The European Union is getting serious about sanctions circumvention.
ADVERTISEMENTAfter slapping Russia with ten rounds of sanctions at a record-breaking speed, it has become painfully evident that not everything is working according to the plan.
Brussels has detected an unusual surge in EU-made goods being exported to countries that are either located in Russia's periphery or politically close to the Kremlin.
Coincidentally, these products, which include machinery parts, valves, cranes, semiconductors, chemicals and even daily appliances such as microwaves, dishwashers and freezers, happen to be strictly prohibited in EU-Russia trade.
These anomalous transactions do not often correspond with the economic needs or historic trends of the purchasing countries, leading policymakers to conclude that a great share of this merchandise is being surreptitiously re-routed to Moscow and used to prop up the armed forces trying to invade Ukraine.
In other words, circumvention.
This explains why the new raft of EU sanctions, approved on Wednesday after a month and a half of behind-the-scenes negotiations, has as its prime goal the crackdown on evasion.
The penalties target three companies from Hong Kong, two from the United Arab Emirates, two from Uzbekistan, one from Syria, one from Armenia and one from Iran, all of them suspected of helping the Kremlin get its hands on blacklisted goods.
This marks the first time that firms based in China, one of the bloc's largest trading partners, become directly entangled in the EU's hard-hitting response to Russia's war of aggression.
But the real novelty in the latest package of sanctions is a radical tool that will allow Brussels to go after entire countries, rather than specific businesses, that are suspected of enabling circumvention.
The tool will be triggered when the evasion is considered widespread, systematic and long-lasting, taking place across a variety of companies, and will restrict the sale and transfer of a product, or group of products, to the country under scrutiny.
In practice, the tool will declare the nation to be an active accomplice in the circumvention – or at least a permissive participant that turns the other way.
It will come, however, with strings attached.
EU officials insist the tool will kick in as a "last resort" in exceptional circumstances, when other methods, such as diplomatic outreach and targeted restrictions, have failed to yield results.
The European Commission will propose the activation only after drawing up a thorough data analysis and engaging in consultations with the suspected country. Member states will then decide by unanimity whether to move ahead.
The mechanism will apply to blacklisted products that are assembled by EU companies or in EU territory, rather than those made elsewhere, and might enhance Russia's ability to wage war in Ukraine.
"We don't target alternative suppliers," said a senior EU official, speaking on condition of anonymity. "There is always an EU link."
Once triggered, the anti-circumvention tool will be under constant review and switched off if the penalised country provides sufficiently convincing assurances that the evasion will be stamped out for good.
Given its stringent conditions for activation and the diplomatic risks of publicly name-shaming another nation as a circumvention enabler, it is unlikely the new tool will be triggered on a frequent and regular basis.
ADVERTISEMENTInstead, officials and diplomats suggest, the mechanism will be used as a carrot-and-stick strategy by David O'Sullivan, the special envoy for EU sanctions, to prod countries into respecting the bloc's regulations.
Over the past months, O'Sullivan has travelled to the United Arab Emirates, Turkey, Kyrgyzstan, Kazakhstan, Uzbekistan, Serbia and Armenia, with Georgia scheduled next.