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On a dusty side street on the outskirts of Dubai, Sohrab Fani is profiting from the Western response to the war in Ukraine: his shop installs seat heaters into cars that are re-exported to Russia.
Twelve thousand heating pads languished in his warehouse for years, he said, until the Russian invasion and Western sanctions forced American, European and Japanese cars out of the Russian market. Currently, Russia imports the cars through Dubai, in the United Arab Emirates – and since cars shipped to the Middle East tend to be made for warm climates, accessory stores like Mr. Fani’s are doing brisk business preparing for winter.
“When the Russians came, I sold them,” said Mr. Fani, then ordered several thousand seat heating pads. “In Russia, they have sanctions. Here, they don’t. Here, there is business.”
More than a year into the invasion of President Vladimir V. Putin, Western sanctions have crippled Russia’s economy but not involved. The web of global trade has been set up, so the Russian leadership can make a major promise: that the war will not disrupt the consumption lifestyle of the Russian elite.
Russia still imports coveted Western goods, enabled by a global network of middlemen.
In Moscow, the latest iPhones are available for same-day delivery for less than retail prices in Europe. The stores still have Gucci, Prada and Burberry. The car sales site features new Land Rovers, Audis and BMWs.
Just about all electronics, car and luxury brands in the West announced last year that they were leaving Russia. Not all goods technically violate sanctions, but trade with Russia has been made difficult by public anger, pressure from employees, and restrictions on semiconductor exports and financial transactions.
However, Russian demand for luxury goods remains strong, and traders in Dubai and elsewhere are meeting it.
“Rich people always stay rich,” said Ecaterina Condratiuc, director of communications at a Dubai luxury car showroom that recently delivered a $300,000 Porsche Cayenne Turbo GT to a Russian dealer. The war, he added, “didn’t affect him.”
In Dubai, buyers roam the sprawling car market showrooms, haggling over Western cars — the Dodge Ram is a new favorite — to buy for cash and ship to Russia. Some rich Russians buy vehicles for themselves, or small businessmen who want to sell cars quickly.
In other cases, Russian car dealers, having lost their official affiliation with Western brands, manage their own imports, sometimes hundreds of cars at a time.
Russian analytics firm Autostat reported that indirect imports will account for 12 percent of the 626,300 new passenger cars sold in Russia in 2022.
Electronics also took the circuit route to the Russian market. In the old commercial neighborhood of Dubai, Deira, electronic wholesalers have scrambled to recruit Russian-speaking staff.
“It’s an open secret,” said the owner of Bright Zone International General Trading LLC, a chain of hair extension wholesalers. “Today’s competition is very tough for Russia.”
The owner, who asked to be known only by his last name, Tura, said he shipped hundreds of smartphones and laptops to Russia last year before the holiday season. One potential buyer wanted a quote for 15,000 iPhones, Mr. 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 earlier, and had since learned enough Russian to negotiate with Russian-speaking customers. Across the street, a man from Tajikistan, a former Soviet republic, said he and his friends quickly found work at a shop selling phones, laptops and drones.
“All the shops here are looking for people who speak Russian,” he said. “We’re lucky.”
After many Western companies pulled out of Russia, Mr. Putin’s government encouraged illegal imports of their goods from other countries. Russia’s trade ministry has published a list of dozens of companies whose products can be imported without manufacturer approval, including Apple, Audi, Volvo and Yamaha.
“Anyone who wants to bring any kind of luxury will be able to do so,” Mr. Putin promised last May.
A Russian report estimated that “parallel imports” of laptops, tablets and smartphones totaled $1.5 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 auto journalist. “Everyone who is not lazy brings a car.”
New trade routes generally pass through countries that have friendly relations with Moscow. Western analysts and officials point to Turkey, China and former Soviet republics such as Armenia and Kazakhstan as countries that direct Western goods to Russia. He said that the Kremlin is taking advantage of these imports not only to destroy the public used for foreign phones and cars, but also to source microchips for weapons used against Ukraine.
Mr. Bakanov, like other Russian car bloggers and journalists, has got his own business: he posts ads on the Telegram messaging application, offering to import cars “to order from anywhere in the world.” He said foreign car parts also came in through parallel imports – some are now available in Russia at lower prices than before the war, when the parts were sold by official dealers who charged high premiums.
Workarounds have become so widespread that Russian car publications run regular reviews of cars made for foreign markets. The multimedia console in the Toyota Camry made for China only operates in Chinese, a popular car website warned in February; reviewers are advised to hold the smartphone rendering the app up to the display.
At the Dubai car market one March evening, Sergei Kashkarov sat in the passenger seat of a parked gray Toyota, negotiating his latest deal: shipping six Mitsubishi cars to a dealership in the Siberian city of Novosibirsk by ferry and truck, via Iran and Kazakhstan. Mr Kashkarov had moved to Dubai from Siberia in 2021 and, after the invasion, became a broker connecting Russian car dealers with Dubai suppliers.
“I have a lot of work to do,” he said. “I’m really not complaining.”
New trade patterns appear in international statistics; Exports of cars from the European Union to Russia, for example, will drop to around 1 billion euros in 2022, from 5 billion euros in 2021.
But EU exports to Kazakhstan increased by almost four times, to more than 700 million euros, and exports to the Emirates increased by about 40 percent, to 2.4 billion euros. Armenia reported that its car imports more than quintupled to $712 million last year.
Western car companies generally deny knowledge of cars going to Russia in significant numbers, or of increased sales in the Emirates.
“We haven’t seen anything,” said Jim Rowan, Volvo’s chief executive.
Paul Jacobson, chief financial officer of General Motors, said, “I don’t know anything that will go to Russia.”
Automakers will have trouble tracking vehicle sales through intermediaries, industry officials say. And US officials responsible for enforcing the ban have focused more on items that could be used for military purposes.
The United Arab Emirates has been identified as a “focus country” by US officials due to its role as a hub for products sent to Russia in violation of sanctions. Electronics are of particular concern, officials said, because the chips can be reused for military use.
“The UAE has strict measures in place to regulate import and export permits for dual-use materials to prevent their exploitation for military purposes,” Emirati officials said in a statement.
Browsing in the Dubai car market, a group of three people said they split their time between Russia and Armenia. He declined to say what he does, but he describes importing and reselling cars as a lucrative side business; one said he had bought around 100 cars in the last year.
“Dubai is three-in-one,” the man who gave his name as Aik quipped. “You go on vacation, you buy yourself a car, and you buy some to resell.”
Anton Troyanovski reported from Dubai and Jack Ewing from New York. This reporting was contributed by Vivian Nereim from Riyadh, Saudi Arabia, Ahmad Al-Omran from Jeddah, Saudi Arabia, and Oleg Matsnev from Berlin.
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