Welcome to Wider Europe, RFE/RL’s newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe’s Eastern neighborhoods.
I’m RFE/RL Europe Editor Rikard Jozwiak, and this week I’m drilling down on two issues related to sanctions: Will Russia be hit by another round? And will the EU ever sanction people or entities for being corrupt?
Brief #1: Can The EU Pass Another Round Of Sanctions On The Kremlin?
What You Need To Know: The European Commission will start sounding out officials from EU member states this week on another round of sanctions on Russia. Some countries — notably the Baltic trio of Estonia, Latvia, and Lithuania, as well as Poland — are pushing for a 14th package of sanctions against the Kremlin. The problem is that they need to get all other EU member states on board — and that needs to happen in the next 10 weeks.
In July, Hungary, the most sanction-skeptic member of the European Union, will take over the bloc’s rotating presidency. A few diplomats I have spoken to have said that they don’t believe that Hungary is keen to adopt more measures against Russia during the country’s six months at the helm.
But there is also another obstacle: European Parliament elections are just around the corner. That means the jockeying for top EU positions in the European Commission and European Council will officially start after that vote in early June — and is already under way in the corridors of power in Brussels and in other European capitals.
There is an illustrative example here: Ursula von der Leyen is hoping to be selected again as European Commission president for another five years and has appointed the head of her cabinet, Bjorn Seibert, to lead her campaign team. Seibert is essentially tasked with persuading the 27 heads of state and government to endorse von der Leyen for another mandate.
The issue there is that Seibert — often described as something of an éminence grise — is the sanctions person in the European Commission, the body in the EU that initiates the measures for member states to eventually agree on. With Seibert busy securing political backing for his boss, will anyone else be able to push through more sanctions?
Deep Background: Then there is the question of what to sanction, apart from blacklisting more people. The obvious answer would be the Russian liquefied natural gas (LNG) and nuclear sectors. But, collectively, there is not enough appetite among EU member states to target Russian energy, as fears still persist inside the bloc that energy prices could spike again just like last year.
Banning the import of aluminum could possibly fly, especially as the EU’s own aluminum industry would be in favor of such a move. But it would require that countries such as Greece, which are heavily reliant on Russian aluminum, be on board. Another potential and realistic target is to go after Russian helium exports. While the country only gets about $1 billion a year from exporting the gas, the EU has increased its imports substantially over the last couple of years, and Moscow has the ambition to become one of the world’s biggest helium suppliers in the future.
Some EU officials I have spoken to believe that more can be done to limit IT services provided by EU companies in Russia. The current ban, introduced in a previous sanctions package, targets mainly the prohibition of European consultancy services to install computer hardware and software, but services such as cloud computing remain largely untouched. This could be included in a future package.
Drilling Down
- In the future, EU officials are expected to focus on plugging loopholes in the already existing sanctions. When EU leaders met in March, they unanimously agreed on conclusions stating that “Russia’s access to sensitive items and technologies with battlefield relevance must be restricted to the maximum extent possible, including by targeting entities in third countries enabling this circumvention.”
- The EU has drawn up the legal framework to sanction third countries — as well as companies operating in third countries — that the bloc believes are circumventing EU sanctions and aiding Russia. So far, the framework hasn’t been utilized, but one place to start targeting firms could be Central Asia. Trade between the EU and Central Asian states such as Kazakhstan and Kyrgyzstan has risen dramatically in recent years. Much of that trade is luxury goods and components that can be used for airplanes, helicopters, and drones.
- There are other ways that the process could be tightened. Right now, the EU’s legal framework allows member states to prevent imports if they have a strong suspicion that the goods originated in Russia. But there isn’t a similar provision preventing the export of goods where there is a good chance they’ll end up in Russia.
- There are plenty of loopholes, for example, goods checked by customs have to be exported within a certain time frame. In practice, that means that goods can be substituted for others after the cargo has been checked.
- Another loophole is businesses bypassing the EU’s ban on flights to Russia. To get around the ban, new aviation companies have popped up in other countries, using quick stopovers in places like Armenia, Georgia, or Turkey. Flight plans are closed at the layover, and then new ones are opened for the final destination, Russia. There are even so-called “fake ambulance flights” where an elderly “medical” passenger is accompanied by several “friends and family members.”
- Perhaps one of the biggest sanctions prizes would be targeting the assets of sanctioned Russian companies and oligarchs. Most of those assets are in trustee and nominee services, where the ownership is concealed and notoriously hard to trace. There are almost 800 companies and trusts registered in tax havens or places with a high degree of financial secrecy that are owned or controlled by Russians who have been sanctioned by the EU, according to the International Consortium of Investigative Journalists. But there might not be enough political will in the EU and among the G7 partners to go after these assets.
Brief #2: Will Corruption Ever Be Sanctioned In The EU?
What You Need To Know: Whatever happened to the European Commission proposal that the EU should impose sanctions on people and entities guilty of serious corruption? The short answer: not much. Since the proposal was announced amid much fanfare in May 2023, there were hopes the EU would finally have something similar to the so-called “Magnitsky sanctions,” which are already in place in Canada, the United Kingdom, and the United States. Those measures allow these countries to target corrupt businesspeople and compromised officials.
European Commission President Ursula von der Leyen, who had raised the idea in a big speech back in the fall of 2022, has not spoken much about the issue in recent months. But the main reason the proposal has stalled — as happens so often when it comes to the bloc’s sanctions policy — is due to the member states themselves and the need to find consensus.
Deep Background: When the EU adopted a new sanctions regime in 2020 targeting human rights abuses globally, corruption was omitted as a sanctionable offense. Hungary said that it would not support the proposal if it included references to corruption, while other member states, particularly in Luxembourg and in southern Europe, also expressed reservations.
The story is still pretty much the same. The issue has languished in various lower-level diplomatic working groups ever since the European Commission, the executive branch of the EU, presented the draft law nearly a year ago to the European Council, which defines the political direction and priorities of the bloc.
Sweden, which held the council’s rotating presidency when the European Commission announced its proposal, only had weeks left in its stint at the helm and decided not to touch the issue. Spain, which wasn’t overjoyed about the proposal, also decided not to put it on the agenda during its presidency in the second half of the year. For Belgium, which currently holds the European Council Presidency, it will probably be a similar story. Belgian officials have indicated that there is no chance of moving forward with the issue when no consensus among member states exists. With the EU gearing up for European Parliament elections, the proposal will only gather more dust.
There are many legitimate concerns about making corruption a sanctionable offense. Some European politicians are worried that the restrictive measures could be used domestically to punish political opponents. There are also questions about how far Brussels could go when it comes to interfering in what is largely a domestic issue in third countries.
Some diplomats I have spoken to note that most of the sanctions the EU imposes don’t deal with what can broadly be described as “economic crimes” but instead concern more “classical” abuses of power. For instance, actively supporting the undermining of a country’s territorial integrity has led to asset freezes and visa bans, primarily levied against Russian nationals in recent years following the full-scale invasion of Ukraine in 2022. Or cases involving killings, torture, and mistreatment, which are included in the EU’s global human rights sanctions regime.
Drilling Down
- There is another obstacle: the need to obtain enough credible evidence to impose sanctions in the first place. Brussels can only target people and companies via publicly available information, and, of course, corruption is an incredibly opaque business.
- The EU also didn’t have much luck with perhaps its biggest corruption-related sanctions regime so far: the 2014 decision to impose punitive measures on the Ukrainian ex-president, Viktor Yanukovych, and 17 of his closest associates over the “misappropriation of Ukrainian state funds.” Ten years down the line, only three people remain on the blacklist, with the others managing to get delisted through the European Court of Justice (ECJ). Brussels officials have already conceded — as have ECJ judges — that much of the evidence they had at the time was a little flimsy and the sanctions were adopted in haste.
- The EU’s legal troubles with the ECJ were further highlighted recently when some Russian citizens who had been sanctioned over the war in Ukraine managed to win in the Luxembourg-based court.
- This is where diplomats in favor of corruption-focused sanctions have one of their strongest arguments. As legal decisions have shown, it can sometimes be hard to prove connections to the Russian war effort. If corruption was a sanctionable offense along with other infractions, there would likely be more evidence and a greater likelihood of individuals staying on the blacklist.
- Those in favor of corruption sanctions say that creating a working party on the issue within the Council of the European Union, where ministers from member states meet to discuss, amend, and adopt laws, would help. There is a precedent: Cyberattacks on the EU are considered sanctionable offenses, and a working group has been set up on precisely this issue.
- The actual European Commission’s draft proposal, seen by RFE/RL, is quite limited in scope — which could actually help its chances. Under the proposal, three categories would be targeted: active bribery, meaning “the promise, offering, or giving, to a public official, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity”; passive bribery, which is the acceptance by a public official of such an offer; and embezzlement and misappropriation of property by a public official.
Looking Ahead
The EU’s foreign and defense ministers gather in Luxembourg on April 22. They will mainly discuss how to give Ukraine more air defense capabilities, but they could also take stock of the situation in Georgia, where the government is trying to pass a controversial “foreign agents” bill that the bloc has already signaled its displeasure with.
Also this week, European Union ambassadors could finally clinch a deal on sending the profits from frozen Russian state assets to Ukraine. The main issue to overcome is how to deal with the taxation on these extra profits and where that money should end up.
That’s all for this week. Feel free to reach out to me on any of these issues on Twitter @RikardJozwiak, or on e-mail at [email protected].
Until next time,
Rikard Jozwiak
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