Non-paper on strengthening EU sanctions capacity and countering sanctions
circumvention
2022 was characterized by the Russian war of aggression against Ukraine and the unity
showcased by the international community in denouncing these gross violation of
international law. The EU and its partners have adopted unprecedented sanctions
packages aimed at limiting Russia’s ability to wage war. The EU’s sanctions capacity has
been strengthened along the way, but further steps need to be taken, including in unified
application among Member States. More substantial capacity for economic analysis is
needed for advancing a data driven approach. The EU also needs to step up its capacity
to develop listing proposals. However, it is essential to maintain and further increase the
effectiveness of our existing sanctions. The year 2023 must be the year of success in
countering circumvention.
As concluded by the European Council on 9 February 2023: “Anti-circumvention measures
will be reinforced.” This paper aims to contribute to operationalize this. Circumvention is
detrimental not only to the effectiveness, but also to the societal support for our sanctions.
Those that abide by our measures and carry their costs can question their legitimacy if
others do not, and may ultimately be led to disregard them. Circumvention tactics and
procurement efforts by the Russians are getting more numerous and more creative. With
these efforts Russia is trying to keep supplying its military industry with the
necessary components despite our sanctions.
We see that Russia is transitioning into a full-on military economy with a view to sustaining
its war efforts. Alternative supply chains are created through the use of front companies
and intermediates in the circle of countries around Russia. Special focus should be put
on Western components that are crucial to the Russian military industry. These
components are not easily replaced: changing an element in weapons production takes
months, due to certification and design processes. A small disruption of these production
chains therefore quickly has a significant impact in the Russian ability to produce weapons
and military equipment.
It is therefore urgent that the EU and its partners counter sanctions
circumvention together. We welcome existing initiatives, but wish to advance an
innovative, coordinated and cooperative approach where we think outside the box. The
following elements need to be taken on board in order to more successfully counter the
circumvention of our sanctions:
1. Strengthen the feedback loop between enforcement practice at national level and
sanctions policy at EU-level.
 At national and EU-level, cooperation between agencies like customs, tax authorities
and prosecutors, the intelligence community, as well as research institutes and
statistics agencies is crucial. MS should set the necessary steps to identify concrete
cases of circumvention for enforcement purposes. This should also be a structural
element of high level dialogue in the relevant fora.
 Bring this information up to the EU-level of sanctions policy making so loopholes can
be closed.
2. Strengthen the EU point of contact for sanctions circumvention
 Exchange of information at the EU level is essential for common analysis. We should
therefore ensure that national authorities can safely share information on possible
circumvention in Brussels in an easily accessible way.
 Strengthen the EU’s capacity for analysis and research. Provide – within the institutions
- a platform for common analysis on individual cases of circumvention and possibly
jurisdictions that facilitate circumvention to enable a common approach.
 Leverage the soon to be established EU Anti-Money Laundering Authority (AMLA, 500
FTE) for countering sanctions circumvention.

3. Identify concrete steps for diplomatic outreach and potential further measures
 Based on our common analysis, concrete steps can be identified in order to address
the specific cases of (potential) circumvention.
 On a case-by-case basis, it can be determined what form of action is appropriate,
starting with diplomatic outreach. This could be done by the Special Envoy for the
Implementation of EU Sanctions, through EU démarches and/or a letter from the EU
institutions.
 Seek coordination with G7-plus partners where possible, to coordinate such
engagement with third states where possible/necessary.
4. Expand the EU-toolbox
 Need to be creative and look beyond the sanctions instrument. This could include:
o Guidance by EU institutions for EU companies and tools to recognize and
counter circumvention patterns.
o Issuing official warnings to certain persons/entities inside and outside the EU;
o Watch list of companies and/or sectors/trade flows of specific concern: explore
possibilities of publishing ‘suspicions’ or warnings in case sufficiently solid
evidence cannot be presented, enabling due diligence for companies;
o Encourage companies in circumvention-sensitive sectors to adopt contractual
obligations regarding end-use;
o Use of the EU’s trade toolbox and possibly other instruments of external action
can be considered in cases of widespread circumvention within the territory of
a specific state that refuses to act upon these issues. The possible use of EU´s
trade instruments in this context should be examined further in order to secure
legal compliancy with the instruments.
o
5. Expand listing capacities
 We should give a strong signal to persons and entities in third states. The provision of
material support to Russia’s military and defense industrial base will have severe
consequences regarding their access to the EU market.
 Currently, listing of entities in third countries can only be done by (1) using the general
criterium of providing material support for the invasion, or (2) by using the new
criterion, which requires proving a link with an infringement of the prohibition of
circumvention by EU actors. This puts the bar for application very high in practice. It
requires a preceding investigation by an enforcement agency and possibly a public
outcome. We should use these possibilities to the maximum extent, but more is
needed.
 The EU needs to be able to act also on other cases where circumvention may be linked
directly or indirectly to the use of products/components on the battlefield in Ukraine,
thereby including a broader category of products/components required for weapons
and military production.
The EU and its partners need to do everything in their power to limit the ability of Russia
to wage its war of aggression. Tough enforcement of sanctions offers the EU a possibility
to increase pressure and acts as a deterrent. Imposing sanctions should not be seen
as the end of a policy process, but rather the beginning.