EU Secondary Sanctions More Bark than Bite

The European Union has established an anti-circumvention framework, akin to the United States' "secondary sanctions" system, which potentially empowers the EU to sanction third countries that assist trade with nations under sanctions, including Russia. However, EU officials suggest that this framework may be a diplomatic deterrent more than an immediate plan of action, as the bloc seeks to avoid driving these third-party nations towards Russia and China.

The EU's latest sanctions package against Russia, approved by all member states on June 23, featured this new framework. The current arrangement now gives the EU the legal tools to create a list of products manufactured within the bloc, suspected of reaching Russia through third-party nations, and another list naming these third countries, thereby preventing their import of goods from the EU.

There's no denying that this mechanism could prove useful in the future. A significant increase in exports of potential dual-use goods was noted last year from EU member states to countries like Kazakhstan, Kyrgyzstan, and Uzbekistan.

David O'Sullivan, the EU’s sanctions implementation envoy, has been active in areas like Central Asia, Armenia, and Georgia, advocating against the use of EU-sourced items in Russian military equipment and weapons. An anonymous senior EU official told Radio Free Europe, “We are seeing circumvention...There is evidence that something is happening.”

Despite this, the consensus is that the EU may hesitate to utilize this instrument, preferring diplomacy as the primary strategy. The new tool could inadvertently push third countries closer to Russia and China, a situation the EU is eager to avoid. Serbia and Georgia serve as examples, neither aligning with EU sanctions on Moscow nor facing any repercussions from the EU for doing so.

The necessity for unanimous agreement among all 27 EU member states presents another hurdle for this new framework. Germany, backed notably by Italy, had expressed significant resistance against the proposal, working to extend and complicate the sanctions text on this issue. Berlin was particularly against listing specific third countries, although most other EU member states resisted this stance.

Despite the initial hopes for quick agreement when the proposal was first presented by the European Commission in early May, it took nearly two months to reach a consensus, mainly due to Berlin's persistent requests for clarification on anti-circumvention language. The difficulty of implementing this anti-circumvention instrument is apparent, with the EU likely to exhaust all diplomatic resources before considering any restrictive measures.

Further measures must be taken before targeting a third country. It involves briefing the member states by the EU's foreign policy chief and the European Commission, including trade data and efforts made by the EU to address the issue with the third country in question. Only after a final outreach to that third country has been concluded, a unanimous decision could be taken, highlighting the complexity of this new framework.