A group of member states is pushing to dilute proposals by the European Union aimed at cracking down on the circumvention of sanctions on Russia through third countries, according to people familiar with the matter, Bloomberg informs.
The bloc’s executive arm has proposed banning importers from reselling so-called high-priority items — like semiconductors used in weapons or needed to make them — to Russia or for use in Russia, and requiring a sum to be deposited in an escrow account to ensure compliance.
Under the EU’s latest sanctions proposals, seen by Bloomberg, at least half of that sum would be transferred to a trust fund for Ukraine and contracts would be terminated if they’re broken. Exporters would also be obliged to inform national authorities of any breaches by third-country companies.
But diplomatic envoys from a group of big member states raised several concerns with the proposals this week, including doubts about their legality, and whether asking for such guarantees and clauses from importers was workable, said the people, who spoke on the condition of anonymity.
The countries also want to narrow the scope of the potential clauses and the list of goods that would be covered by the proposed measure, according to the people. Those member states also worry that the contractual demands could put European companies at a competitive disadvantage.
Other member states, including the Baltic nations, back the proposals, said the people.
The debate comes as the EU has been working to curtail Moscow’s ability to get its hands on key goods used for military purposes through third countries such as Kazakhstan, Serbia and Turkey. Recent trade data seen by Bloomberg shows that exports from those nations, which also include Armenia, Azerbaijan and Uzbekistan, fell in the second half of this year but remains mostly higher than pre-war levels.
However, more than 80% of Russia’s foreign purchases of the high-priority items are now coming from China and Hong Kong, according to the data. Moscow has also been able to establish new routes via countries such as Thailand and Malaysia.
The United Arab Emirates, which has been another main channel used by Russia, has recently signaled that it will do more to control exports, Bloomberg previously reported. The UAE though doesn’t provide timely trade data, making it difficult to assess progress.
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