EU aims to target nations through which Russia evades sanctions

The European Union is discussing a new sanctions mechanism to target third countries it believes aren’t doing enough to prevent Russia from evading sanctions, particularly those that can’t explain spikes in trade of key goods or technologies, according to people familiar with the matter.

The primary aim of the tool would be to deter countries from helping Russia and crack down on trade channels that Moscow may be exploiting, the people said. If that doesn’t work, the bloc would have the option as a second step of imposing targeted restrictions on key goods.

The bloc also aims to widen the scope of several existing export measures and ban many goods transiting through Russia, said the people, who spoke on condition of anonymity to discuss private matters.

The sanctions package, the EU’s 11th since February 2022, will mostly focus on closing loopholes in measures already enacted, as well as strengthening the bloc’s ability to enforce its restrictions. It’s a reaction to how Moscow has been able so far to source numerous sanctioned goods through third countries.

Imports to Russia of goods like semiconductors, integrated circuits and other technologies have surged from countries such as Kazakhstan, the United Arab Emirates, Turkey, China and others.

The new enforcement mechanism, aspects of which were first reported by the Financial Times, would give member states the authority to create two lists — one of affected third countries and the other of banned goods.

If the mechanism is approved by national governments, decisions on which countries and goods to list would be for member states to take unanimously, the people said. The measures were unlikely to target China at first, but focus mostly on nations in central Asia and Russia’s immediate neighbors, the people added. 

Elsewhere, the proposed package would make it easier to sanction companies in third countries that are circumventing the EU’s sanctions.

EU sanctions require the backing of all member states to be adopted. The bloc is aiming to finalize the measures ahead of a Group of Seven summit later this month and member states are expected to discuss the proposals in the coming days.

Other proposals include banning many goods from transiting through Russia and targeting vessels that switch off their navigation systems, Bloomberg previously reported.

The EU is also aiming to widen existing bans on cars, high-end technologies that have been used by Russia in Ukraine, industrial goods, and iron and steel as well as processed products that use the sanctioned metals, the people said. Prohibitions on goods could extend to intellectual property rights and licenses issued to produce those items.

The new set of measures also impose new restrictions on trailers to avoid having Russian trucks hitch their cargoes to EU trucks once they reach the bloc’s borders, according to the same people. In addition, the EU is likely to clarify rules on existing bans relating to entry into EU ports and prohibitions on using port services, as well as guidance on ship-to-ship transfers, the people said.

The package is expected to see dozens more individuals and entities added to sanctions listings, the people said. However, the bloc is unlikely to sanction the Russian state nuclear power company, Rosatom, nor nuclear fuel, due to a lack of consensus among member states, the people said.

Separately, the EU is considering the feasibility of a set of listings relating to the case of jailed Russian opposition figure Vladimir Kara-Murza.