Latest EU Sanction Proposals Target Third-Country Circumvention

May 11, 2023
The European Commission marked Europe Day with a visit to Kyiv and an 11th package of sanctions against Russia.

The European Commission marked Europe Day with a visit to Kyiv and an 11th package of sanctions against Russia.

Ursula von der Leyen, the European Commission’s president, has outlined proposals for an 11th round of sanctions against Russia.

“We continue to do everything in our power to erode Putin's war machine and his revenues,” said von der Leyen in a speech while visiting Ukraine. “Our sanctions are working.”

The latest round targets third countries and aims to stop circumvention, whereby firms and individuals evade sanctions through routing a transaction via an intermediary.

There have been concerns, for example, that companies from countries such as China are undermining the West’s punitive sanction packages.

“We are doing this in very close coordination with our international partners, particularly with the G7,” noted von der Leyen.

The commission chief said that a focus now is also sharpening existing tools. For example, more products are being added to the transit ban.

“Advanced tech products or aircraft parts that are going to third countries via Russia will no longer end up in the Kremlin's hands,” she said.

However, to ensure this, the German politician noted that additional action needs to be taken.

‘We’ve recently seen a growth of highly unusual trade flows between the European Union and certain third countries. These goods then end up in Russia,” she said.

“If we see that goods are going from the European Union to third countries and then end up in Russia, we could propose to the member states to sanction those goods' export.”

Von der Leyen insisted that this new tool to combat sanctions circumvention will be a last resort and it will be used cautiously.

It will involve a “very diligent risk analysis” and will also need approval by EU member states.

“But there should be no doubt that we work against sanctions circumvention,” she warned.

Another element of the proposal is a ban on ‘shadow' entities from Russia and third countries who are intentionally circumventing our sanctions.

The new package will now need to be negotiated by the European Council and news outlets have reported that this will be tense considering the political stakes.

For example, on the same day as von der Leyen outlined the new sanctions proposal, China’s foreign minister Qin Gang warned his German counterpart, Annalena Baerbock, that the country will retaliate if Chinese firms are sanctioned for their trade with Russia.

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