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Kremlin chief Putin
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To patch a broken fishing net, you must first find the holes. This is the great merit of the joint research by SPIEGEL, the Norwegian company Corisk and other international partners: They paint a detailed picture of developments in trade with Russia's neighboring countries since the sanctions against Russia came into force more than a year ago. Especially in comparison with the trade patterns of the past three years, the drastic increase in Western exports of goods to Kazakhstan, Armenia and other countries stands out.
The sanctions coalition, led by the EU and the US, has imposed punitive measures against Russia unprecedented in history. The consequence was a sharp decline in direct trade with Moscow. But it seems that exports to Russia have been largely diverted – and they are now almost back to the same level as before the outbreak of the war. That's how much Western trade with Kazakhstan, Armenia, Belarus, Georgia and Kyrgyzstan has increased – and it's still growing.
So far, investigative journalists have only been able to trace the complete supply chains of goods to Russia in individual cases. But it seems likely that the circumvention will take place on a much larger scale.
Violations endanger the Western coalition
It is important to understand what this means in concrete terms: this deal strengthens Russia's ability to continue its illegal war longer and with greater commitment. For Ukraine, this means more suffering than if the sanctions were fully enforced. Western governments should also be alarmed, as the current situation undermines the credibility of the sanctions coalition.
The explosive power should not be underestimated: the fact that within the Western camp, including within the EU, states monitor compliance with the sanctions in very different ways has the potential to tear this coalition apart sooner or later. Countries will wonder why they should pay a higher price for complying with the sanctions, while others – notably Germany and Lithuania – are making money from significant trade surpluses with Russia's neighbors.
Over the past decade, sanctions regimes have become an important tool for enforcing human rights. Otherwise, the international system for the protection of human rights lacks the levers to hold states and individuals accountable. This criminal liability gap is a major problem. If waging war no longer has any consequences, then the threshold for further armed conflict will drop in a dangerous way. The imposition of sanctions has so far been the West's response to this structural impunity.
Russia's development in recent decades confirms this pattern, from the armed conflicts in Chechnya in the nineties to the war in Ukraine today. There have been many crimes during this time, but rarely punishments. President Vladimir Putin has apparently learned the lesson that war is a cost-effective means of consolidating his power. The sanctions against Russia therefore serve a human rights purpose.
When companies export excessively to Russia's neighboring countries, they are playing with fire. They risk criminal investigations for circumventing sanctions, but also civil and class action lawsuits from Ukrainian victims of the war, who are likely to demand redress. If companies have supplied goods for Russia's military action in Ukraine, they may have been complicit in war crimes and crimes against humanity. Universal jurisdiction applies to such offenses. They can be brought to court in a variety of countries.
The EU is not doing enough
Since December, the EU has stepped up its efforts to prevent the sanctions from being circumvented. The EU Commission is currently working on its eleventh package of sanctions and is bringing ideas into play that could help plug some holes. EU Commission President Ursula von der Leyen suggested during a visit to Kyiv on May 9 that, as a last resort, Europe could sanction the export of certain goods to third countries that "deliberately circumvent our sanctions".
We doubt that the proposals go far enough. In order to create an effective culture of sanctions compliance – which in practice means that firms carry out stricter audits – much more needs to be done at the level of the EU and nation states. We need more tools to achieve full enforcement.
We therefore propose the following steps:
At the EU level, member states should strengthen the 2014 Sanctions Regulation, which is the most important law behind the European sanctions system. Today, it prohibits the "knowingly and deliberately" circumvention of sanctions. A negligence clause should be added to this Regulation in order to be able to prosecute circumventions that undertakings should reasonably have known about, even if they did not actively plan for them themselves. Such a passage would make it easier to prosecute exporters who have expanded sales in Russia's neighboring countries since the beginning of the war, in some cases drastically, but pretend to have no idea where their products are going.
While the sanctions coalition has imposed restrictions on Russia's close ally Belarus, there are still major gaps in the network. Like Russia, Belarus should be sanctioned for the export of war-critical goods in order to end the sharp increase in sales of heavy trucks, tractors, cars, drones and chemicals since the beginning of the sanctions.
The EU should also introduce stricter export regulations for war-critical and dual-use goods, i.e. goods that can be used both for civilian and military purposes. These regulations should apply to all members of the Russian-dominated Eurasian Economic Union (EAEU). These include Belarus, Kazakhstan, Kyrgyzstan and Armenia, which share a common market and free trade zone with Russia. In recent months, these countries have proven to be the main gateways for supplies to circumvent sanctions to Russia. The export of such potentially critical goods could be strictly regulated and capped, for example, by means of a quota system or export licences.
At the state level, the member countries of the sanctions coalition should create special investigation teams that will exclusively deal with compliance with the measures. This is already the case in some countries, where officials from customs, police and the relevant authorities work hand in hand. Even the establishment of such an institution can strengthen the compliance culture in the economy.
The real key, however, lies with the companies themselves. Business associations should play a stronger role here by informing companies about the significant risks associated with circumventing sanctions.
In Ukraine, meanwhile, civilians and soldiers continue to die every day at the hands of a military machine that is also kept running by circumventing sanctions. President Putin seems to be counting on a long war and that the democratic world will eventually be distracted from supporting Ukraine. To prevent this from happening, it is crucial to act quickly now.