Espreso. Global

How Russian loopholes in evading sanctions are closed

28 March, 2023 Tuesday

This is a long process, but it significantly increases the effectiveness of sanctions

Prior to the full-scale invasion of Ukraine, Russia was a significant participant, though not the only one, in world trade. In most markets, such as gas, oil, and metallurgy, which form a crucial system for the Russian Federation, its share in world exports was approximately 10%. However, it held a dominant position in the European gas market, accounting for over 40% of it until recently.

Considering Russia's size, it's impossible to eliminate its presence in world trade entirely. Therefore, it will continue to resist and devise various schemes and bypass options as long as resources are available.

On the other hand, Russia isn't substantial enough on a global scale to be "immediately needed". Thus, the sanctions imposed by Ukraine's allies are gradually encouraging the world to function without Russia. These steps must persist incessantly to maintain the trend:

1. The 11th round of EU sanctions against Russia will target the evasion of previously imposed restrictive measures against Moscow, according to Ursula von der Leyen, head of the European Commission. 

While Russia may not be essential on a global scale in the immediate sense of the word, the gradual imposition of sanctions by Ukraine's allies is teaching the world to function without it. The timing of this event is crucial, particularly since the measures outlined in the 10th round need to be strengthened.

Global Witness, a British NGO, has released a report indicating that Russian oil is being sold systematically at prices higher than the $60 "ceiling" established by the G7 nations in December 2022. Despite this, its stock price has remained below $50 for an extended period. However, hackers have been able to find loopholes through the use of various schemes such as the mixing of different types of oil and transportation by a "gray" tanker fleet.

It is now time to close the loopholes that have become apparent and uncover new ones. Although a lengthy process, it significantly enhances the effectiveness of sanctions.

2. The EU and NATO are devising strategies to circumvent Hungary's attempts to block aid to Ukraine and to impede anti-Russian actions.

Despite Hungary's reluctance, a meeting of the Ukraine-NATO Commission at the foreign ministers' level will soon take place in Brussels. The Alliance has found a procedural approach to prevent Budapest from utilizing the right of veto.

Earlier, in December, the EU was able to allocate EUR 18 billion in aid to Ukraine, effectively bypassing Hungary's objections.

Despite Hungary's reluctance, a meeting of the Ukraine-NATO Commission at the foreign ministers' level will soon take place in Brussels. The Alliance has found a procedural approach to prevent Budapest from utilizing the right of veto

As Hungary is reliant on EU funds and NATO protection, it cannot continue to blackmail these alliances indefinitely. In the meantime, the allies are severing the ties that bind Hungary to Russia. According to the Financial Times, Hungary has commenced negotiations with France to increase its participation in the expansion project of the Hungarian nuclear power plant Paks, which is currently predominantly managed by the Russian state company Rosatom. Given that France is among the opponents of the implementation of sanctions against Rosatom, its involvement in pushing Russia out of the European nuclear market is a strategic move. Notably, the French state-owned nuclear reactor manufacturer Framatome acts as a contractor for Rosatom in Hungary, and it must provide the power plant control systems together with the German company Siemens. Therefore, it is probable that the Russian mediator will be eventually pushed out.

3. According to a spokesperson for the Indian Air Force, plans for a significant supply of weapons from Russia this year have been canceled due to the Russian Federation's aggression in Ukraine. The planned supply likely included aircraft, components for them, and the S-400 air defense system.

The Wall Street Journal has reported that Russia's global arms export market share dropped from 22% to 16% between 2017 and 2022, with the aggression against Ukraine serving as a detrimental factor for Russian weapons sales.

The Wall Street Journal has reported that Russia's global arms export market share dropped from 22% to 16% between 2017 and 2022, with the aggression against Ukraine serving as a detrimental factor for Russian weapons sales

4. In lieu of the canceled Russian arms supply, the European Union leaders have approved the joint purchase of ammunition for Ukraine and have also expressed support for missile supplies, if necessary.

5. According to the conclusions adopted at the European Council meeting in Brussels, the European Union is committed to ensuring full accountability for war crimes and other serious crimes committed in connection with Russia's aggressive war against Ukraine. To this end, the EU intends to establish an appropriate mechanism for prosecuting the crime of aggression, which is a matter of concern for the entire international community.

The European Council welcomes the agreement on the establishment of a new international prosecution center for the crime of aggression against Ukraine, which will be associated with the Joint Investigative Group supported by Eurojust. The document also reaffirms the Council's support for the investigations conducted by the prosecutor of the International Criminal Court.

These mechanisms will not only prosecute Russian criminals but also create a legal basis for the confiscation of assets belonging to Russian public and private individuals in favor of Ukraine. 


About the author. Rostyslav Pavlenko, Ukrainian politician, political scientist, lecturer. People's Deputy of Ukraine of the 9th convocation

The editors do not always share the opinions expressed by the blog authors.

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