Are EU Sanctions Against Russia Enforceable?

Russia’s war launches new reform of EU sanctions design

28 July 2022

Bohdan Bernatskyi

Future of Ukraine Fellow

The lack of EU sanctions enforcement was evident for a long time, the EU finally decided to handle it. The effectiveness of sanctions pressure depends much more on their enforceability.

A week ago the EU adopted the seventh package of sanctions against Russia that targets jewellery, gold, certain individuals and companies and the shipbuilding industry — which is involved in the theft of Ukrainian grain. Despite the importance of growing pressure, another development on the sanctions track deserves close attention.

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The European Commission proposed introducing liability for sanctions violations as a serious crime at the level of the European Union. The Commission recognised that the sanctions worked but that there was no mechanism for monitoring their implementation. Recognition of this by the EU means that the member states have failed to implement the common sanctions policy properly.

All in the Hands of Member States

It is worth noting that the current framework of the EU sanctions policy places all responsibility for the implementation of sanctions on the EU member states. Each EU state establishes a different level of criminal, administrative or financial liability for violation of sanction prohibitions and limitations.

For the absolute majority of EU member states, violation of sanctions constitutes grounds for criminal prosecution. The main types of punishment are imprisonment and fines — from 1,200 euros in Estonia, to up to 37 million euros in Lithuania — the amount and degree of responsibility vary for individuals and companies respectively.

The European Union, as an institution, is de facto deprived of supervisory functions over the implementation of sanctions prohibitions and limitations, which has resulted in heterogeneous and fragmented prosecution for violations of EU foreign policy acts. Until recently, the sanctions portfolio was a part of the European External Action Service (EEAS), which is mainly a diplomatic service coordinated by the EU High Representative for Foreign Affairs and Security. 

Shortly after the election of the new EU Commission, Ursula von der Leyen decided to move the sanctions authorities to the Director General for Financial Stability, Financial Services and Capital Markets Union (FISMA). 

While the EU previously uses the diplomatic service for sanctions, now they are driving toward the US’s and UK’s more financial approach to sanctions. While these changes were implemented in 2019, the results from the said changes are far from evident, and no radical improvements have been seen in their enforcement capabilities.

Moreover, the effectiveness of the entire sanctions toolkit largely depends on domestic law enforcement agencies ability to investigate possible sanctions violations. In practice, a lack of ability and will in such investigations is evident.

One of the most egregious facts of the violation of sanctions limitations was the detection of control systems developed by the French company Thales in a Russian infantry fighting vehicle (BMD-4) destroyed in Ukraine. 

This is despite the fact that the EU has banned exporting dual-use weapons and technologies to the Russian Federation since 2014. French NGO ‘Disclose’ found that France had granted 76 export licenses for arms sales to Russia since 2015. Although the French Ministry of Defense has prepared an explanation that, formally, this was not a violation of sanctions, the question of the latter’s effectiveness seems to be rhetorical.

European industrial giants such as Siemens or Grundfos, which have supplied equipment (pipes, materials for water supply) to the occupied Crimea, came under the crosshairs of investigative journalists. At the same time, there was a ban on the supply of any goods to Crimea at the EU level. Despite assurances from officials to conduct an investigation, the results were not publicly announced. 

A number of isolated cases of prosecution for sanctions violations have taken place in Holland, Belgium or Germany. However, investigations appear to be sporadic rather than systematic. On the other hand, Slovakia has not even codified the breach of EU sanctions as a criminal offence. It means that national law enforcement agencies have limited powers to launch investigations in that regard.

What Does the Commission Propose?

Commissioner for Justice and Consumers, Didier Reynders, said — ‘We must ensure that persons or companies that bypass the EU restrictive measures are held to account. Such action is a criminal offence that should be sanctioned firmly throughout the EU. At present, divergent criminal definitions and sanctions as regards the violation of the restrictive measures can still lead to impunity. We need to close the loopholes and provide judicial authorities with the right tools to prosecute violations of Union restrictive measures.’

At the technical level, the European Commission proposes to recognise that violations of sanctions have a cross-border nature, and therefore affect the foundations of the security and foreign policy of the Union. The Commission set out a vision according to which Article 83 of the TFEU should be supplemented by the definition of a new crime of ’violation of restrictive measures.’ 

This will result in member states having to harmonise approaches to liability for sanctions violations and provide effective channels for investigating possible violations in cooperation with the European Commission.

When the Member States Are Unreliable, the Commission Should Step Up

Recognising the vulnerabilities of the sanctions architecture comes at a time of turbulence for the entire European Union, and the EU’s unity is further eroded by Hungary’s simple blocking of sanctions decisions. 

The establishment of criminal liability is the proper and timely step on the part of Brussels, and it should be supported by new, expanded powers of the Commission in order to respond to novel hybrid threats stemming from Russia.

Although the implementation of criminal liability is crucial, there is still a lack of a European equivalent of ‘OFAC’ to monitor and impose sanctions if member states are unwilling to do so. EU FISMA should have the power to conduct its own investigations and impose fines if necessary. 

The strength of the Union in foreign policy should go in line with viable mechanisms for its full implementation.

Published as part of our own Future of Ukraine Fellowship programme. Learn more about it here and consider contributing.

Picture: Canva

Bohdan Bernatskyi

Future of Ukraine Fellow

Bohdan Bernatskyi is a Visegrad Insight Fellow as of 2022. As a Senior Lecturer at the National University of Kyiv-Mohyla Academy (and Ostroh Academy) he teaches Diplomatic Law, Public International Law, Countermeasures and Law of Treaties. In 2019, he defended PhD thesis on banning political parties in Ukraine and abroad. Since then, Bohdan has become a member of the Parliamentary working group on reforming party legislation in Ukraine. Bohdan serves as an independent Legal Consultant at Project Expedite Justice (2022-currently), Future of Ukraine Fellow at Visegrad Insight (2022-currently). He was a Legal Adviser to Ukrainian MPs (2020-2022), and Democracy Reporting International (2015-2019). His professional track of record includes thorough expertise in the fields of sanctions and transitional justice initiatives. He is the author of the complex changes to Ukrainian sanctions infrastructure which aimed at converging UA foreign policy tools to EU best practices. Given EU candidate status to Ukraine, the idea to deepen cooperation within EU-UA CFSP, including sanctions, will gain more currency. Bohdan participated as an Independent Expert in the transitional reform group launched by the Ministry of Reintegration of Ukraine. All efforts related to building solutions for sustainable peaceful reintegration of the temporarily occupied territories of Ukraine was brutally interrupted by Russia on February 24th, 2022. The aftermath of the war will require harder approaches to transitional measures and Bohdan will contribute to this development.

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