidzina Ivanishvili, possesses three undisclosed plots of land in Moscow, one bought as recently as 2024. Image via Tabula.
According to Marat, these relations may be behind Ukrainian President Volodymyr Zelenskyi’s decision to sanction Ivanishvili’s brother, his cousin, and his cousin’s wife.
‘Transparency International found that these individuals have business relations with the US-sanctioned former KGB general and governor of Saint Petersburg, Georgy Poltavchenko, and with the former high-ranking official of Volgograd, Roland Kherianov, whose wife is a former member of the State Duma’, Marat says.
Overall, she believes that the connections between Ivanishvili and business actors in Russia, including recently sanctioned individuals, coupled with the political fallout between the Georgian Dream government and the EU and US in early 2023, have given rise to speculation that there is a significant hidden trade between Georgia and Russia circumventing Western sanctions.
The South Caucasus ‘gaslights’ the West
Laura Linderman, Senior Fellow and Director of Programmes at the Central Asia–Caucasus Institute, however, emphasises that the issue goes beyond blaming a single culprit.
‘Weak customs capacity matters; that’s true across much of the post-Soviet space. Diaspora and business ties are [also] part of the picture, but I’d be careful not to overweigh them’, she says.
At the same time, however, she points to the local geography as the starting point for understanding sanctions evasion, noting that there is established trade infrastructure in every direction.
A line of trucks moving towards the Georgian-Russian border crossing in the Kazbegi Municipality. Photo: Mariam Nikuradze/OC Media.
Similarly, Marat has noted that the shared borders within the greater Caucasus has made it one of the key transit zones for sanctions violations, along with Central Asia and China.
‘Our findings from the study “Criminal Geographies: How the Russia-Ukraine War has Reshaped Global Crime Networks” show that armed conflict produces not only geographical shifts in organised crime but also functional re-organisation, exacerbating vulnerabilities in neighbouring regions, including the Caucasus, through cross-border smuggling, human trafficking, and trade-based money laundering’.
She adds that a substantial portion of the increased traffic has been concealed through illegal techniques, such as the intentional misrepresentation of origin and destination points, the deliberate underestimation of trade volumes and valuations, and the omission of critical details pertaining to the suppliers and importers involved.
‘In some cases, transiting goods are probably re-exported to Russia with implicit approval from Western producers who have formally committed to new trade restrictions. States neighbouring Russia turn a blind eye or actively cover up the transit of sanctioned brands and services via their territories’.
Kupatadze also highlights how the relationship between the EU and South Caucasus countries makes them more beneficial to Russia’s illicit trade networks.
‘The issue is that all three countries in the South Caucasus often turn a blind eye while gaslighting the West. The key factors, in my view, are geography, [Eurasian Economic Union] membership, in Armenia’s case, and deeply integrated trade networks that largely rely on diaspora links’.
Armenian Prime Minister Nikol Pashinyan virtually attending a session of the Supreme Eurasian Economic Union (EAEU) Council. Official photo.
He explains that compared to other regions, trade links, integration, and treaty frameworks with Europe are far more developed in the South Caucasus, and in Georgia in particular.
‘Countries like Kazakhstan and Kyrgyzstan may play a larger role in sanctions evasion, but Georgia and Armenia are particularly critical when it comes to facilitating trade with Europe and enabling sanctions circumvention’, Kuptadze says, adding that this has led to both the re-export of European-produced goods to Russia as well as re-export of Russian-produced goods to Europe.
Individual opportunists or broader organised networks?
As Kupatadze highlights, it is difficult to clearly define whether those recruited into smuggling operations are to be understood as individual opportunists or as part of a broader network serving Russia’s war economy.
‘[It] can be either or, indeed, both. There are trade networks that clearly saw [the war] as an opportunity, while there are other networks deliberately leveraged by the Russia-based business elite to facilitate sanctions evasion’.
Marat separately explains that many entrepreneurs in the South Caucasus found opportunities in Russian trade, while at the same time, Russians who fled the draft also set up businesses in their new homes, often the neighbouring Caucasus countries.
‘Russian entrepreneurs and state companies also look for opportunities to bypass sanctions through the South Caucasus’, she says.
A group of Russians cross the border into Georgia in September 2022. Photo: Zurab Tsertsvadze/AP Photo.
Linderman, on the other hand, notes the importance of seeing the bigger picture rather than blaming individual actors, such as in the case of the earlier Starlink incident. She highlights that small traders, shell company registrants, and drivers moving goods across borders are at the bottom of the chain. The bottom layer only functions because it sits on top of something much more deliberate: professional enablers — lawyers, trust services, logistics firms, and bankers — who know exactly what they’re doing. There is also, of course, the political architecture that keeps the gaps open.
‘The US Department of the Treasury and the UK have [sanctioned] more than a hundred of these enablers over the past three years, and the EU is moving to criminalise sanctions evasion directly. So ‘opportunist’ describes the foot soldiers, but ‘network serving Russia’s war economy’ is closer to how the system actually runs’, she concludes.
