Economic punishments for the Ukraine invasion are still too easy to avoid, some lawmakers say.
Uneven enforcement, trade diversion, and complex financial structures are hampering enforcement of EU economic sanctions imposed against Russia, Euronews has been told by multiple sources.
A package of restrictive measures, the twelfth in 21 months, was put forward by the European Commission last week (14 November) — but some lawmakers think clampdowns in key areas like oil and diamonds still aren’t enough.
The economic restrictions are intended to punish the Putin regime and weaken Russia’s economy in the wake of its invasion of Ukraine. For Lithuanian MEP Andrius Kubilius, they merit a mixed report card.
“Sanctions are working,” and sceptics who say they should be abandoned are “wrong,” Kubilius, a member of the European Parliament’s powerful centre-right European People’s Party bloc, told Euronews — but he believes they should be stronger.
Though its oil and gas revenues are half pre-war levels, he says “Russia is still getting too much” from Europe, and that creative circumvention is dulling the effect of sanctions.
In a declaration passed on 9 November, MEPs called for a full ban on a host of Russia-derived energy products — and they worry Moscow is still getting its hands on European high-tech goods.
After the EU restricted direct sales of anything that could be used by the Russian army, exports to non-EU neighbours rather suspiciously rose by just as much, Kubilius said, suggesting supplies were displaced without disappearing.
“We need to try to convince those third countries not to participate in that exercise,” but also pressurise EU companies with dubious trading patterns, he said. “If suddenly your sales of iPhones to Kyrgyzstan increase by 10 times, 100 times, you need to ask yourself what is behind that.”
Kubilius’ suspicions are supported by evidence from Ukrainian battlefields. Seized Russian weapons often contain western components, Svitlana Taran, a research fellow at think tank the European Policy Centre, told Euronews.
That suggests goods are also arriving via countries such as Kazakhstan, Georgia or Armenia — though Russia still pays a price through longer, riskier supply chains, she said.
With economic sanctions a centrepiece of the EU’s war response, officials are keen to defend their track record.
In an August blog, the EU’s foreign-policy chief Josep Borrell said the Russian economy was being pushed “towards isolation and decline,” with the rouble, industrial production and GDP all falling.
EU sanctions have meant oligarchs’ jets grounded, €200 billion of Russian central bank assets immobilised, and the army reduced to using inferior Soviet-era weaponry, a Commission spokesperson told Euronews.
In March, the EU’s executive also appointed a new Sanctions Envoy, seasoned diplomat David O’Sullivan, to persuade the likes of Kazakhstan to stop frustrating EU sanctions.
But Kubilius wants the EU to go further, by seizing some €300 billion of assets from the Russian central bank — something he says could pay for a good chunk of Ukraine’s post-war reconstruction.
Christine Lagarde has warned such a move could damage the euro’s reputation — but Kubilius believes he has found a workaround to international legal obstacles, and hopes he can persuade other lawmakers to join his call.
When one state harms another, then you “can implement countermeasures to seize the state property,” Kubilius said. “In this case there is no legal immunity.”
Measures targeting Putin’s cronies have also proved tricky, Transparency International’s Roland Papp told Euronews, as they’re hampered by financial secrecy.
“Putin’s yacht doesn’t say PUTIN’S YACHT on it,” said Papp, who is Senior Policy Officer for Illicit Financial Flows at the lobby group — adding that EU delays made oligarchs’ lives easier.
Belgian Prime Minister Alexander de Croo has said overly hasty sanctions on diamonds would merely shift trade away from Antwerp without harming Russia — but the lengthy time needed to finalise trade blocks allows extra loopholes to be created, Papp said.
“Russian entities and individuals are expecting to be sanctioned — they will have already taken some steps to hide their assets,” Papp said. “It’s unreasonable to imagine they’ve been sitting around for one and a half years not doing anything.”
Compared to the fierce US sanctions authority OFAC, European enforcers have been timid, Papp says, with fines on major financial institutions that amount to little more than a “rounding error.”
Sanctions for sanctions
According to a 2021 paper by EU criminal justice agency Eurojust, the maximum fines for breaching sanctions — set and enforced nationally — are as low as €1,200 in Estonia, while in Spain it isn’t even a crime.
That’s something that needs to change, argues MEP Sophie in ‘t Veld, who’s championing tougher punishments for violations.
“You can argue whether the maximum prison sentence should be three years or five years but that’s not so relevant,” in ‘t Veld told Euronews. “What’s relevant is that it’s the same in all the member states — otherwise, if you’re a Russian oligarch, you just go the country with the nicest regime.”
“A day doesn’t pass without reports in media about sanctions being ducked in this country, not being applied in another country, or people finding back doors,” added in ‘t Veld, a Dutch lawmaker from the centrist Renew Europe coalition.
There’s a further round of talks to finalise new laws due at the end of this month, and she says she’s “sure” she can find agreement with the national officials who meet in the bloc’s Council.
But she’s clearly also frustrated with the gap between EU politicians’ anti-Russian rhetoric, and what they actually bring to the negotiating table.
“The Council are really keen on announcing and chest-beating how they’ve adopted the umpteenth sanctions package … they’re always very pleased with themselves,” she said. “If you look at the actual application, there’s not much reason for chest-beating.”