After 3 months of war in Ukraine, Israeli-Russian trade relations continue to flourish

Despite some cancellations, Israel remains the only Western country not to impose sanctions on Russian entities or capital

A Russian ballet performs in Tel Aviv, Russian products bearing the Russian flag are easily found in Israeli supermarkets, Israel exports its vegetables to Russia, while Yango, part of the Russian giant Yandex Group, supplies Israelis with taxis and grocery deliveries.

Today, Israel is the only Western country that does not exercise any sanctions against Russian entities or capital. However, financial constraints exist. How did the war in Ukraine affect trade between the two countries and how did the Russian-speaking communities of the Jewish State of Russia and Ukraine react to it?

A taxi, a deli delivery man and a pre-war image of Bucha

Advertisements for Yango Deli – a new delivery service that allows a customer to quickly stock up on milk, bread or any other product in a record time of just 15 minutes – have recently been seen in many cities across Israel.

Yango, short for Yandex Go, is an international brand of Yandex – Russia’s so-called Google, a giant conglomerate that started as a search engine and now offers everything from taxis and scooters to shipping, deliveries , news and data.

Yandex employs 450 people in Israel and, according to recent Russian and Israeli media reports, it plans to move its headquarters to Israel and split the company into a Russian division and an international division.

The European Union recently added Yandex deputy general manager Tigran Khudaverdyan to its sanctions lists (he quickly resigned from the company), while pro-Ukrainian activists and observers noticed that the Yandex search engine only offered pre-war images of Bucha, where massacres were allegedly carried out. by the Russian army. Some Yandex officials resigned shortly after this became public knowledge.

Denis Dlugach, a Ukrainian-born Israeli and activist with the non-governmental organization Israeli Friends of Ukraine, told The Media Line that the main problem with Yandex was that it manipulated data, and therefore the public opinion.

“People who want to know the facts will not be able to do so through Yandex. It is important that Israel understands what type of business it is allowing into the country. They can put anything into their algorithms – no one will ever know – and that makes it easier to manipulate public opinion. Moreover, they continue to pay taxes in Russia, and we know how this money is used by the Russian state,” he said.

Ukrainian-born businessman and former Knesset member Roman Bronfman warns of another problematic aspect.

“Personally, I stopped doing business with Russia in 2014, but I understand the dependence of the market when we are talking about companies that are not involved in the military industry or the sale of arms,” ​​he said. he told The Media Line. “But Yandex and its offshoots are busy collecting information and data. This can compromise Israeli security and its activity here in Israel must cease immediately. »

Bronfman called on Economy Minister Orna Barbivai to use her powers to stop Yandex’s activities in Israel.

In response to an inquiry by The Media Line, the ministry’s spokesman said: “The matter is outside the responsibility of the Ministry of Economy. The State of Israel does not restrict the activities of international companies that operate in accordance with the law.

The Israeli government has so far avoided imposing sanctions on Russia or criticizing Vladimir Putin’s regime, trying to maintain the balance between Moscow and Kyiv. Russian oligarchs have not been sanctioned and their assets have not been seized, while many Russian billionaires of Jewish origin have immigrated to Israel.

As Europe, the United States, Canada and other Western countries struggle with dependence on Russian oil and gas and extend existing sanctions, Russian-made products – from ice cream to coconut oil cooking – can be found in most supermarkets in Israel, Russian artists (recently the Russian National Ballet Theater) arrive to perform and Russian state TV channels such as Channel 1 continue to broadcast as usual .

A few concerts by Russian artists who support Putin have been canceled due to pressure from pro-Ukrainian activists, and the development has sparked a furious debate between Israelis who support and oppose such activity.

“People have to choose for themselves. This is how it is in civilized states,” Beersheba resident Marina Polinoski wrote on Facebook. “Who decides who will perform in Israel and who will not? Artists don’t have to answer these questions, just perform and make the audience happy.

Hundreds of other Facebook users enthusiastically supported the cancellation of scheduled concerts by Grigory Leps, Elena Vaenga and other Russian artists known for supporting the Putin regime.

No credit insurance and a lot of uncertainty about the future

The value of trade between Israel and Russia reached some $3.5 billion in 2021, including about $3.16 billion in goods and about $350 million in services, according to Foreign Trade Administration data. of the Ministry of Economy. The numbers have increased by 52% compared to 2020.

According to the ministry, no official data can yet be released on exports and imports with Russia in 2022.

It was announced in March that Israel would not issue credit insurance to Israeli companies that maintained business with Russia, but some continued to export and operate in Russia without such insurance.

Sources from the vegetable production industry told The Media Line that there is a lot of uncertainty about further cooperation with the Russian Federation, especially regarding the ability of Russian companies to transfer international payments.

At the same time, major Israeli tech companies such as Wix.com, Fiverr, Playtika and Tipalti have suspended or withdrawn their business operations in Russia following Russian aggression in Ukraine.

More than 100 others – including Check Point, Tadiran, Gottex, Netafim and Ahava – remain active in Russia. In addition, to this day, the Israeli diamond industry continues to import rough stones from the Russian state company Alrosa.

“Israel has been extremely cautious regarding international financial affairs since Israeli banks operate around the world. Financial and insurance structures are very cautious and most often avoid doing business in Russia. Those who continue the trade do so on their own responsibility,” Bronfman said.

Recently, David Davidovich, a business partner of Russian-Israeli billionaire Roman Abramovich, sued Israeli Bank Hapoalim after it blocked his account and credit card. Hapoalim replied that he had acted in accordance with British sanctions imposed on Davidovitch in April. Some experts in Israel believe that Davidovich acted as Abramovich’s leader, as did the bank account.

Nearly 100 days into the war, Israeli trade with Russia has likely slowed due to international financial restrictions, shipping difficulties, etc. However, due to the lack of Israeli sanctions or legislative basis, many Israeli and Russian businesses continue as usual.

In the absence of baseline data from the Ministry of Economy for 2022, it is difficult to talk about numbers, but it is always easy to talk about the political aspects of trade relations between the two countries: Israel is still reluctant to act against oligarchs, “Google Russians” and cooperation with state-owned companies.

“This behavior is definitely a very serious exception to what has already become the rule in the West,” Bronfman said.