The European Union is preparing to impose a new round of sanctions on Russia, targeting companies and countries that are believed to be helping the Kremlin evade existing penalties. This move comes after ten rounds of sanctions that cover a broad range of economic sectors and products, such as microchips, trucks, banknotes, chemicals, and luxury bags. The EU's new measures will require the application of extraterritoriality, a legal principle that can enable the bloc to impose sanctions on entities that fall outside its jurisdiction.
The draft proposal, designed by the European Commission, was sent to member states on Friday and is expected to be further discussed by ambassadors during a meeting on Wednesday. The package focuses on the implementation of sanctions, their effectiveness, and how to prevent circumvention, which has been a tricky task. The goal is to prevent banned goods from being exported to Russia and its military-industrial complex and crack down on companies and countries that are aiding in circumvention.
The EU is growing increasingly concerned about EU-made goods flowing to countries in the South Caucasus and Central Asian regions, suspected of being re-routed to Russia. Furthermore, EU exports to China and Iran, close allies of the Kremlin, are also under scrutiny, as well as trade exchanges with Turkey, a NATO member that tries to maintain equidistant relations between Moscow and Kyiv.
The Commission's draft proposal includes seven Chinese companies accused of selling equipment with potential military uses. Some of the listed firms are already under United States sanctions. Targeting China, the EU's largest trading partner in terms of goods, would represent a bold move in the bloc's foreign policy and would almost certainly provoke a response from Beijing, at a time when EU-China relations are going through significant turbulence.
Extraterritoriality has been used in the past, notably in the case of US sanctions against Iran. In 2018, the Trump administration withdrew from the Iranian nuclear deal and imposed "maximum pressure" to re-impose sanctions on the Tehran regime that had been lifted under the international agreement. Back then, extraterritoriality, also known as secondary sanctions, was used by the US to penalize non-American companies that were still doing business with Iran. Many European firms withdrew from the Iranian market, despite being perfectly able to operate inside the country under EU law.
The EU's new measures are expected to undergo heated and prolonged discussions among member states, some of which might fear a backlash effect if the bloc goes after Chinese companies. EU sanctions require the unanimity of all 27 member states.