Sanctions Pressure on Russia is Crucial to Combat Russian War Capabilities

Executive Summary:

• On the third anniversary of the start of Russia’s full-scale invasion, Western countries imposed new sanctions targeting Russia’s shadow fleet, banking institutions, and defense industry, reinforcing efforts to weaken its war capabilities.
• Western sanctions aim to curb Russia’s financial and military strength, primarily by restricting oil and gas revenues. Russia circumvents these measures using shadow fleets and illicit trade routes, prompting calls for stricter enforcement and broader financial restrictions.
• Russia exploits intermediaries in friendly nations such as Kazakhstan, Kyrgyzstan, and the People’s Republic of China (PRC) to bypass sanctions, especially for military technologies and microelectronics.
• Russia shares military technology with allies such as Iran, North Korea, and the PRC, enhancing their weapons capabilities and raising security threats for the Asia-Pacific region and beyond.
• Russia continues aggressive military production plans for 2025 despite sanctions, aiming to manufacture millions of munitions and missiles. Stricter sanctions, better enforcement, and increased international coordination are crucial to mitigating the threats posed by Moscow’s war ambitions.

On February 24, as a sign of solidarity with Ukraine on the third anniversary of the start of Russia’s full-scale invasion, several Western countries announced sanctions against the Kremlin. In particular, the sixteenth EU sanctions package included vessels of the Russian shadow fleet, several banking institutions, as well as companies and individuals involved in the Russian defense industry or helping to obtain foreign spare parts necessary for the production of weapons (European Council, February 24). The United Kingdom also announced its largest package of sanctions in three years, also targeting Russia’s shadow fleet, oil sector, and defense industry (UK Government, February 24). Canada, Australia, and New Zealand also did the same (Glavcom, February 24).

On February 18, in light of the current disputes with the new U.S. administration, Valdis Dombrovskis, the European Commissioner for both Economy and Productivity as well as Implementation and Simplification, stated that the European Union does not plan to lift sanctions against Russia, even if the United States decides to do so (European Council, February 18). Earlier, Keith Kellogg, Special Representative of the U.S. President for Russia and Ukraine, said that, in his opinion, the severity of sanctions against Russia is now at a six out of ten, but their implementation is only at a three. He underlined the need for tougher sanctions, particularly against the Russian oil industry (UNN; Kyiv Independent, February 15). The question remains about whether sanctions are necessary and effective.

All sanctions imposed by Western countries against Russia can be divided into two types. The first, broader type aims to reduce Russia’s economic potential to prevent it from continuing to finance its aggression. The second, more specific, and focused type is intended to limit or stop the Russian defense industry by restricting the supply of technologies, materials, and spare parts that can be used to develop weapons.

The first type of sanctions primarily targets the oil and gas industry, as these industries are the primary funders of Moscow’s budget. Several different restrictions have been imposed, including a maximum cap on the price of oil and a ban on tanker insurance and maintenance. Several countries have announced that they will stop directly purchasing Russian energy. Thanks to the development of the so-called “shadow fleet,” however, Russia still has the ability to trade oil (see EDM, January 27). One of the methods of circumventing sanctions is to transfer oil from one tanker to another right at sea (Ukrainska Pravda; Bloomberg, February 18). At the same time, poorly maintained and uninsured tankers are more prone to accidents and pose a serious threat to the environment. Last December, two Russian tankers split in half during a storm in the Black Sea. The result was a large amount of oil products spilled and serious damage to the ecology of the Crimean peninsula (TSN, December 15, 2024). Another environmental disaster was averted when the tanker Seajewel, which may be part of the Russian “shadow fleet,” suffered two explosions while docked off the coast of Italy. Fortunately, there was no leakage (UNIAN, February 15).

These sanctions, while limiting profits, have not been able to stop this sector of the Russian economy completely. That is why many Western politicians periodically call for tougher action. For example, in his recent column for The Telegraph, Keir Starmer, the Prime Minister of the United Kingdom, noted that economic pressure on Russia should be increased. To do this, the United States, Europe, and G7 allies should seek to go further on the oil price cap and apply more sanctions against the “shadow fleet” and oil giants. He also mentioned that there are banks enabling sanctions evasion (The Telegraph, February 16).

Ukrainian expert Andriy Klymenko, Head of the Monitoring Group at the Black Sea Institute for Strategic Studies, shares a similar view. He also believes that sanctions against Russian tankers are generally ineffective and need to be enhanced. In Klymenko’s opinion, actions to restrict the movement of Russian tankers in the Baltic Sea, which the European Union is currently working on, could have an impact as about 60 percent of all Russian crude oil exports by sea go through there (Tyzhden, February 18).

The Kremlin is actively trying to get the sanctions lifted. For this purpose, it is using far-right political parties in Europe that are promoted or sponsored by Moscow. For example, Alice Weidel, the leader of the German far-right party Alternative for Germany (Alternative für Deutschland, AfD), which won 20 percent of the vote in Germany’s February 23 election, is in favor of lifting sanctions and returning to purchasing Russian energy (Bild, February 16; DW, February 25). Additionally, French far-right politician Marine Le Pen stated in 2022 that she opposes sanctions against Russian gas (BBC, April 12, 2022; Le Monde, October 2, 2022). Similar views have been expressed by another friend of President Vladimir Putin—Prime Minister of Hungary, Viktor Orbán (Radio Free Europe/Radio Liberty Hungarian Service, January 28).

To date, the Ukrainian Defense Forces’ constant attacks on key facilities such as oil refineries, ports, and oil depots have been more effective than sanctions against the Russian oil industry (see EDM, April 18, October 16, 2024). They have become an almost daily occurrence, a significant transition from rare strikes once or twice a month. According to the Startcom of the Armed Forces of Ukraine (AFU), in January 2025 alone, nine key oil industry facilities in the Russian Federation were hit (AFU StratCom, February 3). This has led to serious logistical problems for the Russian army and a drop in energy exports from Russia. Despite the effectiveness of such strikes, a political decision on the part of the West is still needed.

This is also true for the second type of sanctions, which limits resources for developing weapons. Ukraine alone cannot stop the supply of Western spare parts and technologies to Russian defense companies. This requires the constant coordination of all international institutions that will monitor the creation of bypass schemes, parallel imports, and manipulation of delivery routes. The most difficult task is to stop the sale of dual-use goods, as they are not purely military products, and therefore, it is extremely difficult to impose sanctions or restrictions on them (see China Brief, March 31, 2023; see EDM, September 10, October 18, 2024).

The most common way to circumvent restrictions on the supply of goods to Russia is to use countries friendly to Moscow as intermediaries. Against the backdrop of an official decline in direct exports to Russia, the volume of supplies to Kyrgyzstan, Armenia, Georgia, and Kazakhstan is constantly growing. These countries are using repacking, remarking, and manipulations with customs documentation. First and foremost, the importation of microelectronics, precision tools, and machine tools is crucial for the production of weapons (Novaya Gazeta, April 25, 2024).

According to the series of investigations made by the international volunteer community InformNapalm based on the data provided by the Cyber Resistance group hacktivists, another approach is how Russian officials have tried to create a scheme to continue servicing their Su-30SM combat aircraft. These aircraft have navigation and display equipment manufactured by French companies Thales and Safran and require certified maintenance. Due to sanctions, however, this maintenance has become impossible. This led to Russia setting up a shell company, ARC Group, in Kazakhstan that could provide maintenance services, with the involvement of French specialists, allegedly only for the domestic Kazakh market. Following the publication of information about the scheme, the company’s operations were suspended (InformNapalm. September 12, December 11, 2024). There is no guarantee, however, that Russia will not try to create another similar mechanism with another company or in another country. Such actions require constant monitoring, including the involvement of Western arms companies (in this case, Thales).

Another investigation showed that despite the restrictions, Russia was able to build an entire plant using foreign equipment and machines (mostly from Germany and Taiwan) to produce avionics for the latest Su-57 fighter jet (see EDM, January 15). There are still no requirements, however, for companies to request information about the end user of their products. This means that they are not responsible for supplying their goods to Russia (InformNapalm, November 7, 2024). To circumvent sanctions, the Kremlin also uses a cover in the form of the state company Rosatom, through which it manages to purchase microelectronics, which is transferred to the production of cruise missiles for the Russian Armed Forces (InformNapalm, September 18, 2024).

In the face of Western restrictions, Moscow is increasingly relying on the People’s Republic of China (PRC) to develop its defense industry. The PRC is the main supplier of machine tools, materials, and spare parts (see EDM, December 4, 2023, January 22, 2024; Economic Security Council of Ukraine, January 23). An investigation from Ukrainian activist Vadym Labas revealed a sophisticated camouflage scheme Russia used to obtain servomotors from the PRC for Russian gliding bombs (known as KABs). These servomotors were developed by the Chinese company KST Digital Technology Limited, which was then fictitiously transferred to another company, Kaiffeng Zhendaqian Technology Co., Ltd. or KZT, which was fictitious. The electronics were sent there to another Chinese company, UNIHUI INTERNATIONAL LIMITED (again, only according to the documents). There, the parts were labeled with the brand TRC, a well-known Taiwanese microelectronics manufacturer. If the supply chain was identified, all claims were addressed to the Taiwanese manufacturer, which did not even realize that Chinese parts for Russian bombs were being supplied under its brand (Facebook/labas.v, January 6).

According to the Ukrainian Defense Intelligence (HUR), Russia is switching to Chinese spare parts instead of American ones for the Shahed-136 kamikaze drones (Telegram/@DIUkraine, February 18). The documents leaked by hackers showed that Russian companies are trying to use tantalum from the PRC to replace Kazakh tantalum, which is unavailable due to sanctions. Despite loud statements from Russian officials about successful import substitution, there has been little success. The quality of Chinese raw materials is unsuitable for manufacturing capacitors for missile guidance systems such as the X-47M2 Kinzhal and the 9M727-K Iskander. This causes delays in the production of weapons. In other words, if the vulnerabilities are correctly calculated, targeted sanctions against the Russian defense industry can have an effect (X/@Tatarigami_UA, January 17).

Stopping or at least limiting the Russian defense industry is important not only for Ukraine. The Kremlin shares its technology with allies, including Iran, the Democratic People’s Republic of Korea (DPRK), and the PRC. This gives them the opportunity to improve their own weapon systems. The Head of HUR, Lieutenant General Kyrylo Budanov, said that thanks to Russian technology, the DPRK has improved its KN-23 ballistic missiles, significantly increasing their accuracy (UNIAN, February 18). He warned that this technological progress could have serious security implications for South Korea and Japan (UNIAN, February 18). This will have long-term implications for the security landscape in the whole Asia-Pacific region.

The Kremlin has not abandoned its aggressive plans against Ukraine and, probably, against Europe despite the recent allegedly peaceful rhetoric from Moscow. This is evidenced by plans to produce various munitions in 2025. According to Lieutenant General Oleh Ivashchenko, Head of the Ukrainian Foreign Intelligence Service, Russia plans to produce more than 7 million artillery munitions, large-caliber mines, and about 3,000 long-range missiles (Ukrinform, February 23). Thanks to sanctions, there is a chance to significantly reduce this number and thus reduce the threat to Ukraine and the European Union.