Russian Sanction Evasion Drives Development of Alternative International Economic System

Executive Summary:

• The Kremlin is developing and spreading sanction evasion tactics to create an alternative international economic system populated by rogue states.
• Russia’s burgeoning international economic order is characterized by ignoring Western intellectual property rights, circumventing sanctions, and the unconstrained trading of military goods.
• Türkiye, Iran, and the People’s Republic of China are working with Russia to create an alternative international payment system that uncouples payments from Western banks.

Moscow is positioning itself as a model state in sanction circumvention as Russian President Vladimir Putin and Kremlin propaganda present Russia as the center of the non-Western world. Putin often claims Russia “is one of the leaders … of building a fairer multi-polar world” (TASS, December 20, 2023). Pro-Kremlin analysts insist Russia will lead global technological development (see EDM, June 26, 2024). Russian economist and co-founder of the European Center for Analysis and Strategy, Vladislav Inozemtsev, published a piece in Re: Russia on April 8 claiming that sanction circumvention could launch a process of “alternative globalization,” the emergence of “a global coalition opposed to” the current international economic order (Re: Russia, April 8).

Inozemtsev describes five aspects of Russia’s creation of what he calls an “alternative globalization structure” (Re: Russia, April 8). First is an institutionalized refusal to observe Western intellectual property rights, including copying Western software, showing pirated copies of Western films, and replicating Western medical technology (Re: Russia, April 8). Kremlin-endorsed copyright infringement began in Russia after the first round of Western sanctions in 2014. Rossiskaya Gazeta, Russia’s state-run newspaper, reported in 2015 that Russian enterprises began to copy foreign products and parts in the name of “import substitution” (Rossiskaya Gazeta, May 12, 2015). At the time, the publication expressed concern about possible accusations of violating intellectual property rights and did not recommend that enterprises blindly copy foreign products (Rossiskaya Gazeta, May 12, 2015). Now, Russian manufacturers do not hide the fact that they violate foreign authors’ copyrights. Igor Panasyuk, the head of the scientific research company “PSO-Project,” declared during a 2023 panel discussion of the Chelyabinsk “Expert Club” that “there is a lot of the best European technology …  in the country that should be disassembled and initially primitively copied” (Noviye Izvestiya, April 10, 2023).

In September 2024, legislators in the Russian State Duma introduced a bill to simplify the issuance of “compulsory” licenses for foreign patents (Kommersant, September 16, 2024). Previously, Russians could file a claim against foreign patent holders to obtain rights to the patent if the owner did not sufficiently use it for an invention or industrial design within four years. Under the new law, there is no wait period “if the patent holder is associated with ‘unfriendly’ states or refuses to sign a licensing agreement” (Kommersant, September 16, 2024). Since most patents are issued in states “unfriendly” to Russia, the new law essentially legalizes patent theft.

Inozemtev’s second element of alternative globalization is “parallel importation,” the importation of genuine products without the permission of the intellectual property owner (International Trademark Association, accessed April 25). Parallel importation reduces requirements on and obligations to importers at the expense of consumer protection and copyright laws (Re: Russia, April 8). In May 2022, the Ministry of Industry and Trade approved 100 categories of goods, from cars and electronics to shoes and cosmetics, for parallel importation without consent from the manufacturers (Pravo.gov.ru, May 6, 2022). Russian shipping companies openly publish methods for delivering parallel imports to Russia. According to their websites, the main point of delivery of “gray-market” goods is the port of Jebel Ali in the United Arab Emirates and Türkiye (Bs-gp.ru, 2025). The companies provide sea freight rates and promise “reliable delivery to Moscow, Novorossiysk, and other Russian regions, as well as customs clearance of goods, taking into account all the rules and features of import under the parallel import scheme” (Bs-gp.ru, 2025).

The third element of alternative globalization, according to Inozemtsev, is Russia’s creation of a “shadow fleet” that consists of dozens of aging oil tankers that Russia uses to circumvent Western sanctions by concealing the origin of their cargo (see EDM, January 27). The fleet’s derelict condition makes them dangerous for their crews and the environment.

The fourth element of Russian-led alternative globalization is the unfettered trade of weapons and ammunition, including deals with countries under UN sanctions such as Iran and North Korea.

The final element of alternative globalization is a payment system being developed by Russian, Indian, Chinese, and other companies to bypass Western restrictions and sanctions.

Russian smuggling has developed increasingly sophisticated ways of using intermediary countries to bypass sanctions (Re: Russia, April 8). In 2022, Russian Foreign Minister Sergei Lavrov promised to work with Iran to circumvent trade restrictions (RBC, March 30, 2022). Media loyal to the Kremlin recently boasted that “Russia and Türkiye have discovered a creative way to circumvent the restrictions,” referencing a plan for Russia to use natural gas to pay for the construction of a nuclear power plant in Türkiye (Lenta, February 11). Russian officials also openly encourage European countries to use sanction evasion tactics to continue trade with Russia, telling them to “find any structure willing to accept [your] currency, convert it to rubles, and transfer these rubles to Gazprombank” or to “barter currencies” with an intermediary firm (Vzglyad, December 9, 2024; see EDM, January 27). The People’s Republic of China (PRC), for its part, uses the Russian example to contingency plan for the economic consequences of a potential armed conflict in Taiwan. Shortly after Russia’s full-scale invasion of Ukraine, Beijing created an interdepartmental tasked with understanding the effective mitigation of Western sanctions. According to sources close to the PRC leadership, Beijing is preparing for “an extreme scenario” of armed conflict and its economic consequences (The Moscow Times, December 12, 2024).

The threat of “alternative globalization” cannot be ignored. There are enough countries interested in evading economic consequences for political actions or simply maximizing their profits regardless of international law that a parallel “gray market” economic system could take hold. Rogue states are building trading systems that ignore intellectual property rights and transparent payments. These systems will not simply disappear after the end of Russia’s war against Ukraine, with potentially long-standing implications for the global economic norms.