Almost two years after Russia’s illegal invasion of Ukraine, Europe is slowly starting to address the existing loopholes in sanctions regulations and enforcement.
Most specialists have welcomed Europe’s unified response to the war in Ukraine and swift implementation of sanctions package. Yet, criticism progressively emerged about their quality, effectiveness and enforceability.[1]
As pointed out by the EU Parliament, sanctions effectiveness heavily relies on the efficacity of their enforcement by Member States.[2]
Until now, despite that sanctions are adopted at the EU level, their enforcement falls under each Member State’s responsibility. In practice, this results in a variety of actors with different enforcement practices, speed and diligence scattered across different jurisdictions. Similarly, penalties incurred depend on each Member State’s domestic legal system. As such, sanctions violations are potentially less “costly” in certain EU jurisdictions than others, which may in turn increase the risk of forum shopping.[3]
Combating sanctions circumvention has been on Europe’s agenda for the past year.
The first step has been taken in November 2022, when the Council of the European Union unanimously adopted a decision to add sanctions circumvention into the list of “EU Crimes” – i.e., a crime serious enough to require harmonization of legislations at the European level.[4] Interestingly, this is the first time that the list of EU crimes included in the Lisbon Treaty is to be modified since its enactment.
A month later, in December 2022, the European Commission published its directive proposal, which aims at establishing harmonized minimum rules on the legal definition of what constitutes a criminal violation of sanctions and the related penalties incurred.[5] A clear sign of Europe’s political willingness to make sanctions enforcement its priority are the severe criminal penalties (including imprisonment of up to five years) and dissuasive criminal fines.
In July 2023, EU Members of Parliament in the Civil Liberties Committee adopted a drat negotiating mandate on the violation and circumvention of sanctions, which includes fleshing out the list of activities that count as circumvention. With respect to penalties, MEPs have set the maximum fines that companies would face to 15% of the overall annual turnover and added new aggravating circumstances.[6]
EU Parliament calls for tougher enforcement of EU sanctions against Russia
On 7 November 2023[7], the EU Parliament voiced its alarm over existing loopholes in EU sanctions regulation, expressing significant concern over the lack of proper enforcement by EU Member States. As often is the case in Europe, Parliament noted that one of the central topics pertains to coordination of enforcement between Member States.
Mirroring criticism that emerged throughout Europe, Parliament insisted on the need to comprehensively review how Russia sanctions are working, especially after noticing the existence of several backdoor routes for various Russian goods (including through Turkey, Serbia or the United Arab Emirates). For example, Europe still very much relies on Russia’s fossil fuels, a situation that seems unlikely to change as Europe enters the winter season.
Conclusion
Since the beginning of the war in Ukraine, the EU adopted eleven sanctions packages. In addition to asset freeze measures, they include restrictive measures covering various business sectors, from financial and legal services to oil and gas or media broadcasting.
Now comes the time to reflect on how efficient and adequate all these sanctions are in practice. More than ever, Europe needs to identify and address existing inconsistencies between the various sanctions’ packages. In particular, closing existing loopholes should be a priority, as they could otherwise facilitate sanctions circumvention and deprive any enforcement willingness of any concrete impact.
[1] Russia’s invasion of Ukraine: Are EU Sanctions Going Too Far? Salomé Lemasson, 15 March 2023 [2] EU sanctions on Russia: Update, economic impact and outlook, EU Parliament Think Tank’s Briefing, 28 September 2023 [3] Expert Report – Prosecution of sanctions (restrictive measures) violations in national jurisdictions: a comparative analysis, Eurojust, 30 November 2021 [4] Circumventing Sanctions is now an ‘EU Crime’, Salomé Lemasson, 6 December 2022 [5] Proposal for a Directive of the European Parliament and of the Council on the definition of criminal offenses and penalties for the violation of Union restrictive measures, EU Commission, 2 December 2022 [6] EU sanctions: new law to crack down on violations, EU Parliament, Press Release, 6 July 2023 [7] Parliament wants tougher enforcement of EU sanctions against Russia, EU Parliament, Press Release, 9 November 2023
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