Italian sales to Russia awake spectre of sanctions evasion. A new report by Silverado Policy Accelerator, a Washington-based think tank, revealed the dealings between some Italian companies and Yumak, a Russian entity suspected of being a Kremlin front used to circumvent sanctions and import tank machinery and technology. Crucially, some of the contracts were apparently honoured after the beginning of Moscow’s war of aggression against Ukraine in February 2022.
Claims of direct sales…. The think tank’s report highlighted the activity of Parpas, a leading Italian company in the industrial machinery and aeronautics sectors (its clients include major carmakers like Fiat and General Motors as well as defence companies and key NATO suppliers like Airbus, Boeing, Lockheed Martin and General Electric). According to Silverado, the company delivered a processing centre to Yumak in June 2022.
- Italian daily La Repubblica reached out to Parpas, which confirmed the existence of the order but maintained that none were directed at Yumak, stressing that they had “respected all the provisions of the sanctions.”
… through Latvia… The report also maintains that other European companies (including some Italian ones) have sold materials to Yumak, not directly but through Latvia, possibly via sea shipments. The Italian companies are Herrblitz Modular System (Turin-based, shipped a system for mechanical presses); Cams (near Padua, sent a machine for vertical slots); and Cdmeccanica (which sold a series of tools for sharpening cutting machines).
- Contacted by Repubblica, Herrblitz denied having worked with Yumak, noting it sold some spare parts to a Riga-based Latvian company, A/S Arta, in June 2022. “We would be sorry to find out that our products have been sold to other countries,” they added.
- Cams told the paper that it had Yumak among its customers but that the order was signed and invoiced in January 2022, before the full-scale invasion.
- Cdmeccanica maintained it issued its last invoice to Yumak in January 2022 and then shut off its business with Russia.
… and via Turkey. Silverado’s report came a week after the Ukrainian government publicly asked the Italian one to be more careful about sales and sanctions. Vladislav Vlasiuk, sanctions advisor at the President’s office and secretary of the International Working Group on Russian Sanctions (coordinated by Andrij Yermak, head of the Ukrainian Presidential Office), drew Rome’s attention to an 87% spike in Italian exports to Turkey since the invasion.
- It’s possible the increase masks a commercial triangulation of dual-use products (suitable for both civil and military applications) that ultimately end up in Russia.
Watch out for Russian exports too. Goods flow both ways. The Kyiv School of Economics recently flagged that Italy is the biggest European importer of pig iron produced in Russia and the occupied territories of Ukraine, with imports soaring shortly after the full-scale invasion (iron products fall under Western sanctions).
- Reportedly, the material is shipped from Novorossiysk via cargo ships that stop for up to a month in India and then enter the Mediterranean through the Suez Canal.
- The product then passed customs controls with false certificates, according to KSE, which highlighted three shipments on three ships that completed their journey in Northern Adriatic seaports.