EU agrees on more Russia sanctions — but do they work?

This week the EU added new names to its Russia sanctions list. But earlier this month, Russia announced positive economic growth. Critics, including from Ukraine, are questioning the impact of the EU's sanctions.

On the eve of the second anniversary of Russia's  invasion of Ukraine, the European Union has managed to get a 13th package of sanctions targeting Moscow over the line. On Wednesday, EU ambassadors agreed to add close to 200 individuals and companies to a list that already had around 2,000 entries.

With the bloc facing tough questions about the scope and effectiveness of its sanctions strategy, EU foreign policy chief Josep Borrell was among senior officials publicly celebrating the deal. "We are taking more action against entities involved in circumvention, the defense and military sectors," Borrell wrote on X, formerly Twitter.

Closer details of the targets for asset freezes and EU travel bans are under wraps until the sanctions are formally approved. EU-presidency holder Belgium said that should happen by Saturday, when Russia's war on Ukraine reaches its grim third anniversary. 

But the Financial Times newspaper reported Wednesday that companies from China, India, Sri Lanka, Turkey, Thailand, Serbia and Kazakhstan would be hit. As well as listing Russian entities, one focus of the new sanctions package is to crack down on third countries that help Russia evade or circumvent existing sanctions.

Without naming firms or countries, European Commission President Ursula von der Leyen said the new listings would keep pressure on the Kremlin and further cut Russian access to drones. "We must keep degrading Putin's war machine," she wrote on X.

‘Definitely not very ambitious'

Less enthusiastic about the latest punitive measures was Kyiv's envoy to the EU in Brussels. "This 13th package is definitely not very ambitious, [but] rather [is] symbolic because it's adopted just a few days before the anniversary," Vsevolod Chentsov told reporters at a briefing.

Previous EU sanctions packages targeted whole sectors or key export goods, including crude oil, coal, gold and most recently diamonds. But two years into the conflict, it seems the EU is running out of big sanctions guns, or at least any that stand a chance of getting unanimous agreement from all 27 member states.

Chentsov expressed understanding for the time constraints on the EU as it rushed to get the package done by February 24 but said Kyiv would "keep pushing to get Russian sectors of the economy better covered by the sanctions regimes."

The Ukrainian ambassador pointed to certain metals and liquefied natural gas (LNG). These are often regarded as some of the easiest of yet unsanctioned Russian exports to penalize. However they are also some of the most difficult politically. 

With several EU states dependent on Russia for their gas, LNG deliveries to the EU actually increased in the first six months of 2023, according to an analysis by campaign group Global Witness. While the EU has decreased imports of Russian gas since 2021, several countries are still using a lot of it. That includes Belgium, Spain, and France.

Navalny's death heats up debate

The death of Russian dissident Alexei Navalny in a Siberian penal colony last week has also added fuel to the fire. Guy Verfhofstadt, a centrist EU lawmaker and former Belgian prime minister, said the latest round of sanctions was "too little, too late."

"[The] Navalny Foundation has listed 6,000 people who make up Putin's regime. After all we've seen in Ukraine and Russia, [the] EU sanctioned less than one third ...This is our tool to hit Putin's closest allies... use it!" Verhofstadt wrote on X.

Borrell, who has proposed renaming the EU sanctions regime punishing human rights violations in honour of Navalny, already suggested the 27 member states could sanction Russian government figures. 

"The EU will spare no efforts to hold Russia's political leadership and authorities to account, in close coordination with our partners; and impose further costs for their actions, including through sanctions," he said at the EU foreign ministers' meeting on Monday.

But as Agathe Demarais of the European Council on Foreign Relations told DW, those sanctions would more likely be symbolic and against individuals rather than hitting the Russian economy.

As for the latest round, it shows above all that all the "sexy, big measures have probably all been implemented. "Now it's all a question of tackling sanctions evasion, which is very difficult and akin to a game of Whack-a-Mole," she said. The next round will likely also focus on this, she said.

Russian economy appears in rude health

Another issue: Despite EU sanctions, the Russian economy also appears to be growing at a healthy pace, at least according to official figures. After seeing a recession in 2022, Russian gross domestic product (GDP) rebounded 3.6% last year. The defense industry now makes up 10% of the country's GDP and its war economy seems to be in full swing.

Moscow frequently ridicules Western sanctions as ineffective. Within the EU, Hungarian Prime Minister Viktor Orban, who is the closest of any EU leader to Russian President Vladimir Putin, often argues that sanctions only hurt the EU economy and not Moscow's. His government was blocking the latest package of sanctions until Monday and has made similar moves in the past.

Still, Demarais warned against taking official Russian GDP data at face value. Russian economic growth also reflected a war economy that wasn't necessarily benefiting normal Russians, the sanctions expert said.

She also cautioned against black-and-white thinking. The idea that sanctions would ever shut down the Russian war economy entirely is unrealistic, she cautioned. "The reality is that Russia is the eighth largest economy in the world with huge natural resources,” she stressed. But, Demarais concluded, "I do believe that sanctions make it more difficult."

EU officials also defend their sanctions strategy. The European Commission argues that sanctions imposed over 12 packages since February 2022 have banned the export of €43.9 billion worth of EU goods to Russia, and halted the import of €91.2 billion worth of Russian goods.

"Sanctions are a long game," an EU diplomat told reporters last week on condition of anonymity. While the headline figures were strong, Russian was bending over backwards to keep up its war economy, the source stressed.