The EU continues to trade with Russia despite sanctions

After Russia’s invasion of Ukraine in February last year, the European Union (EU) adopted ten consecutive sanctions packages against Russia and began imposing the toughest sanctions on a foreign country in history.

The EU aimed to restrict Russia’s income and access to technologies used in war equipment with sanctions. However, according to the research note published by the European Parliament, “the impact of the sanctions will not be great enough to restrict Russia’s war activities against Ukraine in 2023.”

Most trade relations between the 27 EU countries and Russia still continue due to successful lobbying, efforts to reduce the economic impact on the EU as a result of sanctions, and concerns about the effects of sanctions on the supply chain. global supply.

Instead of imposing new sanctions, the EU now intends to intervene harshly against individuals and institutions that violate existing sanctions. Authorities found that Turkey, the United Arab Emirates (UAE), Armenia, Georgia, Kazakhstan and Kyrgyzstan were used as sanctions circumvention routes.

Ongoing trade relations between the EU and Russia can be listed as follows:

TRADE

The European Commission, the executive body of the EU, announced that Russia was the fifth largest trading partner of the union, with 258,000 million euros in trade with the EU in 2021. Fuel, wood, iron and steel and fertilizers were the main products the EU imported from Russia.

Following Russia’s invasion of Ukraine in 2022, EU imports from Russia halved to almost €10 billion in December last year.

Between March 2022 and the end of January 2023, the EU imported €171 billion worth of goods from Russia, according to data from the EU’s statistics office, Eurostat.

Ongoing EU trade with Russia tops the €60bn the EU has sent to Ukraine since the start of the invasion, announced last month, but the aid does not include the cost of the latest tank supply deal weapons and ammunition to Ukraine.

LIQUEFIED NATURAL GAS (LNG)

Last year, the EU began imposing sanctions on Russian coal and oil exported from Russia by sea. EU sanctions do not cover gas, but Russia has drastically reduced its pipeline gas shipments to Europe since the start of the invasion. The EU imported around 40 percent less Russian gas in 2022 than in previous years.

Liquefied natural gas (LNG), on the other hand, was not affected by the sanctions. Since the start of the war, Russian LNG shipments to Europe have increased further. According to the EU analysis, Russian LNG imports from the EU increased from 16 billion cubic meters in 2021 to 22 billion cubic meters this year.

The EU imports more Russian LNG a year than the roughly 155 billion cubic meters of gas that Russia sent via pipeline to the EU before the war. However, the increase in LNG imports has led some countries to request EU laws to ban LNG imports.

NUCLEAR

The EU also does not impose sanctions on Russia’s nuclear sector. Hungary and Bulgaria, home to the Paks power plant to be expanded by Russia’s state-owned nuclear power company Rosatom, oppose sanctions on Russia’s nuclear sector.

According to Eurostat data, the EU imported about 750 million euros of products from the Russian nuclear industry in 2022. The EU nuclear agency Euratom has announced that Russia will provide one fifth of the uranium used in EU facilities in 2021, a quarter of its conversion activities and a third of its enrichment services.

The environmental non-governmental organization Greenpeace claimed in a report published last month that France has significantly increased the amount of enriched uranium it imports from Russia since the start of the war, while France rejected parts of the report and announced it would terminate contracts with Russia. it would be more expensive than maintaining the contracts.

DIAMOND

The EU, which does not ban the import of precious stones from Russia and does not blacklist Russian state-owned mining company Alrosa, bought 1.4 billion euros worth of Russian diamonds last year, according to Eurostat data.

Belgium, home to Antwerp, the world’s largest diamond trading hub, upset hardline EU members because it did not want the EU to impose sanctions on Russian diamonds and was lobbying on this issue.

The EU, the US and other G7 countries are working on a follow-up mechanism to remove Russian diamonds from the market. The Antwerp World Diamond Center stated that for this mechanism to work, non-G7 India must also participate.

CHEMICALS AND RAW MATERIALS

The EU imported 2.6 billion euros of Russian fertilizers last year. This figure was 40 percent more than in 2021.

Potash imported from Russia and its ally Belarus is heavily restricted or banned entirely by the EU. However, industry lobbyist Sean Mackle said other types of fertilizers, including urea, can be freely traded in the region, adding that inconsistent restrictions also make it difficult to implement sanctions.

Disagreement among the 27 EU member states over exceptions that would allow fertilizer shipments to Africa to continue is averting further sanctions against Belarus for its support of the war.

Among the raw materials that are not subject to sanctions is nickel, which is used mainly in the production of stainless steel. According to Eurostat data, while the EU imported €2.1 billion worth of nickel in 2021, this figure rose to €3.2 billion in 2022.

BIG NAMES AND SECONDARY SANCTIONS

Mining company Alrosa and energy giant Rosatom have yet to be added to the EU’s blacklist of around 1,700 individuals and organizations. Gazprombank, the financial unit of Russia’s natural gas monopoly Gazprom, and Russia’s second-biggest oil producer Lukoil were not added to the blacklist.

Advocacy organization Transparency International has long called for Russia’s access to the EU lobby to be restricted and for secondary sanctions to be imposed, as in the US, on those who help people and organizations already subject to sanctions. (Reuters)