The European Union’s major sanctions machine

Hearing_of_Josep_Borrell,_High_Representative_Vice_President-designate,_A_stronger_Europe_in_the_World_(48859228793)

Europeans were shocked and appalled when Russian forces invaded Ukraine on 24th February 2024. Russia was a major trading partner of the Europe. They felt that international law and the security of their continent were being undermined to such an extent that they decided, in defiance of their own economic interests, to impose heavy sanctions on Russia. No fewer than 14 “packages” of sanctions of all kinds have been imposed on Russia in Brussels since that date.

In order to manage this new kind of war – Western Europe never once sanctioned the Soviet Union during the forty-five years of the Cold War (1946-1991) – major sanctions have been built up in Brussels. How does Europe’s major sanctions machine work? Who pulls the strings? How effective are they? To find out, we went to see for ourselves.

We met the General-in-Chief of this sanctions war. His weapons are not cannons manned by artillerymen, but computers commanded by senior international officials. The battlefields are not trenches, but the web, where banks and international trading companies operate. The General’s HQ is not a bunker, but a very large, bright office on the sixth floor of the Schuman roundabout in Brussels, protected by an uncompromising security service. He is the High Representative for the Common Foreign and Security Policy (CFSP), Josep Borrell. After the President of the European Council and the President of the European Commission, he is the third most important person in the European Union. He is also ex officio Vice-President of the Commission, whose services he can call upon at will. The European Commission employs some 32,400 people, three-quarters of whom are civil servants. The CFSP was established by the Treaty of Maastricht (February 1992) and confirmed by the Treaty of Lisbon (December 2007), which constitutionally governs the operation of the European Union.

“It’s not true to say that our sanctions against Russia aren’t working, even if appearances are against us,” Josep Borrell tells us from the outset. The IMF is forecasting 3.2% growth for Russia in 2024, and Putin’s homeland is still managing to manufacture its two nuclear submarines every year. “The Russians have adapted and mastered the art of circumventing sanctions. But we are going to take steps to make this circumvention much more dangerous for companies that dare to do it”, the High Representative assures us. In addition, he notes that Russia has suffered a considerable brain drain in the technology sectors as a result of the war and sanctions, and that in the long term its industry will suffer greatly as a result.

As a foreign policy measure, sanctions against a foreign country are decided unanimously by the EU Council of Ministers. They are proposed by the High Representative but can also be proposed by the Member States themselves, which have intelligence services capable of putting together dossiers. The Baltic States and Poland, which feel directly threatened by Moscow for geographical and historical reasons, have been particularly active in this area.

The procedure for sanctions is now well-oiled. Once the Council, on a proposal from the High Representative, has taken a decision in principle to impose sanctions on a foreign state (known as a CFSP decision), the High Representative and the Commission submit a joint proposal for a regulation to the Council.

These proposals are first submitted for examination to the relevant geographical or thematic group, then to the External Relations Counsellors Group, known as RELEX, which deals with all CFSP legal, financial and institutional issues. They are then forwarded to COREPER (Committee of Permanent Representatives of the Member States in Brussels), where the final negotiations take place, before the Council adopts them, if no Member State votes against. Hungary is the most reluctant of the 27 Member States to adopt new sanctions against Russia.

Unlike other regulations or directives, the European Parliament is not called upon to give its opinion on CFSP matters. It is simply informed. On the other hand, the General Secretariat of the Council (3,200 employees, 2,500 of whom are civil servants) has already done a great deal of work in verifying the legitimacy and legality of the sanctions, as they, like all restrictive measures decided by the Council, can be challenged before the General Court of the European Union.

The regulation defines the criteria for the application of penalties. In this case, they can be very broad. It is sufficient to be a person, natural or legal, “providing material or financial support to the Government of the Russian Federation”, or “taking advantage of that Government”, to be sanctioned. As a generally applicable legal act, the regulation is binding for any person or entity within the EU. It has the force of law for all public authorities, economic operators and private individuals in Europe. No one is exempt, and derogations are subject to strict controls.

The Council’s decision is enforced as soon as it is published in the Official Journal of the EU. The CFSP Decision and the regulation are published at the same time, to increase their effectiveness, which is crucial in asset freezing measures.

The European Regulation which allows individuals to be sanctioned in relation to the Russian-Ukrainian war is simply called Regulation 269/2014. As the number indicates, the first sanctions against Russia were taken by the European Union in 2014, after the annexation of Crimea. From 2022 onwards, the Council added a very large number of sanctions under Regulation 269/2014 (for individual sanctions) or Regulation 833/2014 (for sectoral sanctions). These sanctions are renewed every six months.

Because of the unanimity rule on foreign policy decisions, it would only take one of the 27 EU members (such as Hungary or Slovakia) to oppose the renewal of sanctions for them to be dropped. But this has never happened.

There are two types of sanctions: sectoral sanctions and individual sanctions. One of the main sectors of the Russian economy targeted by the former is energy. “You can see that we have not been maximalist,” says Borrell with satisfaction. “It’s true that European imports of Russian oil and gas have fallen considerably, but we haven’t eliminated them entirely, in order to prevent prices from skyrocketing”.

David O’Sullivan, the international special envoy for the implementation of EU sanctions, estimates that the Russian state has “400 billion euros less to spend each year” as a result of European sanctions. But, critics say Russia has managed to sell its gas and oil via China and India. What’s more, in Europe, Russian gas has largely been replaced by imports of American shale gas, considered ecologically evil by Europeans before 2022. And finally, the high cost of energy in the EU has made its industries much less competitive than those in the US.

On the other hand, European technology sanctions are already having a major impact in Russia. Since December 2023, the EU has banned the supply of industrial design and manufacturing software to Russia. In air transport, many Russian aircraft are grounded due to a lack of spare parts. In the energy sector, Russia will be sorely lacking in European horizontal drilling technology.

There are also individual sanctions. These target prominent Russians who are taking part in the war effort against Ukraine, such as political and military leaders and heads of companies in the military-industrial complex. These sanctions freeze their assets in the EU and prohibit them from entering EU territory. All Duma deputies who voted for war were sanctioned, as were a significant number of oligarchs.

With regard to Russian businessmen, the Council has been criticised for “hitting the ground running” on the basis of information sometimes only emanating from press articles. On 10 April 2024, the General Court canceled the sanctions targeting oligarch Mikhail Fridman, founder of the huge Russian bank Alfabank. The Court criticised the Council for failing to prove that Fridman had any responsibility for the aggression against Ukraine or for the ongoing war against Kyiv. Having been a friend of Putin or a pillar of the Russian economy in the past is not enough to make you an adversary of the “objectives or values of the EU”, therefore liable to sanctions, European judges ruled.

The Council is also criticised for lacking consideration for court rulings. The case of Alexander Pumpyanskiy is emblematic. This Russian, who arrived in Switzerland at the age of fifteen to study, stayed and took Swiss nationality. He was blacklisted (which prevents him from using any credit cards) because his father, Dimitri Pumpyanskiy, is the founder of TMK, the Russian Vallourec, and Alexander was a member of two of the group’s boards of directors. As soon as the war broke out, the son resigned his mandates. On 29 November 2023, the Court declared that the sanctions the Council had imposed on him since September 2022 were illegal and ordered that Alexander be removed from the blacklist. The Council decided not to appeal, but put the young Russian back on the list in its March 2024 sanctions package, on the grounds of “close family ties giving rise to benefits”.

“What do you want me to do?” says Alexander, whom we met in Geneva. “I haven’t received any money from my father or from Russia for a long time now, but I can’t make sure that I’m no longer my father’s son,” he says in perfect French. What’s more, the sanctions imposed by the Council against Alexander’s parents were annulled by the Court this week.

When we asked the Council how the sanctions imposed on Alexander Pumpyanskiy could put pressure on the Kremlin, we did not get an answer because we were told the case was “pending before the Court”.

For leading Viennese lawyer Gabriel Lansky, a specialist in sanctions, the Council has gone too far. “Europe is not North Korea, where being the child of an enemy of the people is enough to be punished“, explains Lansky, who is close to the Austrian Social Democratic Party. “An administrative body which, because of the specifics of the Lisbon Treaty, also has legislative powers, should not be going after the same man on very slightly different grounds, trampling over a court ruling. This violates the principle of the separation of powers”.

The Council’s senior officials are rightly proud to serve a state governed by the rule of law, which Russia is not. The Member States, the High Representative and the European officials in their service should therefore be extremely scrupulous when they propose “restrictive” measures to the Council against this or that family. For these sanctions function – de facto if not de jure – as real penalties.

This article was originally published in Le Figaro.

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