The Maldives, renowned for its stunning islands and luxurious resorts, has recently found itself entangled in a surprising role as a transit hub for shipments evading sanctions against Russia. In the wake of Russia's invasion of Ukraine, it has been discovered that a significant quantity of U.S.-made semiconductors, valued at $53.6 million, were secretly routed through the Maldives to reach Russia. This data was analyzed by Nikkei, who found that these shipments, each exceeding $50,000 in value, ranked second only to China (including Hong Kong) in terms of volume in the year following the invasion. Intriguingly, prior to the invasion, no such shipments were recorded.
These unprecedented semiconductor shipments took place in May 2022, a month that coincided with the resumption of flights between the Maldivian capital city, Male, and Moscow by the Russian airline giant Aeroflot. Upon further inspection, it becomes apparent that the Maldives lacks a substantial semiconductor market. Omdia, a consulting company, confirmed that the Maldives possesses virtually no presence in the semiconductor industry. The customs data also revealed that while fourteen exporters were responsible for sending semiconductors from the Maldives to Russia, none of these companies appeared to be based in the Maldives.
Notably, a London-based corporation called Mykines Corp. was accountable for around $40 million, or 80%, of the total semiconductor shipments identified by Nikkei. As reported by the Financial Times in April 2023, Mykines allegedly dispatched approximately $1.2 billion worth of electronic equipment to Russia. However, Mykines declined an interview request from Nikkei, leaving their activities shrouded in mystery.
Another company on the list of exporters was Pixel Devices, which is based in Hong Kong. While Pixel confirmed that they exported to Russian companies, they maintained that they strictly adhere to export control laws applicable to Hong Kong entities and claimed no violation of regulations. Pixel refrained from commenting on questions regarding potential violations or the Maldives' role in their operations.
Freight forwarders play a significant role in facilitating these shipments, acting as intermediaries between shippers and transporters while handling customs procedures. A source in the shipping industry revealed that arranging shipments of U.S. chips from the Maldives to Russia may involve providing the name of a local forwarder in the waybill's "notify party" field.
Typically, international shipments routed through an intermediary country fall into two categories: re-exports and transshipments. Re-exports involve unloading goods at a port or airport, clearing them through customs, and subsequently reloading them onto another ship or plane for shipment to a different country, without any modifications. Transshipments follow a similar process but do not undergo customs clearance in the intermediary country.
According to Maldivian customs service data, around $10 worth of semiconductor items were recorded as re-exports in 2022. Notably, information regarding transshipments is excluded from export statistics.
The involvement of freight forwarders in the Maldives and their potential role in evading trade restrictions with Russia have drawn the attention of U.S. authorities. In May, the U.S. Commerce Department accused Intermodal Maldives of facilitating the export of aircraft parts to Russia in violation of U.S. restrictions. However, when questioned about potential violations, the company abruptly ended the call with Nikkei. Nikkei visited Intermodal Maldives' office in Male and found no evidence of the company's name or any staff present.
In terms of geopolitical considerations, the Maldives has a history of engaging with foreign assistance while being careful not to overly rely on any particular country. Under the presidency of Abdulla Yameen, the country leaned towards China, symbolized by the China-Maldives Friendship bridge constructed with Chinese assistance. Presently, President Ibrahim Mohamed Solih has focused on strengthening relations with neighboring India, receiving Indian aid for developing a coast guard base and infrastructure projects.
As the Maldives seeks to maintain a balance between the influence of China, India, and the United States, it has little incentive to actively participate in actions curbing transactions related to Russia. The country prioritizes safeguarding its own interests by accepting support from various sources while maintaining a certain level of distance.
While the Maldives is renowned for its paradisiacal allure, it has unwittingly become a crucial link in shipments circumventing sanctions against Russia. The motives behind these shipments, the involvement of various countries in the Maldives, and the exact role played by different actors remain subjects of intrigue and ongoing investigation.
