Envoy: EU sanctions now include financing of Russian battlefield products

The EU sanctions envoy stated on Wednesday that sanctions against financial institutions could be aimed at the military product flow to Russia, as well as products manufactured in Southeast Asia by Western subsidiaries.

Since 2022, the EU has imposed extensive sanctions against Russia because of its invasion in full force of Ukraine. David O'Sullivan, EU envoy, said that sanctions are not a "magic bullet", but they aim to make Russia's war machine more difficult to fuel. He said he had no illusions about circumvention, and that listing dual-use companies that sell to Moscow is often a "whack a mole" effort.

He said that the EU had made significant progress in reducing circumvention through central Asian countries. The reductions were apparent after diplomatic efforts with Kazakhstan Uzbekistan Armenia and other states. He faces a greater challenge to stem similar flows in Southeast Asia, where many countries are not just transit points, but also producers.

O'Sullivan, who had visited Vietnam, Thailand, and Malaysia in order to address these issues, said that a lot of the products going through China are made by the subsidiaries of western firms in Southeast Asia.

He said that it was important to identify the financial institutions who are funding the potential trans-shipment (of battlefield products) to Russia.

"Where they are identified, these establishments will be contacted and told...if they don't desist, they risk being listed. Three instances in the U.S. earlier this year were a great success. We're starting to gather information and compare notes."

The EU faced a growing challenge in harmonising the 14 sanctions packages across its 27 member countries.

He said that despite the limitations of the EU's and Western powers' measures, they had forced Russia into a "war economy" which would have a heavy toll on Russia's future economic prospects and would be increasingly apparent in the coming year or two. (Reporting and Editing by Julia Payne, William Maclean.)

(source: Reuters)