The EU is not Alone in its Attempts to Crackdown on Sanctions Circumvention
As with sanctions directly targeting Russia, the effectiveness of sanctions penalising the non-compliance of third countries is largely contingent upon the level of coordination between the EU and its partners. The European Commission paid heed to this in the press statement they issued on 9 May 2023 outlining the details of their eleventh package of sanctions. The statement highlighted that the implementation of the latest round of sanctions would be done ‘in very close coordination with our international partners, particularly with the G7’.
Indeed, this latest round of sanctions from the EU follows last month’s G7 summit in Japan, where discussions on sanctions centred on circumvention. The G7 countries unanimously called ‘on third parties to immediately cease providing material support to Russia’s aggression, or face severe costs’, warning that they ‘continue to take actions against third-country actors who materially support Russia’s war’.
The EU is not alone in adopting a more draconian position towards sanctions circumvention in recent months. Whilst no other country has gone as far as the EU in introducing mechanisms that permit the targeting of entire states instead of entities and individuals, other states have taken decisive steps in the fight against non-compliance.
During the G7 Summit, the US treasury announced they would be imposing sanctions on 22 people and 104 entities with touchpoints in over 20 countries or jurisdictions in an attempt to thwart Russia’s access to goods required by its military-industrial complex. The targeted entities included a Liechtenstein-based Russian intelligence services procurement network and a procurement network tied to US-sanctioned Radioavtomatika LLC. US participation is of distinct importance given the supremacy of the dollar in global trade and the prominence of the US financial markets and systems that render its introduction of secondary sanctions particularly painful.
On 12 April, the US and the UK collaboratively introduced measures on third-party facilitators and businesses permitting Russia’s access to the international financial system. US targets included a China-based firm providing satellite imagery of locations in Ukraine whereas the UK targeted two Cypriot professionals purportedly supporting Russian billionaires Roman Abramovich and Alisher Usmanov.
Beyond its collaborative efforts with the US, the UK unveiled new sanctions against Belarus on 8 June. In order to ‘crack down on Russia’s efforts to circumvent sanctions’, the UK introduced the banning of imports of goods which may have originated from Russia, such as gold, and further limited Belarusian access to UK financial markets. Whilst less of a stringent measure, when publishing its Common High Priority Items List, which names the Western items critical to sustaining Russia’s war efforts, the UK also issued a further plea to companies to make certain that the final destination of specified products is not Russia.
The concrete steps that several of Ukraine’s allies have taken to combat sanctions circumvention illustrate that the multilateral coordination that the European Commission referred to in its press statement is not a rhetorical ideal but a tangible reality. This will ultimately strengthen attempts to curb evasion. Nevertheless, challenges such as establishing functioning enforcement mechanisms remain and risk undermining the effectiveness of these further-reaching sanction packages that equally have the potential to inflict economic and diplomatic costs upon sending states.