According to Pia Sarivara, head of the sanctions team at the Ministry of External Affairs, Russia is constantly looking for new ways to circumvent sanctions. A special case came to light at the end of 2022 in Finland.
The EU is currently preparing an 11th sanctions package, which will impose additional sanctions on Russia, plug loopholes found in previous sanctions, and tackle sanctions evasion.
Reports of evading sanctions have been widely reported in the past, but Russia continues to find new loopholes.
Sanctions are circumvented to some extent by Russian citizens, but the biggest problem concerns the transportation of goods through companies. All kinds of goods, including technology that could benefit Russia in military operations, remained in customs hounds.
The team leader of the Ministry of External Affairs’ sanctions team, Piya Sarivara, tells IS that sanctions are increasingly being circumvented in, for example, Central Asia and the Caucasus. Primarily, though, the products go to the destination country legally.
Based on customs data, apart from Central Asia and the Caucasus, an increase in exports is clearly observed in Turkey and to a lesser extent in the United Arab Emirates.
– The increase in export volume is marginally significant for some countries. However, it is difficult to say which export growth is a question of increased exports of companies from EU countries, Sarivara says.
According to Sariwara, alarm signals should often sound when there is a significant increase in exports of a certain group of goods.
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One particular example was found in northern Finland late last year, when Russians emptied snowmobile warehouses.
– In northern Finland, especially in Lapland, it was noticed at the end of last year that there was an explosion in demand for snowmobiles among Russians. We wanted to intervene because it was believed to mean that a loophole had been found in the export restrictions, Sarivara says.
Snowmobiles or parts derived from them were probably taken to Russia for combat use.
According to Sarivara, a similar surge in demand for ATVs was seen in Norway.
The next package of sanctions also includes snowmobiles, ATVs, night vision devices and camouflage nets.
– Entities that circumvent sanctions are often ahead of the authorities and find new ways to circumvent sanctions.
According to Sarima, there are gaps in the sanctions because the sanctions are aimed at finding the most important categories of products that could benefit Russia. The listings are made by customs title, and according to Sarivara, therefore, it is not possible to “obviously start listing everything”.
There are also many issues which can be sensitive for the member states of the European Union and because of this consensus is not being reached among the member states. For example, these are issues related to nuclear energy. When it is seen that exports have increased in certain products, the issue will be dealt with in the next sanctions package, Sarivara reasons.
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According to Sariwara, the importance of evading sanctions is difficult to assess.
– But if the purpose of the sanctions is to affect Russia’s readiness to wage war, then surely they want to interfere with all kinds of sanctions violations. Absenteeism also has a deterrent effect.
The practical problems in loopholes in the restrictions appear in bordering countries such as Finland, Estonia, Latvia, Lithuania and Poland, as well as in Norway, which is not an EU country.
According to Sarima, goods traffic passes through Finland, for example, either as its own exports or as exports from another member country. However, it comes with challenges.
– The situation is not made easier by the fact that customs clearance or exports can be registered in Finland even if it is a company exporting products from another member country. EU customs regulations enable the product to be registered in Finland as our export. Sarima stressed that in cases of evading sanctions, it may appear that piracy occurs through Finnish companies.
– Thus, attention is drawn to the border country, when the focus should be on the member state where the actual supplier company is located.
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According to Sarima, companies are at the forefront of implementing the ban. Companies have a great responsibility to ascertain where they source their products, who their end users are, and who owns and controls the company. Companies should also consider whether there are warning signs that product is likely to go to Russia instead of Kazakhstan.
At the moment, an EU expert meeting is dealing specifically with sanctions evasion and is considering how to give concrete instructions to companies.
– Now we are having a meeting of border countries in Helsinki, where we are talking about violations of sanctions between border countries and how to deal with it effectively. Guidelines for companies are currently being developed, and we’ve already come a long way there.