Evgeny Roshchin
Hello. It’s Tuesday morning here in Washington, DC, and I welcome you all to the Center for European Policy Analysis’ press briefing on US and European sanctions. There has been a lot going on in this domain in the last few weeks. In late April, the European Union adopted its 20th package of sanctions on Russia. Just yesterday, we heard more news from European officials announcing that there will be more sanctions coming up, and they also listed a few individuals for various acts on sanctions lists. Immediately, we’ve gotten responses from observers that it wouldn’t change Russia’s course of action, that sanctions don’t matter, and that Russia is now in its fifth year of the war against Ukraine, and there is no light at the end of the tunnel. So, to discuss that and many other developments in the field, we invited two of our brilliant colleagues, Mihkel Märtens, who was our Baltic American Freedom Foundation Fellow at the Center for European Policy Analysis, and Mihkel recently published a comprehensive report on sanctions with the Center for European Policy Analysis, titled “Transatlantic Action: Sanctioning Third Country Enablers of Russia’s War Economy.” We will be later joined by Benjamin Schmitt, whom I will introduce separately. Before that happens, I would like to start with you, Mihkel. I would like you to walk us through all these muddy waters of recent sanctions packages and tell us why it is important in the fifth year of the war to look at the sanctions, to pay more attention to them, and what you simply observed over the last few years in that field. What were the main breakthroughs or the main loopholes that you were observing?
Mihkel Märtens
Thanks so much, Evgeny, for the introduction. Glad to join you all virtually from Tallinn, Estonia. As Evgeny mentioned, I did a fellowship last year with CEPA, and the outcome was this great report that was just published by CEPA a couple of weeks ago, a very timely one given the US 20 package. I will just reiterate that I’m speaking only on behalf of myself, and my views don’t necessarily represent any of the views of the institutions with which I’m affiliated. As Evgeny mentioned, it’s the fifth year of the full-scale invasion, and I do think it’s a critical moment, especially in sanctions policy. I think sanctions policy generally should be viewed as a long-term effort, and it is quite clear from what Russia is doing on the battlefield and what the Russian officials are saying that Russia quite clearly has not changed its long-term goals and objectives. I think it’s a signal to the West that it must continue with its sanctions policy in return. Looking at sanctions policy, I think because Russia is constantly evolving and adapting in its response to the sanctions imposed by the West, I think it’s quite obvious that the sanctioning jurisdictions need to adopt in their response as well. Sanctions policy is not a static field because there is constant adaptation going on. It’s like a constant game of cat and mouse or a constant game of whack-a-mole. Russia quite clearly has incentives to try and circumvent those restrictions because it needs to keep the war going. I think the European Union, the UK, the US, and other sanctioning jurisdictions need to keep that in mind. If sanctions are kept static, they are pretty much doomed to fail in the long term. As we see new sanctions packages coming out, it will take a couple of weeks for Russia to adapt, so there’s a constant need to evolve the sanctions regime. New channels of evasion emerge, be that in trade flows, be that in financial flows, in energy flows, and so on. And I think it’s also important to keep in mind that the signal of sanctions and imposing new sanctions is important as well. That’s a signal to Russia that the West is also in it for the long term and that Russia can’t just outlast the West in this war of attrition.
Evgeny Roshchin
Thanks so much, Mikhel. I see our colleague Benjamin Schmitt is here. Ben, can you hear us well?
Benjamin Schmitt
Yep.
Evgeny Roshchin
Okay, let me introduce you. Benjamin Schmitt is a senior fellow with the Democratic Resilience Team here at the Center for European Policy Analysis, and Ben is also a senior fellow at the University of Pennsylvania, where he holds a joint academic appointment at the Department of Physics and Astronomy at the Clayman Center for Energy Policy. Ben also serves as director of the Perry World House Graduate Program at Penn. Ben, welcome. And Ben, if I could continue with you, how do you feel about the continuation of sanctions policy on Russia here in the United States, as well as in Europe? In light of what’s going on now with the US and Israeli operations against Iran, do you think it will undermine the sanctions effort? Do you think there is a chance this regime will resume, and how do you think it will affect the overall policy against Russia?
Benjamin Schmitt
Well, thank you, Evgeny and Mihkel. I totally just want to start by saying I agree with everything that you said, and it’s great to have everyone on this call this morning. I will start by saying I testified before the Senate Foreign Relations Committee a week and a half ago mostly on subsea sabotage issues related to Russia and China in Northern Europe, the Baltic and Bering seas, and East Asia in the Taiwan Strait. But sanctions were a key topic throughout the entire hearing, and the reason for that is all of these sorts of misdeeds by especially Putin’s Kremlin. Obviously, they are focused, and what I often call the apex of Russia’s energy weaponization strategy over the years has been reached in Ukraine through not only its full-scale invasion generally, but in particular when it comes to energy, to its targeting of critical energy, and other related sites that are built for civilian use. They’re trying to create a catastrophe of humanitarian misery and have been for the past four years by blowing civil energy infrastructure up with drones and missile strikes. I can’t imagine what would be more in their energy weaponization strategy than that. Obviously, we’ve seen over the years that they have tried to advance monopolistic practices and undermine market rules in the EU. They have also tried to dominate certain energy routes and build infrastructure that has been used for strategic corruption and elite capture, basically taking former senior officials, people like Gerhard Schroeder, and putting them on the boards of Russian state-owned enterprises, who then take pro-Russian positions on things well outside the energy realm. And then finally, what you all in the press have covered for years, which is energy cutoffs. Russia has been involved in these energy cutoffs of natural gas, in particular across Ukraine, but also to other locations. Certainly, after their 2022 full-scale invasion of Ukraine, they started to cut off not only natural gas but electricity interconnectors across borders, including electricity to Finland. So, where does this all leave us in terms of sanctions? I think it’s worthwhile to not only talk about where we’re at right now, but to contextualize it from where we are in terms of sanctions since even before Russia’s full-scale invasion of Ukraine, because, remember, the Russia sanctions started in 2014 after its initial invasion of Crimea and Donbas. But they also should have been increased because of Russia’s various malign activities, whether it be targeting political opponents abroad with weapons of mass destruction, or in things like the Skripal case and Alexei Navalny, these sorts of situations that Russia was behind, not to mention its malign influence generally and its threats towards the EU. We’ve advocated here at CEPA for many years, even before the full-scale invasion, that there needed to be sanctions to stop Nord Stream Two because it would undermine Europe’s energy security and, in particular, Ukraine’s strategic stability going forward. Ultimately, those sanctions came in on Nord Stream in particular just 48 hours or less before Russia’s full-scale invasion began, so far too late to have a deterrent impact. This notion that we didn’t do this was spurred during the Biden administration by a fairly reasonable concept, which is that, after the first Trump administration, to try to have a better relationship with Europe generally and Germany in particular, but what they missed was this Russian project. This was the project of a country that did not care about any of these rules, these norms, or anything like this. And so, when in 2021 the Biden administration reached a sanctions waiver with Germany to allow for the completion of Nord Stream, that was a permissive environment right before Russia’s full-scale invasion. Skipping ahead as the war progressed, the West didn’t take the necessary steps in terms of energy sanctions fast enough. We had an oil price cap instead of actual oil sanctions. When you look back at statements from Janet Yellen, then Treasury Secretary, they were very much focused on global liquidity rather than on holding the Kremlin accountable, although that’s ostensibly why these sanctions even existed, or the price cap even existed. And then, of course, the price cap was set too high. It was set at $60 per barrel. It was not down near $30 per barrel for Urals broad grade, which is near the marginal cost of production at that point. So, that was an inconsistency in the sanctions regime. Eventually, we got there and built those up over the years, both from the United States and from the EU. Now, what the Trump administration is doing with these waivers on Russian crude oil that’s out at sea, you can sensibly say, “Well, the first one, okay, fine, it’s for crude oil that’s already out on ships at sea. They can just make their deliveries.” But when they extended for a second month, that means that many of these ships probably already dropped off their oil and have maybe even filled up again. So, these sort of signals are really bad in terms of making sure we hold the Kremlin accountable more broadly. But they’re also bad because it’s giving Putin a windfall at a time that he’s effectively on the ropes in a lot of cases economically, and so I sincerely hope that Treasury Secretary Bessent sticks by his statement this time. He did say three days before the sanctions waiver was extended that the general licenses were approved to allow these oil imports. He said that it wouldn’t be extended. Of course, it was extended, and then he’s come out since then and said it won’t be extended again. Let’s see, because it seems like this is clearly focused on domestic oil prices and the price at the pump questions, rather than something related to Russia. But again, this is a dream for Putin, and these are the sort of things that, by all counts, Dmitriev and his statements around meetings with Kushner and Whitkoff have been pushing for. We can’t allow for sanctions relief, and we can’t allow for sanctions inconsistencies in particular. I’m going to stop there. Give you a lot of food for thought. Happy to talk about any of these topics. Thanks, Evgeny and Mihkel.
Evgeny Roshchin
Thanks so much, Ben. Before I follow up, I would like to invite everyone on this call to ask questions in the chat, or if that’s inconvenient, just use your raise hand function whenever you feel comfortable. Since Ben mentioned all these inconsistencies and the Western allies’ action, which always lags behind, I would like to ask you both: How do you see the dynamics going forward, at least within the European Union? Given the change of government in Hungary, and if you see a change in the dynamics, do you think it would be sufficient for the European Union to just continue on this topic alone, or will it be essential to have the US on board? Ben, if you could.
Benjamin Schmitt
I’ll go quickly since I just spoke. I think that it certainly gives, to use the term of the day, a lot of cards for the European Union to play with. Finally, now that Viktor Orbán is out of power, and by all accounts, Hungary will not block these sanctions. We’ve seen statements this week that the next sanctions package will include a significant number of Russia’s shadow fleet vessels. I think that that’s absolutely imperative, especially in the case that it allows for littoral states of the European Union, the Baltic Sea, the North Sea, etc. to interdict these vessels as much as they possibly can. Anything you do like this will give more legal jurisdiction for seizures and stops of these vessels, and that’s needed for national security purposes. Remember, we’ve seen reports that these vessels are not only carrying Urals crude grade oil, but they also, by all accounts, have Russian security personnel on board that are unaccountable to the captains or crews of these dilapidated vessels. And there have been reports, including last September, that some of these vessels may be launch platforms for Russian drones that have gone into EU airspace and actually shut down airports, like Copenhagen airport last September. That’s incredibly important. Can the EU go it alone? They’re going to have to do what they can on their own if the US does not step up and remain consistent, but the whole raison d’être of sanctions, and the reason that we don’t just see sanctions being successful when one country sanctions another in most cases, is that there are ways to get around them. There are loopholes, and there are ways to have different sorts of export regimes for technologies, illicit financing, and energy products. So, we need the US to be fully on board, and we need to be leading, not following the EU in terms of its sanctions efficacy.
Evgeny Roshchin
Thanks, Ben. Mihkel, do you have anything to add?
Mihkel Märtens
Yeah. First of all, I agree with everything that Ben said, but I would just add that perhaps the developments are that they need to give cost to cautious optimism, maybe not full-fledged optimism. Indeed, as has been visible from media reporting, there is a lot in sanctions policy that the EU hasn’t been able to agree to because of one member state. But I think, looking at energy sanctions especially, I would say that one EU member state perhaps hasn’t been the obstacle. For example, tankers with some kind of nexus to the EU continue to transport between a quarter or a third of all seaborne crude oil exports from Russia, and those aren’t vessels with any ties to Hungary. They’re vessels with ties to some maritime or member states in the south of Europe with maritime interests. So, even though we have a new government in Hungary, that possibly won’t affect any developments on that. Now, I will reflect on the developments of the war in Iran as well, because it’s quite clear that there is increasing demand for Russian oil, and it seemed for some time in January or February that the EU would be closer to reaching an agreement on having a full ban on servicing Russian oil exports. I think that because of the increased global oil prices, that is pretty unrealistic at the moment, which means that EU companies will continue to transport Russian oil on tankers as well. On energy, the EU has already agreed to phase out Russian gas, and looking at the remaining pipeline imports of oil into some Central European countries, they’re not that great in terms of volume. Seaborne exports should be the next target, but I think because of the volatility in global markets, the EU will not reach a consensus on banning those exports soon. I think I will stop there.
Evgeny Roshchin
Alright. I see there are questions, but before we turn to those, let me ask you, Mihkel, about your report. Since in the report you look more specifically at third-country enablers, could you tell us as briefly as possible about the key takeaways from your report? What should we be looking at when it comes to those third countries helping Russia out?
Mihkel Märtens
In the report, I focus on three main categories: trade sanctions, financial sanctions, and energy sanctions. I think in all of those categories, there’s a lot to be done. In all these categories, we’ve seen the EU is constantly breaking taboos with each new sanctions package. I think if you had asked anyone working in EU sanctions five years ago whether the EU would start adopting anything that’s remotely resembling secondary sanctions, they would have just left it to you. But now, with every new sanctions package, we’re seeing dozens of companies registered in third jurisdictions being put on the sanctions list. Now, with the 28th sanctions package, we even have sectoral sanctions against third jurisdictions. The EU banned the export of some goods to Kyrgyzstan because the efforts taken so far hadn’t stopped their re-export to Russia, so I think we’re seeing a lot of developments in the EU. On the other hand, we’re not seeing that much added sanctions pressure from the US. Historically, the rule of thumb in sanctions has been that US designations are much more impactful than EU ones, but my take on it now would be that if you’re quite openly signaling that you’re not considering taking further action in terms of secondary sanctions at the moment, then that also undermines the existing designations. That’s something to keep in mind, but I would also note that sanctions shouldn’t be the policy objective themselves, rather a tool. It’s about how we use sanctions, how we communicate sanctions to third countries, and what the ask of the sanctioning jurisdiction to those third countries is. I think sanctions policy should be more cleverly used in diplomatic outreach efforts as well to send a signal to those third jurisdictions in which there are operators who help Russia circumvent these measures. Do these countries know what is going on? Do they want to play some kind of a role in facilitating that, or do they want to put an end to that? I think it is very important to signal what the expectation of the sanctioning jurisdiction is, and what the threat of the sanctions is. But over time, I would say that merely the threat of having sanctions imposed wanes over time, so at some point, that threat should be followed up with actual designations if there is no progress on the ground, as we saw in the case of the EU’s restrictions towards Kyrgyzstan. At first, there were some individual designations, a lot of diplomatic outreach, and then in the end, we reached sort of sectoral trade measures, banning the trade of specific goods with Kyrgyzstan. Finally, I would say that it’s not just about designations; it’s also about taking those designated companies or people off the lists if we believe that they change their behavior. I think there should be some kind of reward factor in play if you cease cooperation with Russia. They should encourage these off ramps to cease sanctioned activity because, looking at it philosophically, the aim of sanctions is to induce change in behavior, and if you achieve that, then perhaps there should be some off ramps.
Evgeny Roshchin
Yeah, thank you for this, Mihkel. I would like to look at one of the elements in your report more specifically, which is the financial sector, which you identify as one of the most vulnerable sectors in Russia currently. So, my question would be, what makes you think that this is a vulnerable sector, and what makes you think that Western policymakers should look at it more closely? And the question is related to an earlier theory that we heard at the beginning of the war when sanctions were just starting to be adopted. The theory suggested that Western allies should allow capital outflow from Russia, so that the Russian government would have more problems managing its macroeconomic stability and inflation in particular. What you suggest, it seems like there will be more problems for that capital to outflow. Could you expand a little bit on this contradiction in the financial sector overall?
Mihkel Märtens
Yeah, happy to. I think my assessment is that the financial sector is a clear choke point. It’s a highly strategic sector, but if you actually look at what has been done related to the financial sector in terms of sanctions, I would argue it’s perhaps not that much. Looking at, let’s say, primary sanctions, so sanctions towards Russia specifically, the EU has been pretty clear that it is not going to sanction all of the Russian banks because not all of the trade is sanctioned. It argues that there needs to be some kind of open channel to maintain that unsanctioned trade. Looking at secondary sanctions or sanctions against third-country enablers, you don’t find that many third-country banks or other financial institutions on the sanctions lists. Now, the EU, in the last few sanctions packages, has gained momentum in doing that, and designated a lot of third-country banks. The US doesn’t have that many third-country banks on the sanctions list in its Russia sanctions programs. But under the Biden administration, especially in the later years, they passed some executive orders that state the threat of being sanctioned if you deal with sanctionable behavior, but that remained merely a threat, and designations weren’t taken under that. Looking at the bigger picture, Russia needs access to a lot of foreign components and foreign goods for its military industry, and if there are physical goods moving into Russia, then there are also payments coming out of Russia. That’s why I consider the financial sector a choke point. In the end, it’s some sort of money that starts its way from Russia and then ends up in a Western jurisdiction where those goods are exported from. That’s why I think further restrictions on the financial sector would be necessary. In the end, it sort of increases the costs that it takes to procure these items necessary for the industry. You need alternative sources, and in the end, you need to cut down somewhere else to find the money to support the military industry, and that’s something that makes financing this war more difficult.
Evgeny Roshchin
There is a related question from George Allison, UK Defense Journal, in the chat, and the question is as follows: The report notes that the US has built broad legal frameworks to sanction foreign financial institutions enabling Russia, yet only one bank, Keremet Bank in Kyrgyzstan, has actually been designated under the framework so far. How concerned are you that the deterrent effect of these frameworks will erode over time if designations don’t follow, and what would it take to translate that legal architecture into more consistent enforcement action? Has the West essentially been issuing empty threats while Russia’s enablers grow bolder?
Mihkel Märtens
Yeah, happy to answer that as well. I think the response in actually using this legal architecture has been too slow, and with sanctions, a lot depends on credibility. I would argue that if you don’t follow those sorts of threats or legal frameworks up with designations, then the credibility is damaged. And it’s the same question with secondary sanctions. If the current administration is also publicly saying that they’re not considering imposing new sanctions on Russia’s enablers at the moment… That essence is why US and OPEC designations are considered so impactful, because you are always under the threat that if you do any sort of business with a subject of sanctions, then you run the risk of falling under secondary sanctions. But if the policymaker states out loud that there isn’t a threat, then you grow emboldened, and you can continue business with those sanctioned subjects. I’m not sure I would call it empty threats, but I would argue that the credibility of sanctions has been damaged by the fact that these legal mechanisms are not operationalized more quickly and in bigger numbers.
Evgeny Roshchin
Thank you for this, Mihkel. Before I turn back to Ben, I would like to invite everyone to continue posing questions in the chat, and I would also like to say that we’ll aim to end this session at a quarter to ten. Therefore, please use the opportunity. Ben, over to the energy sanctions, and coming back to what you’ve said previously, I was wondering, given everything that’s going on in the oil market currently, what do you think is the next step in Western allies’ policy towards Russia’s oil sector? Is it realistic to actually curb Russia’s exports around the world? And what is to be done with Russia’s shadow fleet, so that the policy remains prudent and doesn’t affect other dynamics that help skyrocket oil prices on the global market?
Benjamin Schmitt
Well, thanks, Evgeny. First of all, I just want to jump over to Richard Mead’s question from Lloyd’s: Is there any credible evidence of Russian armed guards being used on fraudulently flagged vessels? Apparently, there’s court documentation from the Boracay case. Remember that these vessels change to different flag states of convenience. They change their names constantly. Sometimes they have multiple IMO numbers and multiple AIS signals, all these things. In April of 2025, the Estonian government interdicted, or at least asked to stop, and was able to stop a flagless or a falsely flagged vessel, the Kivalla, and escorted it through, with the Estonian Navy, into Muuga Bay, Estonia, near Tallinn, and basically held that vessel until it was allowed to be released after it fixed a number of problems that it had in terms of registration. That was the maximum that that vessel could be held under the legal jurisdiction of the UN Law of the Sea, according to how Estonia was reading it, even though that vessel was a sanctioned Russian shadow fleet vessel. That vessel left and went to Saint Petersburg, Ust-Luga, and probably other places in the Gulf of Finland in Russia. Later on that year, we suddenly saw this vessel that was called the Pushpa and then the Boracay being basically seen as the prime suspect of launching drones from south of the Kadagat, the Danish Straits, to shut down the airport in Copenhagen. That vessel was interdicted by the French Navy, and, to give you a personal aspect of this, when the vessel was the Kivalla, I was in Estonia, went to Muuga Bay, and saw this vessel being held under interdiction by the Estonian Navy. And later on that year in September of 2025, I happened to be in Warsaw for the Warsaw Security Forum and was asked to fly to Copenhagen to work with some investigative journalists from DR, the Danish national broadcaster, to look for satellite data of this possible ship, and we were able to find it and then publish it. But what happened after that was that there was a Chinese captain and crew that were arrested and put on trial, and in the French case, it came out a few weeks ago that the French captain testified that there were crewmembers unaccountable to the captain and crew. Sorry, unaccountable Russian security members from this group called Moran, including one person who used to be a Wagner mercenary, that were basically collecting intelligence, monitoring the crew, monitoring the vessel, and doing God knows what else, unaccountable to the captain and crew. And so, again, that shows that these are jack-of-all-trades hybrid threats. It’s sanctions evasion, it’s possible sabotage, it’s possible air incursions, it’s possible espionage and signals intelligence, all of the above. That’s why we should be concerned about this. And then, just continuing the saga, I was in Taiwan early last month in early April, and I was looking online at my MarineTraffic app and noticed that the same vessel that was the Boracay now was renamed the Phoenix and was sailing in East Asia towards the Russian Federation. So, these vessels don’t disappear, and the interdictions should continue on the oil front. I think, in general, we’re facing a crisis that is unparalleled in terms of energy disruption globally, with the Iranians shutting down the Straits of Hormuz, and at the same time we’re also continuing to see what we’ve seen over the past several weeks threats that the IRGC’s allies in the Houthi rebels in Yemen are threatening to resume strikes in the Red Sea and the Bab al-Mandab Strait. Again, these sorts of things are really disruptive, not only if this spreads to the Bab al-Mandab Strait. This will go not only for energy trade of refined products, crude and natural gas, and things like this, but also to the global container trade business. So, where does this leave us in terms of oil sanctions on Russia? We can’t simply decide when sanctions are good for us and have a consistent sanctions policy. It provides not only a permissive environment, but frankly, an environment in which the Russian Federation can start to strategize and say, “How can we help Iran more to disrupt oil more, such that we can have more of a windfall because everyone in the West is going to get weak knees and start waiving the sanctions?” We can’t see that. We absolutely need to hold them to account. In the United States, I believe there is legislation that has already passed out of committee called the Shadow Act. It’s a shadow fleet sanctions bill from the U.S. Senate Foreign Relations Committee, and I understand that that’s likely to pass later this year. But again, this is a wartime level of effort, wartime timescale, and we can’t just wait for legislation. We really need the Trump administration itself to act as well.
Evgeny Roshchin
This is brilliant, Ben. There is another question from George, and the question is on the shadow fleet, so I’ll just read from the chat. My understanding is that the report argues that threats without follow-through erode deterrence and embolden bad actors. In the weeks since the UK announced it would board and intercept sanctioned shadow fleet vessels in British waters, over 180 sanctioned ships have made transits through British waters, with the UK not conducting a single boarding. Does that enforcement gap illustrate the weakness the report identifies? And at what point does an unenforced threat become actively counterproductive? Mihkel, over to you. Ben, feel free to follow up.
Mihkel Märtens
Thanks. So, I’m not that well-versed in what the UK is doing, especially regarding sanctioned ships. On the enforcement gap, what I focused on in the report was designations, and I would argue that the boarding of shadow fleet tankers goes a bit beyond just sanctions policy. It goes into maritime security and so on. But generally, I would say yeah. Let’s say if you say you’re going to do something, but then you don’t, then that could potentially lead to an embarrassing situation. But I wouldn’t want to comment on what the UK is doing or not. I’m not that well aware of all the facts there, but I know that sanctioned vessels roam around everywhere, from the Russian ports in the Baltic, through the Baltic Sea, then the North Sea, Mediterranean, and so on. There are a lot of sanctioned vessels moving about, and, necessarily, at least for the EU, the sanctions themselves can’t physically stop the vessels moving. What they can do is prohibit any transactions providing services to them, but the vessels are pretty much free to roam.
Evgeny Roshchin
Thanks, Ben. Do you have anything to add?
Benjamin Schmitt
No, I’ll pass on that. That was great.
Evgeny Roshchin
Alright. Since we’re approaching the end of time, I would like to ask both of you a final question. What would be your bottom line in your understanding of the sanctions policy so far? Given that Putin now denies any effect of sanctions on Russia’s foreign policy and persists in his objectives to win this war as well as to exert broader influence in the world, how effective do you think the sanctions have been so far, and how much more effective they can be in the future? If you could answer that question briefly, that would be helpful.
Benjamin Schmitt
Here, I’ll go first because Mihkel can fill in all of the things I miss. Here’s my bottom line on sanctions. I think it is absolutely disingenuous for experts and people… Let me just step back and say this: there are experts that often decry sanctions as being ineffective. There are policymakers that decry sanctions as being ineffective and that sanctions aren’t a tool that can lead to geopolitical changes and things like this. I will say this. There’s obviously a big range. There’s some of them that are all the way from pro-Kremlin commentators that have a reason to say that they don’t think sanctions work, all the way through people that are, I think, just naive, because what we’re really looking at is sanctions that have been set up either a day late and $1 short in terms of their scope, or, and this is more important, that the enforcement has been lacking, because I think in a lot of cases you have people not remembering that we’re talking about the largest sanctions regime ever deployed in the history of the Earth in terms of economic scale, geographic scope, and everything in between, and so you really need to have, both in terms of macroeconomic sanctions and technology export controls, a larger workforce. Literally, a larger workforce to do this in the United States. If you look through the US government, we probably have a few hundred people working full time on sanctions. The Treasury Department Office of Foreign Assets Control, I think, has something like two or three hundred. Don’t quote me on that. You can look it up, but it’s hundreds of people, and that’s for the entire planet and all sanctions regimes. If we want to have, in a wartime scenario, which we’re in right now, an impact that is commensurate with what is going on the battlefield, or even, dare I say it, keeping up with the pace of what is happening on the battlefield, it’s incredibly important to staff up. We don’t have enough people actually doing enforcement, and so one of the things I often get asked on the shadow fleet is, “Well, why hasn’t the US, the EU, or whoever we’re talking about, whatever jurisdiction, why haven’t they sanctioned all of the shadow fleet vessels?” There’s something around 1,000, let’s say, shadow fleet vessels, and only a few hundred have been sanctioned by now. It’s because you physically need evidentiary packages that will stand up in court to show that these are shadow fleet vessels because we operate in the rule of law, and it’s not impossible to get this. It just takes time to put these packages together. So, you need more people. We’re lucky in the US in the sense that we at least have several hundred people working on this and a lot of jurisdictions in Europe don’t even have that. You don’t have that at the European Commission, where, in the EU’s context, you’re doing sanctions from the EU side since it’s a foreign and national security policy element. You don’t have a sanctions office with sanctions enforcement officers. These go back to the national jurisdictions that don’t necessarily have sanctions offices themselves. So, that’s what I would say. I think that the biggest thing is enforcement, and that’s the secret sauce where you can actually have it work. Look back to the first days of Russia’s full-scale invasion, the first round of technology export controls on semiconductors and things like this. That actually helped because it was showing that when you were seeing these anecdotal reports and pictures from the battlefield where Ukrainian military personnel were recovering downed Russian drones, missiles, and things like this, and finding that there were semiconductor elements that were stripped out of washing machines and dishwashers inside the Russian Federation, that shows that they’re working. But guess what? That initial celebration that our technology export controls are working – those were pivoted around, and you build up these illicit networks instead to get them. We have to keep pivoting ourselves and outflanking the opponent when it comes to sanctions for them to be successful. I’ll stop there, and thanks to everyone for your interest in this really important topic. If there are any follow-up questions, I’m happy to answer.
Evgeny Roshchin
Mihkel, what would be your one main takeaway?
Mihkel Märtens
Yeah, so first of all, I agree with everything that Ben said. My main takeaway would be to emphasize the importance of alignment between the EU and US at a certain point in time, especially towards the end of the Biden administration, that perhaps would have meant the EU stepping up. I think, now, it’s also time to look at the US to step up, to add new designations, and to have more ambition in sanctions policy, because, as I also detail in the report, I think the EU has stepped up tremendously, and perhaps it would be time for Washington to step up as well. So, I leave it at that.
Evgeny Roshchin
Thank you, Mihkel, and congratulations again on publishing this excellent report. I invite everyone to go back to the report. It’s taking stock of everything we’ve seen so far in the domain of trade, energy, and finances, so please take a look. And with this, I invite our director of the communications team, Michael Newton, to join and wrap up this session.
Michael Newton
Thanks, Evgeny. Thanks, Mihkel. Thanks, Ben. Thanks to everyone attending. Just to let everyone know, there will be an auto-generated transcript and a video recording of this briefing that will be sent out to you all later today. And as Evgeny mentioned, if you do have any questions that you’d like to follow up with, please email press@cepaorg.pages.dev for this or any other questions you have, or if you would like to connect with any of our other experts. Thanks very much. Have a great day. Goodbye.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
