Sanctions having ‘important influence’ on Russian financial system, says EU particular envoy

Western sanctions are having a “important influence” on the Russian financial system, the EU’s sanctions envoy has stated, forward of the fourth anniversary of Moscow’s full-scale invasion of Ukraine.

David O’Sullivan, a veteran Irish official, stated sanctions have been “not a silver bullet” and would at all times face circumvention, however insisted that after 4 years he was assured they have been having an impact.

“I’m pretty bullish. I believe that the sanctions have actually had a major influence on the Russian financial system,” he instructed the Guardian in a uncommon interview.

“We could also be, in the middle of 2026, coming to some extent the place the entire thing turns into unsustainable, as a result of a lot of the Russian financial system has been distorted a lot by the build up of the struggle financial system on the expense of the civil financial system. I believe defying the legal guidelines of financial gravity can solely go on for therefore lengthy.”

O’Sullivan was talking after weeks of intense Russian attacks on Ukraine’s vitality infrastructure because the nation endures a bitterly chilly winter, with temperatures in Kyiv plunging to -20C this week.

Ukrainian counterparts, he stated, had instructed him that Russia had been in a position to launch twice as many drones and missiles final month in contrast with January 2025.

However Vladimir Putin’s struggle machine has not come with out a price to the broader financial system, which is regarded as below its best pressure for the reason that early days of the struggle. Oil revenues are plummeting, inflation is working at about 6% and rates of interest at 16%.

O’Sullivan, who has greater than 4 many years’ expertise within the EU establishments, was appointed EU special envoy for sanctions in December 2022 with a remit to counter their evasion and circumvention.

The EU has imposed an unprecedented 19 rounds of sanctions on Russia for the reason that full-scale invasion of Ukraine in 2022, concentrating on greater than 2,700 people and entities, and halting commerce throughout huge financial areas together with vitality, aviation, IT, luxurious and shopper items, diamonds and gold.

The sanctions envoy stated he was “very sluggish to accuse nations” of not complying with the EU’s needs, stating that “no [non-EU] nation on the planet is below any obligation to respect our sanctions”.

The EU has been on a mission to steer different nations to not permit the resale of European items to Russia, particularly elements that can be utilized or repurposed for navy use.

O’Sullivan stated the bloc had had some success in “forestall[ing] the direct re-export of vital merchandise for weapons” by central Asia, the Caucusus, Turkey, Serbia, the UAE and “to a smaller extent” by way of Malaysia. Most circumvention was all the way down to “financial operators, seeing financial alternative and being profitable” reasonably than orchestrated by governments, he stated.

However China, with its “no-limits” friendship with Moscow, was an exception. “China is clearly type of backfilling and offering assist” to Russia, though not within the type of direct navy tools provides, he stated.

A number of EU leaders had raised this concern with Beijing, he stated. “The reply is at all times the identical: ‘Nothing to see right here. We don’t know what you’re speaking about. We don’t see any downside.’”

O’Sullivan stated the EU had efficiently taken motion to counter the Russian shadow fleet – ageing tankers below obscure possession transporting Russian oil to export markets in China and India. As of December, almost 600 vessels have been below EU sanctions.

“We’ve been very profitable in getting flag states to take away their flags from sanctioned vessels. I believe now we have tightened the screws on that specific type of circumvention, very significantly. I believe the Russians are struggling to maintain the oil flowing,” he stated.