Clampdown on the evasion of sanctions against Russia should ‘start at home’ – EU envoy

“I emphasise this to both our member states and to the countries I visit: anti-circumvention starts at home,” O’Sullivan told Euronews in an interview on Thursday.

Since the start of Russia’s unprovoked invasion of Ukraine, the EU has slapped 11 packages of sanctions on Moscow in a bid to stifle President Vladimir Putin’s war campaign, including bans on the export of goods.

But the bloc suspects everyday EU products that include components used to manufacture drones, missiles and artillery shells are being re-exported via countries in Russia’s periphery.

O’Sullivan has been tasked with touring third countries to urge them to join EU efforts to cut Russia’s access to these so-called ‘dual use’ goods’ but says the EU must also do its homework.

“These products are European. They are manufactured here and our companies are – probably unwittingly or maybe without any knowledge – sending them somewhere and they are then finding their way to Russia,” O’Sullivan said.

“Member states are really working very hard on talking to European companies, on investigating the trade flows and seeing if there are companies that are still sending products that could be finding their way to Russia,” he explained.

EU countries need to encourage their companies to “do their due diligence” to investigate trade flows and detect suspicious patterns, according to O’Sullivan.

“Who are you selling it to? Is that a company that was only created recently since the war, or is it a long-standing company with a good track record of buying these products, maybe from elsewhere? These are the kind of questions that companies have to ask themselves,” he said.

He also acknowledged that there is “always going to be a degree of circumvention” because “there’s money to be made.”

A list of 45 highly-sought products for Russia’s military campaign has been drawn up by the EU in collaboration with Ukraine. These include components used widely in everyday devices such as semiconductors, integrated circuits, fibre optical readers and memory cards.

Assisting the evasion of EU sanctions is a criminal offence. In September, an employee of the Dutch defence ministry was detained on suspicion of evading sanctions.

But O’Sullivan is confident that the EU’s quest to crack down on evasion is working, making it “harder, slower and much more expensive for Russia to be able to procure these products.”

“Russia is struggling to get hold of the technology it needs and is now turning to Iran or North Korea,” he explained. “And we do see evidence that the Russians are having to roll out older, older weapons, older tanks, in order to keep their military equipped.”

He also assesses that EU measures are taking an increasing economic toll on Russia, which has “€400 billion less to spend” and is running a deficit of around 3%. Despite the growth in Russia’s economy, 30% of public spending is going towards expanding the military, which will inevitably deprive investment in health, research, education and other key areas. 

“I think this may be more of a slow puncture than a blowout. But this is really impacting very severely on the Russian economy and on the Russian military,” he explained. “I think sooner or later it is going to become very, very difficult for Russia to sustain this effort.”

‘Most’ third countries collaborative

Third countries including Turkey and China have been on the EU’s radar for facilitating the provision of dual-use goods to Russia, with exports from both countries spiking this year.

The presidents of the European Commission and Council met Chinese Premier Xi Jinping in Beijing on Thursday, and were set to raise their concerns about Chinese firms’ exportation of dual-use goods to Russia. 

According to senior EU officials, while overall exports of so-called high-priority battlefield items from China to Russia have declined, dual-use goods continue to raise concerns.

According to O’Sullivan, “most” countries who are not implementing direct sanctions against Russia “don’t want to be feeding the Russian military machine” and are taking steps to prevent re-exports.

“Most of them have been quite responsive in saying, well, actually, we don’t want to be involved in this trade.,” he explained. “They don’t want the reputational damage of their country being seen as a channel of circumvention, because this will make companies think twice about investing.”

While third countries have raised the issue of the ongoing conflict in the Middle East since the war between Israel and Hamas broke out on 7 October, they have not questioned the EU’s legitimacy in pursuing its sanctions regime against Russia, according to O’Sullivan.

“I think people understand why, for us in Europe, we have to push back very strongly,” he explained. “Putin’s ambitions of re-establishing Russian hegemony in the immediate neighbourhood of Russia is something we cannot accept. That is why, as Europeans, we have a particular obligation in this situation.” 

“I don’t see people saying, well, we won’t help you on sanctions with Ukraine because of the situation in the Middle East – not at all,” he added.

O’Sullivan also claimed the EU’s cap on the price of Russian oil is having a positive impact, but acknowledged countries such as India are continuing to buy Russian oil that is then sold for a profit to EU countries. 

The bloc has not sanctioned Russian oil due to the dependency of the Global South, but in January this year introduced a price gap to ensure Moscow did not benefit from abundant profits.

“I think the main objective is to make sure that Russian revenue is is severely impacted by by the oil price cap. And I think we see a lot of evidence that that is the case,” he said.