Amid Russia’s intensified missile and drone attacks on Ukrainian cities, the European Commission
proposed a new set of sanctions. This package, the 11th since the start of Russia’s war on Ukraine, focuses on combating the circumvention of pre-existing trade sanctions rather than introducing new bans on still-unsanctioned Russian products and sectors.
Contrary to Ukraine’s expectations, it does not include bans on imports of Russian diamonds, natural gas, LNG, cast iron and ferroalloys, and nuclear energy cooperation, as member states are struggling to reach a consensus on these areas.
Loopholes and circumventions undermine the effectiveness of sanctions; hence, tightening and enforcing them is critical for increasing their impact. The new package proposes three measures to target the
circumvention of EU bans on the export of dual-use goods, advanced technologies, and critical components to Russia. Russia’s military sector needs these products to produce the weapons it uses on the battlefield.
First, the abuse of transit rules (
false transit) is one of
the most widely used circumvention schemes. Thus,
the proposed expansion of the EU road transit ban by adding advanced tech products and aircraft parts that go to third countries via Russia is the right step. To avoid sanctions circumvention, the ban on transit should include a wide range of sanctioned products and be constantly reviewed.
Second, Russia also uses third countries to circumvent EU export bans. A new tool proposed by the European Commission provides a
legal mechanism to ban the export of goods to third countries suspected of circumventing sanctions - if they substantially increase their purchases of banned goods from the EU
that eventually flow to Russia. Countries affected could include
Central Asia and the Caucasus, China, Türkiye, and the United Arab Emirates, which have revealed such trends in their trade with the EU and Russia. As an example, EU exports of vehicles to Russia fell by 78% in 2022, while exports from the EU to Kazakhstan surged by 268%. The draft does not include a list of third countries, but the threat of naming and shaming serves as a deterrent. However, the International Special Envoy for EU Sanctions, David O’Sullivan*, should make the threat credible, conduct consultations with potential candidates, and ban certain exports altogether if the suspect flows continue.
Third,
banning entities from Russia and third countries that intentionally circumvent EU sanctions. For the first time, the European Commission has proposed blacklisting
seven Chinese companies accused of supplying banned components to Russia’s military sector, although the list has not yet been officially confirmed.
They could be subject to an asset freeze in the EU. However, China’s threat to impose countervailing measures and the reluctance of some EU members to worsen economic ties with Beijing may be an obstacle. Still, there is evidence against these companies of sanctions circumvention, turning a blind eye is not an option, as it undermines the effectiveness and credibility of EU sanctions policy.
Ultimately, while the 11th package is a positive step, it is insufficient as it only addresses certain types of circumvention. With Russia becoming increasingly savvy at sanction circumvention, the EU must step up its response to Russian circumvention schemes.
*David O’Sullivan is a member of the EPC’s governing board.
Svitlana Taran is a Ukrainian Research Fellow in the Europe in the World programme at the European Policy Centre.The support the European Policy Centre receives for its ongoing operations, or specifically for its publications, does not constitute an endorsement of their contents, which reflect the views of the authors only. Supporters and partners cannot be held responsible for any use that may be made of the information contained therein.