2023-11-10 07:33:12
“The networks active in evading sanctions have practices similar to those responsible for drug trafficking. We are working to close sectors but we will not be able to completely eliminate them… But our objective is to make Russian companies’ access to certain critical technologies longer, more complicated and more expensive, in order to maximize the impact on the complex. Russian military-industrialist”, explains David O’Sullivan, in charge at the European Commission of implementing sanctions against Russia.
With eleven packages of sanctions already in place, the system in force is the most comprehensive ever to have targeted another country: freezing of assets, ban on financial transactions, embargo on 7,500 products, limitation of the purchase price for Russian oil, etc. These measures cut into trade between the EU and Russia, suddenly causing 55% of import flows and 60% of export flows to disappear.
However, a certain number of parallel circuits quickly appeared: companies hastily created in accommodating countries took over, for example massively purchasing electronic components in Germany to re-export them to Russia. According to Commission experts, the countries most involved in these schemes are Kazakhstan, Uzbekistan, Kyrgyzstan, Armenia, Georgia, Turkey, Serbia and the United Arab Emirates.
“Close the different doors”
Today, while preparing a twelfth package of sanctions, the Commission is trying to plug these holes. It is the work of 75 Commission officials who work under the supervision of David O’Sullivan, former European Union ambassador to the United States and now the EU’s special envoy for sanctions.
His daily routine consists of visiting the countries most suspected of facilitating circumvention, to invite them to take measures: “We are focusing on 45 products that are the most important for the Russian arms industry: chips, integrated circuits, optical drives, flash memories… We ask them not to re-export them to Russia,” David O’Sullivan explained.
“Kazakhstan, Uzbekistan, Armenia, Serbia, the Emirates have already accepted, he specifies. Of course, the sectors are being reorganized… but we are constantly working to close the different doors. »
The European Union does not threaten these countries with sanctions in turn, but it highlights the reputational risk which could scare away international investors. This works all the better as the EU acts in concert with the United States which, for their part, does not hesitate to brandish the threat.
Russia in war economy
The sanctions aim to weigh on Russia’s financial capabilities, deprive it of critical technologies and weaken its economy in the long term. They are indeed having an effect, while Russian oil revenues fell by 47% over the first six months of 2023, the ruble has lost half of its value and the state budget is now in deficit, when it was surplus to requirements before the war.
However, the Russian economy did not collapse. It reorganized itself by becoming a large machine entirely focused on financing the war. “Russia is like a tire that experiences a slow puncture, rather than a burst”Judge David O’Sullivan.
One of the problems in having these sanctions applied by third countries is that the Union itself must be exemplary. However, there are also internal circumvention schemes within the Union. Thus, the NGO Global Witness has just revealed that in 2023 Bulgaria helped Russia sell oil within the EU for almost a billion euros.
An exemption that Bulgaria allegedly abused
Sofia had in fact obtained an exemption from the Commission in December 2022 to be able to import Russian oil, while the rest of the Europeans had accepted an embargo. This exemption was granted for “guarantee national energy security”. But far from using this advantage solely for its domestic needs, Bulgaria has resold Russian oil, including to other European countries.
This revelation is messy. The twelfth sanctions package currently being prepared should put an end to this. This bad example does not, however, trouble David O’Sullivan: “To obtain the implementation of these eleven sanctions packages, we had to agree to compromises. Every country has dependencies that are difficult to break immediately. But this does not reduce the overall impact of sanctions,” he assures.
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