In dusty terrain on the side of a road outside Dubai, Sohrab Fani capitalizes on the West's response to Ukraine's war: her shop installs seat heaters in cars that are re-exported to Russia.
Twelve thousand heating pads remained in its warehouse for years, until the Russian invasion and ensuing 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, since cars shipped to the Middle East are usually made for hot climates, accessory stores like Fani's are doing a good business equipping them for the winter.
"There's business here"
"When the Russians came, I ran out," Fani said, so he ordered several thousand more pads to warm the seats. "In Russia there are sanctions. Here, no. Here, there is business."
Sohrab Fani, founder and owner, works at his Kilimanjaro car accessories store in Dubai, United Arab Emirates. Photo: Andrea DiCenzo/The New York Times
More than a year after President Vladimir Putin's invasion, Western sanctions have hurt the Russian economy but not crippled it. The fabric of world trade has adapted, allowing the Russian leader to largely deliver on a key promise: that war would not drastically alter the consumption style of Russian elites.
Russia continues to import coveted Western goods thanks to a global network of intermediaries.
From Gucci to BMW
In Moscow, late-model iPhones are delivered on the day for less than the retail price in Europe. Big stores are still selling Gucci, Prada and Burberry. Car sales websites offer new Land Rovers, Audis and BMWs.
In Moscow, late-model iPhones are delivered on the day for less than the retail price in Europe. Photo: Andrea DiCenzo/The New York Times
Almost all major Western electronics, automobiles and luxury goods brands announced their withdrawal from Russia last year. Not all of its products technically violate sanctions, but trade with Russia was made very difficult by public outrage, pressure from employees, and restrictions on semiconductor exports and financial transactions.
However, Russian demand for luxury goods remains strong, and merchants in Dubai and elsewhere are meeting it.
"The war did not affect them"
"The rich always stay rich," said Ecaterina Condratiuc, communications director at a Dubai luxury car dealership, which recently shipped a $300,000 Porsche Cayenne Turbo GT to a Russian dealership. The war, he added, "did not affect them."
In Dubai, shoppers scour the showrooms of a vast car market, haggling over Western cars — the Dodge Ram is a recent favorite — to buy them in cash and ship them to Russia. Some are wealthy Russians buying vehicles for themselves or small business owners looking to resell cars for quick cash.
Car sales websites offer new Land Rovers, Audis and BMWs. Photo: Andrea DiCenzo/The New York Times
In other cases, Russian dealerships, having lost their official association with Western brands, organize their own imports, sometimes of hundreds of cars at a time.
Russian analysis firm Autostat reported that these indirect imports accounted for 12% of the 626,300 new passenger cars sold in Russia in 2022.
Electronics also reach the Russian market by circuitous paths. In Dubai's old commercial district, Deira, electronics wholesalers have rushed to hire Russian-speaking staff.
"It's an open secret," said the owner of Bright Zone International General Trading LLC, a company located meters from a hair extension wholesaler. "The competition is very tough now for Russia."
Merchants in Dubai and elsewhere satisfy the need of wealthy Russians. Photo: Andrea DiCenzo/The New York Times
The owner, who asked to be identified only by the surname, Tura, said he sent hundreds of smartphones and laptops to Russia last year ahead of the holidays. One prospective buyer wanted a quote for 15,000 iPhones, Tura said, but apparently found a better deal elsewhere.
At another electronics store nearby, an Afghan salesman, Abdullah Ahmadzai, said he had arrived in Dubai less than a year ago and had since learned enough Russian to negotiate with his Russian-speaking customers.
Across the street, a man from Tajikistan, a former Soviet republic, said he and his colleague quickly found employment in a store selling phones, laptops and drones.
"All the shops here are looking for people who speak Russian," he said. "We were lucky."
After many Western companies withdrew from Russia, Putin's government encouraged the unauthorized importation of goods from other countries. The Russian Trade Ministry 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 goods will be able to do so," Putin promised last May.
A Russian report estimates that these "parallel imports" of laptops, tablets and smartphones amounted to $1.500 billion last year. At the same time, Chinese cars and electronics have flooded the Russian market.
"You can bring whatever you want, as long as you have money," said Pyotr Bakanov, a Moscow-based car journalist. "Everyone who is not lazy brings cars."
Sohrab Fani, founder and owner of Kilimanjaro car accessories store in Dubai. Photo: Andrea DiCenzo/The New York Times
The routes of luxury (and for weapons)
The new trade routes pass mostly through countries that maintain friendly relations with Moscow.
Western analysts and officials have pointed to Turkey, China and former Soviet republics such as Armenia and Kazakhstan as countries redirecting Western goods to Russia. They say the Kremlin takes advantage of those imports not only to appease a population accustomed to foreign phones and cars, but also to stock up on microchips for weapons used against Ukraine.
Bakanov, like other Russian bloggers and journalists specializing in cars, has gotten into the business: he posts ads on the messaging app Telegram, offering to import cars "to order from anywhere in the world."
According to him, foreign spare parts also arrive through parallel imports: some are now available in Russia at lower prices than before the war, when these parts were sold by authorized distributors who charged high premiums.
These alternative methods have become so widespread that Russian car publications regularly offer reviews of cars manufactured for foreign markets. The multimedia console of the Chinese-made Toyota Camry only works in Chinese, a popular car website warned in February; The reviewer suggested bringing a translation app for smartphones closer to the screen.
One afternoon in March, at the Dubai auto market, Sergei Kashkarov, sitting in the passenger seat of a gray Toyota, was negotiating his latest deal: sending six Mitsubishi cars to a dealership in the Siberian city of Novosibirsk by ferry and truck, via Iran and Kazakhstan.
Kashkarov had traveled to Dubai from Siberia in 2021 and, after the invasion, began acting as an intermediary connecting Russian car dealerships with suppliers in Dubai.
"I have a lot of work," he said. "The truth is, I'm not complaining."
New trade patterns are evident in international statistics; European Union car exports to Russia, for example, fell from €5 billion in 000 to around €2021 billion in 1.
But EU exports to Kazakhstan almost quadrupled to more than €700 million, and exports to the Emirates rose by around 40% to €2.400 billion. Armenia reports that its car imports quintupled to $712 million last year.
In general, Western car companies deny any knowledge of their cars going to Russia in significant quantities or of a rebound in sales in the Emirates.
"We haven't seen any of that," said Jim Rowan, Volvo's CEO.
Paul Jacobson, chief financial officer of General Motors, said: "I'm not aware of anything going to Russia."
Automakers would struggle to track vehicle sales through intermediaries, industry officials say. And U.S. officials tasked with enforcing the restrictions have focused more on goods that can be used for military purposes.
The UAE has been identified as a "country of interest" by US authorities for its role as a hub for goods shipped to Russia in violation of sanctions. Electronic products are of particular concern, officials say, because their chips can be reused for military purposes.
"The UAE applies strict import and export permit measures for dual-use materials to prevent their exploitation for military purposes," an Emirati official said.
Browsing Dubai's car market, a group of three men said they split their time between Russia and Armenia. They declined to say what they were doing, but described importing and reselling cars as a lucrative side business; One of them 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, buy a car for yourself, and buy others to resell."
c.2023 The New York Times Company
Translation: Elisa Carnelli
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