The author is a researcher at the TRT World Research Centre, based in Istanbul, Türkiye.
ISTANBUL
On Dec. 18, the European Union announced its 12th set of sanctions targeting Russia. These measures, a response to Russia's war on Ukraine since February 2022, have sparked debates over their effectiveness.
EU countries undermine sanctions
Parallel with this announcement, some questionable media reports [1] started pointing fingers at countries outside the EU on the sanction issue, claiming that they undermine the collective Western effort. However, it appears the EU is in no position to play the blame game, as the lack of commitment seems to be happening inside the bloc. Some EU countries went to great lengths to circumvent sanctions and reap considerable profits.
Among the key culprits that openly adopted the sanctions, two countries, both members of the EU and NATO, stand out: Germany, the European powerhouse driving the EU economy, and Greece, the perennial opportunist, capitalizing on emerging opportunities.
Berlin is primarily motivated by its huge energy needs and aspires to cut its losses in the energy sector while allowing its export-driven economy to keep its market share. Conversely, these moves inadvertently provide Russia with a respite, undermining the intended impact of the sanction packages.
Germany and Greece profit
According to Anadolu [2], citing data from the German Federal Statistical Office, Germany's exports to Russia in the first 10 months of 2023 fell 39.1% to €7.6 billion ($7.3 billion). Conversely, exports to Kazakhstan jumped 32% to €2.7 billion, exports to Kyrgyzstan surged 180.1% to nearly €592 million, and exports to Armenia climbed 19.3% to €423.8 million. There is speculation that these exports may indirectly reach Russia [3], thereby subverting the EU's efforts.
German exports of automobiles and parts to Kyrgyzstan ballooned [4] 5,500%, to Kazakhstan 720%, to Armenia 450%, and to Georgia 340%. This raises questions beyond a simple spike in demand for auto parts in these countries.
Greece, despite the ongoing war, has profited through its shipping industry, primarily by transporting Russian oil. In July 2022, Greece handled [5] 64.8 million tons of Russian coal, oil, and gas, while Türkiye, a non-EU country, managed 7.2 million tons. This is significant, especially against Germany's 9.2 million tons. Comparatively, Monaco, with a much smaller population, traded 5 million tons.
A year later, EU internal dynamics show little change. A Bloomberg report [6] notes that Greek vessels continue to transport a large portion of Russian oil, with tanker sales in the region rising since the conflict began. Greek companies have sold 290 ships, outstripping China, and topping sales globally.
The Financial Times reported [7] that these older tankers, now owned by Russia, have softened the blow from the EU's embargo on Russian oil and G-7 restrictions, helping to cushion the impact of the sanctions.
Last November, Russia's seaborne crude oil exports reached 16 million barrels, with Greece in third place for volume, following the UAE and China. Greek shipowners, rather than supporting the EU sanctions that their government openly endorses, have chosen profit over ideals.
European firms still doing business in Russia
Attempts by the EU to debilitate the Kremlin's military campaign through economic pressure may not be as impactful or sincere as believed. European brand names [8] like Zara and Massimo Dutti, hugely popular among young and urban Russians, officially exited the Russian market due to sanctions. However, these brands are still sold [9] under different names like MAAG, Dub, Ecru, and Vilet by a United Arab Emirates-based company, with the main difference being the change of the label.
A Kyiv-based KSE Institute study [10] shows that many major companies continue operating in Russia, justifying their presence in various ways. Some products, including drones [11] with both civilian and military uses, reach Russian forces in Ukraine through parallel exports.
Sanction circumvention works simply via intermediaries. Although Russia is excluded from Swift, and Visa and MasterCard are non-functional there, payments can be rerouted through systems like a Kazakh payment platform, allowing transactions to proceed.
Russian economy not affected
Given the lack of efficiency, Russian consumers were not affected by the sanctions. They still enjoy access to most household items. Surveys indicate that such access to consumer goods keeps their views of the government at their usual levels. Thus, sanctions will not influence Russian political views for the presidential elections this March. The Levada Center reports [12] high approval ratings for government actions and Russian President Vladimir Putin.
Warfare requires significant financial resources, and Russia's natural wealth sustains its military expenditures. Despite the EU's continued sanctions, Russia remains committed to its war effort against Ukraine. The impact of the new sanctions is doubtful and likely reflects the limited effectiveness of previous actions.
While the EU maintains [13] that its measures are straining Russia's economy and analysts such as Iikka Korhonen acknowledge [14] that there are some significant budget deficits, they remain too ineffectual to affect the outcome of the war. It is clear that the Western sanctions will not lead to the end of the war.
In the theatre of global politics, sanctions serve as a stage where intentions and actions seldom align. The EU's sanctions narrative, juxtaposed against internal circumventions and external critiques, suggests a complex performance rather than a unanimous chorus. As the curtain falls on this act, the spotlight fades on sanctions' efficacy, leaving the audience pondering the script's authenticity and the future of such economic strategies.
[1] https://www.euronews.com/business/2023/11/27/turkey-faces-scrutiny-as-exports-to-russia-surge-fuelling-concerns-of-sanctions-evasion
[2] https://www.aa.com.tr/en/europe/growing-german-exports-to-russias-neighbors-raise-concerns-of-sanctions-violations/3083797
[3] https://twitter.com/RobinBrooksIIF/status/1732386289402446106
[4] https://www.telegraph.co.uk/business/2023/12/05/german-carmakers-accused-of-supplying-putins-russia-through/
[5] https://www.reportersunited.gr/en/9775/european-ships-bolster-russian-fossil-fuel-trade-despite-looming-eu-sanctions/
[6] https://www.bloomberg.com/news/articles/2023-11-27/greek-oil-tanker-owners-avoiding-russia-after-treasury-letters
[7] https://foreignpolicy.com/2023/09/11/greece-russia-tankers-oil-sanctions/
[8] https://www.rt.com/business/574732-rebranded-zara-stores-russia/
[9] http://newsunrolled.com/economy/64613.html
[10] https://leave-russia.org/
[11] https://www.aljazeera.com/opinions/2023/6/5/sanctions-on-russia-may-not-be-working-we-now-know-why
[12] https://www.levada.ru/2023/12/21/odobrenie-institutov-dela-v-strane-doverie-politikam-dekabr-2023-goda/
[13] https://www.consilium.europa.eu/en/policies/sanctions/restrictive-measures-against-russia-over-ukraine/sanctions-against-russia-explained/
[14] https://www.economicsobservatory.com/sanctions-against-russia-what-have-been-the-effects-so-far
*Opinions expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Anadolu.
