As the West continues to sanction Russia for its illegal invasion of Ukraine, some foreign companies have stepped into the fray and are supplying the Russian military with critical technologies prohibited by the EU, US and UK.

The EU’s special envoy for sanctions, David O’Sullivan, has been travelling to third countries with the aim of limiting sanctions circumvention. 

Listen to this episode of the Global Conversation by clicking the video player above, or read the full interview below.

‘There’s always going to be a degree of circumvention’

Shona Murray, Euronews: So your job is sanctions envoy, but I suppose really what you’re trying to do is ensure that sanctions potential is maximised so that other countries around the world or private entities are not undercutting the sanctions deployed by the US, the EU and the UK. Tell us a little bit about your role.

David O’Sullivan, EU Sanctions Envoy: Well, that’s exactly what we’re trying to do. We have an unprecedented range of sanctions against Russia, more than we’ve ever sanctioned any other country. We have 60% of our imports, previous imports from Russia are under sanction, 55% of our exports. And obviously, ensuring effective implementation is very important. One part of that, which is my responsibility, is to reach out to countries that have not aligned with our sanctions.

Shona Murray, Euronews: So what would you say then would be a successful use of your time and this time next year, would you hope to see that these critical goods, this critical infrastructure, isn’t found on the battlefield in Ukraine?

David O’Sullivan, EU Sanctions Envoy: Well, we are already seeing that it’s getting more difficult for Russia to acquire these things. I think we have to be realistic. There’s always going to be a degree of circumvention. There’s money to be made. A lot of these products have previously been sold to other countries and are kind of out there on the free market. So if somebody wants to try and buy them, they are still available. But I think our main objective – and in this, I think we are succeeding – is to make it harder, to make it slower and to make it more expensive for Russia to access these products.

Russia increasingly relying on ‘substitute products’ from China

Shona Murray, Euronews: Do you worry, though, that Russia will just re-orient its economy completely and be able to take all of these exports from huge countries like China?

David O’Sullivan, EU Sanctions Envoy: Well, the thing to remember is that the point about these products and most of them – maybe for your viewers, we should explain – I mean, they are typically semiconductors, integrated circuits and fibre optical readers, flash memory cards. They’re things that have a perfectly innocent civilian application in normal circumstances. But they are largely made with US or EU technology. They are not easily replicated in other countries. So it’s hard for Russia to get them as we cease to export them and as we persuade countries, intermediary countries, to no longer re-export them to Russia. And I think, yes, we do see some evidence that it’s getting much more difficult. And they are using substitute products sometimes of Chinese origin, but which are of inferior quality. So this is giving the Ukrainian military a certain technological advantage on the battlefield.

War in Ukraine ‘a different situation’ for Europeans than the Israel-Hamas war

Shona Murray, Euronews: Have things changed for you or maybe become more difficult since the heinous terrorist attack by Hamas on 7 October? Because we saw criticisms from the likes of King Abdullah of Jordan, for example, who was concerned that the EU position when it came to international humanitarian law protecting civilians in Palestine wasn’t the same or wasn’t the same concern when it comes to civilians in Ukraine.

David O’Sullivan, EU Sanctions Envoy: I think they understand that for the Europeans, this is a different situation. I mean, Russia has attacked Ukraine without any provocation. Ukraine posed absolutely no threat to Russia. So this is an unprovoked, full-scale invasion of a sovereign country. And I think people understand why for us in Europe, we have to push back very strongly. And Mr Putin’s ambitions of re-establishing Russian hegemony in the immediate neighbourhood of Russia is something we cannot accept. So I think people do understand it’s different. And that is why, as Europeans, we have a particular obligation in this situation. Of course, I would argue we have also taken a firm position in relation to what’s happening in the Middle East. But I don’t sense that people see this as a sort of binary choice. I often explain we can manage more than one crisis at a time.

Russia is ‘cannibalising the economy’

Shona Murray, Euronews: But we hear from some member states that say that these [sanctions] are pointless and they’re just impacting the European economy. So citizens are suffering at a time when there’s a cost of living crisis. And yet the Russian economy is growing, albeit much slower, 1.1%, I think the IMF said. So what do you say to that response that this is pointless and Europeans are just suffering?

David O’Sullivan, EU Sanctions Envoy: Well, it does come at some cost to us, let’s be honest, because we traditionally have traded a lot with Russia. It’s still not a major part of our trading pattern. And I think companies have been able to find alternate markets. In terms of the effectiveness, I mean, honestly, we had three objectives. One was to deprive Russia, the Russian military, of the technology. The second was to deprive the Russian government of the revenue. And the third was to impose a high cost on the military-industrial complex. Across all three of those objectives, I think we have had quite a lot of success.

We are seeing Russia struggling to get hold of the technology it needs and is now turning to Iran or North Korea. And we do see evidence that the Russians are having to roll out older weapons, older tanks, in order to keep their military equipped. On the revenue side, we estimate that the Russians probably have about €400 billion less to spend. The Russian government traditionally had a surplus in their public expenditure. They’re now running a deficit of 2 to 3%. And yes, the Russian economy is growing a bit. But you need to look closely at why that’s the case. It’s because they’re massively investing in their military. 30% of Russian public expenditure is now on the military, nearly 10% of GDP. If you put your economy on a war footing, of course, you can bend everything to the interest of the military, but you’re cannibalising the economy. There’s no investment going into social welfare, education, health, into research. So the prognosis for the Russian economy, and that’s the third objective of reducing their industrial capacity, the prognosis is not good.

Addressing the loophole in Russian oil sanctions

Shona Murray, Euronews: India is buying a lot of Russian oil, refining and sending it back to the West. That seems kind of counterproductive. What is your position on that and how much of a loophole that seems to be?

David O’Sullivan, EU Sanctions Envoy: Well, we decided at the very beginning that we would not do an embargo on the export of Russian oil in the way that we did, for example, with Iran. The reason for that was because many parts of the global South were dependent on continuing to allow Russian oil to flow. And we took the position that we would allow those flows to continue. So it is perfectly legal for other countries. We’re no longer buying Russian oil, but it’s perfectly legal for other countries to buy it.

Shona Murray, Euronews: And sell it back to the West…

David O’Sullivan, EU Sanctions Envoy: We have kept the price at which it can normally be purchased in a way that still undermines the revenue that Russia gets. Our estimate is that in the first half of this year (2023), revenue from oil went down by 50% in Russia. But yes, they are still able to export it. And yes, in some cases like India, they refine it and send it back to us. The Indian argument would be that they’re the ones making the profit, not the Russians. I think the main objective for us is to make sure that the Russian revenue is severely impacted by the oil price cap. And I think we see a lot of evidence that that is the case.

Shona Murray, Euronews: Okay. David O’Sullivan, EU sanctions envoy, thank you very much for joining us on Global Conversation.

David O’Sullivan, EU Sanctions Envoy: Thank you.