Brussels demands that EU urgently stop illegal flow of goods to Russia

As patience with the violators wears thin, EU Finance Commissioner Máiread McGuinness and EU Trade Commissioner Valdis Dombrovskis, who signed the letter, said they would soon share "detailed information" on which companies are evading sanctions. They said they would contact the capitals by mid-April to assess the measures taken.

Although the sanctions themselves are agreed upon at the EU level, governments are responsible for their implementation, which is overseen by the European Commission. In December, the countries approved a new package of restrictions against Russia and are working on the next one.

Sanctioned goods from the EU are delivered to Russia first through non-EU countries and then re-exported to Russia, as well as through subsidiaries of European companies that produce goods outside the bloc, the letter says. These are usually items and technologies that are not weapons, but can be used for military purposes and end up on the battlefield.

Centralization of control

The European Commission is studying the possibility of creating an EU body to enforce sanctions, effectively taking this work away from governments.

According to an official close to the talks, who spoke on condition of anonymity, the idea is gaining traction and could be on the agenda of European Commission President Ursula von der Leyen if she is reappointed.

The letter states that exports of prohibited goods from the EU to non-EU countries increased from €3 billion before the invasion of Ukraine to €5.6 billion by mid-2023. This "extremely worrying" increase compensates for the loss of legal trade in these goods with Russia before the war, the report says.

The letter urges governments to "hold accountable EU operators that have been actively undermining EU sanctions" and to deter companies from exploiting sanctions loopholes by publishing the "more illustrative" cases and related penalties.

McGuinness also advises member states to contact companies involved in the production of sanctioned goods and force them to conduct more thorough due diligence on their supply chains to ensure compliance with EU sanctions rules.

National authorities should share more information about non-EU companies and individuals who may be involved in exploiting sanctions loopholes and should "exercise particular vigilance" over sanctions exemptions that could make the problem worse, the letter says.

Huge problems

The idea of a European sanctions enforcement body has proved popular in the past, with about 10 countries, including Germany, France, Italy, and Spain, supporting the idea of a Dutch-led body.

Last year, France lobbied for the European Public Prosecutor's Office to be empowered to close sanctions loopholes.

A senior EU diplomat said there are "huge problems" with the implementation of sanctions, including the "uneven" way they are spread from one country to another.

Another EU diplomat said they support any instrument that will help EU countries enforce sanctions.

A third warned against the creation of an EU-level body, arguing that the European Commission would enter the sphere of influence of national governments, replacing their powers. Any EU sanctions body should only monitor the work at the national level and make recommendations, this person said.

"We don't think member states will relinquish this competence," they added, arguing that such a move could have "repercussions on other areas."

McGuinness will discuss the letter with national ministers at a meeting on sanctions on February 13.

The European Union has begun discussing a new package of sanctions, which it intends to approve by February 24, 2024.

The Ukrainian side, in turn, called on the EU to focus sanctions on preventing high-tech Western components from falling into the hands of the Russian army.