A group of European Union member states is pushing for the bloc to ramp up its ability to hit back against those helping Russia circumvent sanctions, including through the use of trade measures.
(Bloomberg) — A group of European Union member states is pushing for the bloc to ramp up its ability to hit back against those helping Russia circumvent sanctions, including through the use of trade measures.
The new powers may include issuing warnings to people or companies outside and in the EU that are helping Russia get around sanctions and giving the bloc the ability to act where this relates to products used against Ukraine in battle, according to a draft of the proposal seen by Bloomberg.
“Russia is trying to keep supplying its military industry with the necessary components despite our sanctions,” according to the proposal. “Alternative supply chains are created through the use of front companies and intermediates in the circle of countries around Russia. Special focus should be put on western components that are crucial to the Russian military industry.”
One year into Russia’s war in Ukraine and with several sets of sanction packages now approved, the EU and its allies are increasing their focus on enforcement, including compelling nations that haven’t adopted the measures as well as companies meant to implement restrictions.
The proposals, which are supported by nearly a dozen member states including France and Germany, would include:
- Expanding the basis for which firms and individuals in third countries can be sanctioned so that it’s easier to list entities linked to components and supplies used by Russia in Ukraine, as well as the types of goods to target given their military use
- Ensure that sanctions are applied uniformly across member states, and strengthen coordination and reporting mechanisms with the aim of closing any loopholes
- Increase the EU’s capacity to carry out analysis and research, and improve how information flows between member states and the EU’s institutions in Brussels
- Use the EU’s soon to be established Anti-Money Laundering Authority for countering sanctions circumvention
The form of action the EU could eventually take would be on a case-by-case basis and could range from official warnings and diplomatic outreach to publishing suspicions where evidence allows, according to the draft paper. It may also encourage contractual obligations on the end-use of relevant goods, as well as the use of trade instruments and restrictions where there is widespread circumvention.
The ideas are expected to be discussed by member states this week.
EU, US Action
Sanctions the EU and the US are planning to announce later this week include a number of elements to tighten the enforcement of sanctions.
As part of these increased efforts, the EU has proposed that banks and other institutions report sanctioned Russian assets they hold as part of a new package of instruments the bloc aims to approve this week. EU sanctions require the backing of all member states.
The EU package includes proposals to also impose restrictions on Iranian entities seen to be providing Russia with drones and other military supplies, as well as extensive trade controls on other goods used by Russia’s military, including technologies, components, heavy vehicles, electronics, and rare-earths.
The US is planning new export controls and restrictions targeting key sectors, Bloomberg previously reported. President Joe Biden said in a statement from Kyiv that the US will announce later this week “additional sanctions against elites and companies that are trying to evade or backfill Russia’s war machine.”
The Group of Seven have also been discussing ways to sanction companies they believe are providing Russia with supplies used for military purposes.
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