Russian sanctions evasion shows circumvention is the biggest threat to Europe

The EU must keep adopting new sanctions against Russia and try to prevent their evasion.

On March 10, Joseph Borrell, the top diplomat for the European Union, told that the EU had almost run out of sanctions to oppose Russia and would now concentrate on sanctions evasion. Even though the scope and size of the penalties against Russia are unprecedented, sanctions evasion is a serious issue that needs to be addressed without resorting to additional sanctions.

For many years, violations of sanctions, arms embargoes, and product restrictions have been revealed by civil society and the media. These felt like isolated instances and struggled to get on the EU’s agenda until Russia’s circumvention efforts revealed the true extent of the enforcement gap. In 2019, liberal Dutch MEP Marietje Schaake referred to sanctions violations as a “systematic problem.”

Sanction violations have so far been detected and stopped by several EU nations and their neighbors, but this is just the beginning. According to the finance minister of Estonia, 1500 violations of penalties have been discovered. A recent arrest made in the Netherlands involved a microchip exporter to Russia who, according to Europol, “deliberately pretended that these goods had a different destination [than] the actual final one [Russia] to circumvent the EU-imposed trade sanctions.” French authorities recently concluded that 60% of real estate agents in specific municipalities near Cannes, Monaco, and Nice are either unaware of or do not check the sanctions lists, which highlights both the renewed vigor toward sanctions enforcement and the systemic challenges.

Although these occurrences do demonstrate a greater emphasis on enforcement, incidents that go unreported still provide many unknowns. Questions have been raised about the possibility of importing Russian gas through Azerbaijan, about Kazakhstan being “flooded” with demands to violate sanctions, and about the vulnerability of the Balkans to corrosive cash inflows from Russia.

No budget is secure, not even that of the EU. According to a study from the European Parliament, “persons and businesses subject to the EU funding sanctions and using EU funding for their purposes are still likely to be finding ways to circumvent the EU funding sanctions.”

SOLUTION

In essence, additional sanctions are required, and they should be enforced in concert with allies at the same time. Regarding Wagner, a Russian private military company, there is currently a gap in the sanctions. The EU has imposed sanctions on several Wagner-related individuals and front firms, but its sanctions objectives are different from those of the US and the UK.

More funding is required for sanctions teams, law enforcement, and customs officers in the EU and surrounding nations to stop sanctions busting. For instance, although 300 other cases are still pending, the Swiss authorities are looking into 100 cases of probable sanctions violations involving Russia. “The heavy workload involved in examining all these cases” was stressed. Then there are the tools required to look into the blind areas, like the gold-passport holders with sanctions and the illegal Russian gold trade in Africa.

The Wagner group should be put on the EU terror list, which would allow for prosecutions of individuals who join or recruit for it, to counter its involvement in the conflict and stop sanctions from being broken. The EU should also expedite the implementation of anti-corruption sanctions to target individuals who are corruptly funding Russia’s war budget as the number of clear targets for penalties decreases.

Sanctions are no different from other regulations in that they are only as good as how they are applied. The EU should be commended for handling this issue with the US and the UK, and it should look to not just close the loopholes now employed by Russia but also to apply this level of scrutiny to regimes around the world.

Photo by  Virginia Mayo