EU agrees new sanctions on Russia, blacklisting companies in mainland China for the first time

Brussels: The European Union agreed on Wednesday to slap Russia with a new round of sanctions, which for the first time target companies in mainland China suspected of helping the Kremlin get hold of forbidden items.

The sanctions have a heavy focus on fighting circumvention and go after firms around the world accused of providing Russia with advanced technology and military goods manufactured in the EU, particularly drone components.

Companies from Turkey and North Korea, among other countries, have also been targeted. Nearly 200 people and entities, mostly from Russia, have been added to the blacklist, which now contains more than 2,000 names.

The package, however, does not cover any person allegedly involved in the death of Alexei Navalny, the most prominent critic of President Vladimir Putin. Tighter restrictions on aluminium were not included either, as the topic remains divisive.

Exact details of the sanctions will become available after publication in the EU’s official journal, expected to happen later this week.

“We must keep degrading Putin’s war machine,” said Ursula von der Leyen, president of the European Commission.

The bloc had previously attempted to punish a handful of firms based in mainland China, but complaints from Beijing officials and reservations from some member states prevented the move. The ever-closer ties between Russia and China eventually pushed diplomats in Brussels to give the idea a second try.

Russia-China trade reached a record high of more than $240 billion (€213 billion) in 2023, according to customs figures by the Chinese government. The figure easily surpasses the $200 billion objective set by the two countries.

The new raft of EU sanctions, the 13th package since February 2022, also targets Russian-operated institutions that re-educate children who have been kidnapped from Ukraine. The alleged abductions triggered an arrest warrant against President Vladimir Putin by the International Criminal Court, which treats the charge as a war crime.

The approval of the package was deliberately timed to coincide with the second anniversary of the war in Ukraine. The process was slowed down by Hungary, which is bent on preventing any restrictions involving Rosatom, Russia’s nuclear monopoly.

Rosatom is the main contractor in the expansion of the Paks nuclear power plant, which supplies over 50% of Hungary’s electricity.

Despite the small hiccup, the penalties were approved three days ahead of the self-imposed symbolic deadline to mark two years since Russia invaded Ukraine, unlike last year when the bloc almost missed the milestone.

The latest package is almost entirely focused on cracking down on sanctions evasion, a pervasive phenomenon that has been compared to Whac-A-Mole: as soon as one loophole is closed, another one appears.

China, the United Arab Emirates, Turkey, Kyrgyzstan, Kazakhstan, Uzbekistan, Serbia and Armenia have been under the EU’s radar for months, with special envoy David O’Sullivan jetting from one country to another in a bid to convince these governments to do more.

“I think we have to be realistic,” O’Sullivan told Euronews in December. “There’s always going to be a degree of circumvention. There’s money to be made.”

Last year, the EU introduced an anti-circumvention tool that allows the bloc to restrict certain trade flows with countries as a whole, rather than with specific companies. This instrument is considered a last resort and its activation depends on the unanimous approval of member states, a bar that has become increasingly hard to meet.

A diplomat who spoke on condition of anonymity said it had become “quite clear” that the sanctions on Russia were not as effective as the bloc had originally hoped as Russian society was still getting “what they want.”

A recent forecast by the International Monetary Fund (IMF) upgraded the prospects of the Russian economy due to high military spending and strong consumption.