From diamonds to nuclear, EU trades with Russia despite sanctions
With 10 rounds of sanctions since Russia invaded Ukraine last February, the European Union has unleashed its toughest sanctions ever against a foreign country.
The EU has said its sanctions are designed to cut Moscow’s revenue and access to technology used in war.
But the impact “will not be severe enough to limit Russia’s ability to go to war against Ukraine in 2023,” according to a European Parliament research note.
Heavy trade continues to take place between the bloc’s 27 countries and Russia – a result of successful lobbying, the EU’s unwillingness to take a harder economic hit and concerns about ripple effects on global supply chains.
Instead of seeking new sanctions, the EU now wants to crack down on circumventing the sanctions already imposed, and officials have identified the UAE, Turkey, Armenia, Georgia, Kazakhstan and Kyrgyzstan as possible circumvention routes.
Here is a list of areas where the EU continues to do business with Russia.
Trade flows
According to the executive European Commission, Russia was the EU’s fifth-largest trading partner in 2021 with an exchange of goods worth 258 billion euros ($280 billion). The EU’s main imports were fuel, timber, iron and steel and fertilizers.
Since the 2022 invasion, the value of EU imports from Russia fell by half last December to about 10 billion euros ($10.85 billion).
In total, the EU imported 171 billion euros ($186 billion) worth of goods from Russia from March 2022 to the end of January 2023, according to the latest data from Eurostat, the EU’s statistical office.
That figure dwarfs the 60 billion euros ($65 billion) the EU said last month it had allocated to Ukraine in the year since the invasion, though that totally excludes the value of the modern tanks Kiev has since sent, or the final deal on ammunition supplies.
LNG
The EU approved imports of Russian coal and overseas oil last year. Gas is not subject to EU sanctions, but Moscow has slashed pipeline supplies to Europe since the invasion. In 2022, the EU received about 40 percent less Russian gas than in recent years.
Liquefied natural gas is a different story. Russian LNG deliveries to Europe have increased since the war – to 22 billion cubic meters in 2022, compared to about 16 bcm in 2021, according to EU analysis.
LNG volumes are smaller than pipeline gas deliveries in Russia, which were about 155 bcm per year before the war. But the upswing has led some countries to ask for a legal option under EU law to block LNG imports.
Nuclear
Similarly, there are no sanctions against Russia’s nuclear industry, something that Hungary – where Russia’s state-owned nuclear power company Rosatom is set to expand the Paks power station – and Bulgaria have openly opposed.
According to Eurostat, EU imports of products from the Russian nuclear industry will total almost €750 million ($814 billion) in 2022. The EU nuclear agency Euratom said Russia will have provided one-fifth of the uranium used by EU utilities by 2021, the latest available data, as well as one-fourth of the conversion and one-third of the enrichment services.
France’s energy ministry disputed parts of a Greenpeace report last month that said Paris had sharply increased imports of enriched uranium from Russia since the invasion. Paris said his contracts with Russia would be more expensive to terminate than to continue.
diamonds
According to Eurostat, the EU bought 1.4 billion euros ($1.52) worth of Russian diamonds last year because it neither banned the import of precious stones nor blacklisted the Russian state-controlled miner Alrosa.
Belgium, home to the world’s largest diamond trading center Antwerp, has upset the bloc’s hawks by lobbying against the EU going solo on Russian diamonds.
The EU, the United States and other G7 economies are now working on a traceability system to squeeze out Russian diamonds together. The Antwerp World Diamond Center said India – not a G7 member – had to be included for it to be effective.
Chemicals and raw materials
According to Eurostat, Russian fertilizer imports into the EU last year amounted to 2.6 billion euros ($2.82 billion), more than 40 percent more than in 2021, as price increases outweighed reduced volumes.
Potash from Russia and its ally Belarus is heavily restricted or banned in the EU. But other fertilizers, including urea, flow freely, said Sean Mackle of industry lobby Fertilizers Europe, adding that the piecemeal approach weighed on implementation.
Disagreement among the 27 EU countries over proposed exemptions to prevent fertilizers from going to Africa has led to increased sanctions against Belarus for aiding Russia’s war.
One of the raw materials not subject to sanctions is nickel, which is mainly used for the production of stainless steel. According to Eurostat, the EU imported €2.1 billion worth of nickel in 2021, up from €3.2 billion ($3.47 billion) last year.
Big names and secondary sanctions
Alrosa and Rosatom are missing from the EU’s blacklist, which currently lists nearly 1,700 individuals and entities banned from the bloc. Gazprombank – the financial arm of Russia’s gas monopoly Gazprom GAZP.MM – and Russia’s second-largest oil producer Lukoil, a privately owned company, are also missing.
Transparency International has long called for restrictions on Russia’s access to EU lobbying and for secondary sanctions to punish those who help others already under sanctions, as is standard practice in the US.