All the Maldivian schemers to send chips to Russia
The Maldives managed to circumvent the sanctions and become the second largest supplier of microchips to Russia. Yet the country lacks a technology industry. How was this possible?
How is it possible that the Maldives has become – bypassing all the sanctions in place – the second largest supplier of chips to Russia after China? An investigation by the Japanese newspaper Nikkei sheds light on the mystery of semiconductor export flows originating from a country that has no high-tech industry and sells goods abroad for just 280 million dollars.
Chips from the Maldives?
With its crystalline waters and year-round sunshine, the Maldives is hardly a country associated with the production of high-tech components such as chips. Yet in the last twelve months, according to customs data obtained by the Indian research company Export Genius and analyzed by Nikkei , the archipelago has been the point of origin for the export of 400,000 semiconductors made in the USA for a total value of 53.6 million dollars whose destination was Russia.
From the analyzed data, which cover transactions worth at least 50,000 dollars, two contradictory pieces of information emerge: the year before the invasion of Ukraine, the Maldives had exported nothing or almost nothing to Russia while, if we look at the year following the outbreak of the conflict, as a result of which the Maldives was Russia's second largest exporter of chips after China.
Mystery Maldives
These data appear to be real anomalies for a country that in 2021 exported goods for a total value of 280 million dollars. In practice, those American chips represent 20% of the country's total exports.
The sale of semiconductors from the Maldives to Russia began suddenly in May 2022, just as the Russian state airline Aeroflot resumed flights between Moscow and Male, the capital of the Maldives, after a brief interruption due to the outbreak of hostilities in Ukraine .
This sudden increase in exports to Russia appears all the more curious as the semiconductor market in that country is completely non-existent. Customs data shows that none of the 14 chip exporters to Russia are based in the Maldives.
One such firm, London-based Mykines, has transferred chips worth $40 million, or 80 percent of the total, to Russia. It is not the first time that Mykines' name has surfaced in the chronicles of Russian commercial opacity: three months ago, recalls Nikkei , the Financial Times reported that the company had delivered electronic equipment worth 1.2 billion dollars to Russia.
The method
But how is it possible to sell chips to Russia in defiance of Western sanctions? The mystery is soon explained. At the basis of those export flows there are intermediaries who connect the producer to the transport companies that carry out the deliveries and take care of the customs formalities.
By carrying out careful investigations, Nikkei has discovered that the transport of chips from the Maldives to Russia can be implemented by indicating only the name of the intermediary in the accompanying documents.
Assets transferred abroad through intermediaries are managed with two different procedures. In the first, known as "re-export", the goods are unloaded at an airport or port and then loaded into another vehicle after customs formalities have been cleared. In the second, known as "transhipment" the same steps are followed as for re-export but without going through customs controls.
As a Maldivian customs official explained to Nikkei , information on export flows through transshipments or re-export "is not included in export statistics (and therefore) the data is not available." But these data resurface in the Russian customs registers where the Maldives appear as an exporting country.
The Maldives between the US and China
The intrigues of the Maldives have not escaped the USA. Back in May last year, the Commerce Department accused a company called Intermodal Maldives of being involved in transferring airplane parts to Russia in clear violation of sanctions. Intermodal Maldives, coincidentally, turns out to have been created a few days after the invasion of Ukraine.
If there is reason to suspect the Maldives, it can be found in the political orientation of its former President Abdulla Yameen, responsible for a blatant alignment with China whose most striking sign is the construction of the so-called China-Maldives Friendship Bridge by the Chinese construction giant China Communication Construction Company (CCCC) and half financed by Beijing.
The Maldives have also become a strategic hub for the Belt and Road Initiative and not just for purely commercial reasons. As explained to Nikkei Srikanth Kondapalli, a professor at the Indian Jawaharlal Nehru University, the Maldives are not that far from the US base of Diego Garcia, where the US Navy conducts its operations in the areas of the Indian Ocean and the Persian Gulf. "If China wants to replace the US, cooperation with the Maldives can come in handy in the long term" comments the professor.
Next stop India?
But Yameen hasn't been in office since 2018 and the new President of the Maldives Ibrahim Mohamed Solih has started to look in a completely different direction.
The agreement with India for assistance to the Maldivian coastguard in the construction of a new base dates back to February 2021. The Indian giant Data Group is also involved in the construction of new housing units on the artificial island of Hulhumale. Finally, the Indian government has just funded its Friendship Bridge with the Maldives which connects the island of Male to neighboring ones.
Backfire Use?
The change at the top of the institutions in the Maldives has also prompted a reorientation towards Washington.
The signing of a defense agreement between the US and the Maldives dates back to 2020, enhanced with the start of close cooperation between the two Armed Forces which today also conduct joint exercises.
And those exports that so irritate Washington? Aren't they proof of the new partner's infidelity? In reality, as Amit Ranjan, a researcher at the National University of Singapore, explains to Nikkei, the problem of the Maldives is the lack of resources that drives it to turn now to one hour to the other side. In short, the Archipelago, observes Ranjan, "cannot afford to enter into an alliance with anyone".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/maldive-microchip-russia/ on Sat, 29 Jul 2023 05:44:03 +0000.