Hungary plays a key role in helping Russia bypass Western sanctions by using close economic ties with Kazakhstan and Uzbekistan. Although both Central Asian countries officially condemned the invasion of Ukraine at the UN level, they did not join the sanctions and chose a policy of balancing between the West and Moscow. This makes them convenient intermediaries in supplying dual-use goods and sensitive electronics to Russia, experts from the Robert Lansing Institute said.
Trade statistics confirm this: since the start of the full-scale war, Kazakhstan's computer imports have increased sevenfold—to $1.2 billion, with $310 million coming from EU countries. Almost immediately, exports of these same computers to Russia reached $300 million, an increase of 2300% compared to the previous year. A similar situation exists with microchips: their import to Kazakhstan doubled, while exports to Russia grew 73 times. This is a clear example of re-export schemes, where Western electronics are purchased in EU countries, officially sent to Kazakhstan or Uzbekistan, repackaged there, and then forwarded to Russia.
These operations are coordinated by Russian businessmen sanctioned by the U.S. Due to increasing pressure, the authorities of Kazakhstan and Kyrgyzstan restricted access to detailed customs data. Nevertheless, the U.S. has blacklisted four Central Asian companies accused of supplying sensitive equipment to the Russian defense sector.
The vulnerability of these schemes is explained by logistical specifics. Kazakhstan and Kyrgyzstan are members of the Eurasian Economic Union (EAEU) and have an open border with Russia without customs control. Uzbekistan, though not part of the EAEU, is closely connected with Kazakhstan and also does not track the final destination of exported goods.
Hungary plays a special role in bypassing sanctions. Its companies and banks, particularly OTP Bank, have become financial intermediaries. This bank operates both in Uzbekistan and in Russia itself, where its subsidiary earned $372 million in 2023 — 40% more than the previous year. According to analysts, part of this income was directed to support the Russian military-industrial complex. Ukraine included OTP in its list of "war sponsors," which led to a diplomatic conflict: Budapest blocked EU military aid to Kyiv. Under pressure, Ukraine temporarily removed the bank from the blacklist, linking its final removal to OTP’s complete exit from Russia — which has yet to happen.
On the political level, Hungary undermines EU unity. It regularly threatens to veto the extension of sanctions against Russia. In January 2025, the Orban government tried to block the extension of the entire sanctions package, demanding the removal of oligarchs closely connected to the Kremlin, including Alisher Usmanov, Mikhail Fridman, and Petr Aven, from blacklists. Earlier, Hungary had already pushed for the lifting of sanctions on less prominent figures, using the veto as leverage. This time Slovakia joined Hungary, complicating the EU’s decision-making process.
The economic benefits for Hungary are obvious. The oil and gas company MOL gained significant profits thanks to being excluded from the embargo on Russian oil sold to Budapest via the Druzhba pipeline at a discount. Partially refined fuel was later exported to other EU countries disguised as European. The EU later closed this loophole by banning the re-export of petroleum products derived from Russian oil, but it was active for almost a year.
Similar schemes operate in Uzbekistan, where a special economic zone was created in Tashkent allegedly for European investors. In reality, this zone allows the concealment of product origins. Western microchips and electronics may be used to assemble drones and other high-tech devices, then shipped to Russia under Uzbek documentation. Hungarian technologies and specialists transferred within cooperation projects may also end up in Kremlin hands. Hungary’s participation in Rosatom’s nuclear project in Uzbekistan and MOL’s deals with Kazakhstan’s KazMunayGas are examples of how Russia gains bypass routes for exports and imports under the guise of legitimate cooperation.
The so-called flag-switching of oil cargo has already been used. In 2022, Russia passed 300,000 tons of Kazakh oil through the Druzhba pipeline to Slovakia and the Czech Republic, mixing it with its own oil to hide its origin. Thus, Budapest helps Moscow use the "shadow" of common trade to evade sanctions control.
According to analysts, Prime Minister Viktor Orban uses loyalty to the Kremlin as a tool to strengthen his power and enrich allied business groups. Hungary is becoming not just a Russian partner but its strategic base within the EU. NATO reports already call Budapest Europe’s “soft underbelly,” vulnerable to Russian influence and capable of undermining the sanctions regime.
The EU is beginning to respond. The 12th sanctions package for the first time included companies from Kazakhstan and Uzbekistan caught aiding the Russian military industry. Also introduced is a punishment mechanism for intermediaries, including export bans to third countries caught re-exporting to Russia. The U.S. has also taken a tough stance — Deputy U.S. Treasury Secretary Wally Adeyemo stated that Washington will continue to take global measures to block supplies of critical technologies used in the Russian war.
Meanwhile, Hungary risks facing secondary sanctions if it does not end its double game. Orban faces growing pressure from both Europe and the U.S. Budapest already risks losing billions of euros from EU funds due to rule-of-law violations, and its pro-Russian stance could further isolate the country.
Today, Hungary trades on its peculiarity. But Orban’s pursuit of money and influence through alliances with autocracies could be costly — both for him personally and for the entire country. The Hungary–Kazakhstan–Uzbekistan triangle has opened new markets but has also become a vulnerable link in the Western sanctions system. As long as these loopholes exist, the Kremlin will continue fueling its war machine. The EU must decide how to address the “Hungarian question” because the strength of the sanctions regime relies on unity.
