Executive Summary

In the effort to deter Russia’s aggression, allies on both sides of the Atlantic are struggling to maintain a sufficiently strong sanctions regime. American sanctions designations have slowed to an inconsistent trickle, at best. The West faces a pivotal moment: The fate of negotiations over Ukraine relies heavily on transatlantic commitment to sanctions and the leverage that comes with them. If Russia is to be deterred, the United States and Europe must send a clearer signal to Russian entities and third-country enablers, in order to chart a course to a just and durable peace. 

• Russia’s wartime economy persists despite direct sanctions by relying on third-country channels. 
  • Shell companies in third countries help circumvent sanctions by supporting the shipment of illicit goods and facilitating payments between Western banks and sanctioned Russian banks. 
• Allied efforts to restrict Russia’s shadow fleet are important, yet they are riddled with loopholes.  
  • From Russia to Turkey to China, the US and EU have restricted specific companies, vessels, and refineries that make up the shadow fleet. 
  • Though the West occasionally targets entire ecosystems and geographic areas, efforts generally focus on individual companies, trapping sanctions enforcers in a cat-and-mouse game with shell companies. 
• The transatlantic community must update sanctions regularly, staying ahead of emerging trends.  
  • The EU and US must puncture the Kremlin’s belief that time is on its side, laying out dynamic sanctions that curb new evasion techniques. 
• When implementing secondary sanctions, the EU and US must target more financial institutions. Sanctions efforts should be complemented with diplomatic outreach. 
  • Sanctions should act as a signaling tool, and issues of sanctions circumvention should become an integral part of broader diplomatic outreach to third countries.  
  • Allies should consistently prosecute enablers in order to demonstrate zero tolerance for sanctions evasion.  
  • Secondary sanctions should complement primary sanctions, not replace them. 
• Follow new sanctions with designations, maintaining credibility and deterrence.  
  • For credibility’s sake, allies must keep their strategy united and back threats with real action. 
• Sanction-enforcing countries should offer off-ramps and reward changes in behavior. 
  • Policymakers should reward sanctioned entities if they cease cooperation with Russia. 

Introduction: Increasing Sanctions Attention toward Russia’s Enablers

In response to Russia’s full-scale invasion of Ukraine in February 2022, many countries imposed a raft of industrywide and individual sanctions to increase the price of aggression for Russia, forming a so-called sanctions coalition.¹ Although the first sanctions were put in place after the illegal annexation of Crimea in 2014, with some additions made in the following years, the sanctions imposed since 2022 have been significantly more far-reaching, covering the most important sectors of the Russian economy. According to one estimate, sanctions imposed by the UK, the US, and the EU have denied Russia access to more than $450 billion since the start of the full-scale war of aggression (including immobilized foreign currency reserves and lost oil tax revenues).²

While the Trump administration has largely refrained from increasing sanctions pressure on Russia (with a few notable exceptions discussed below), it has not lifted the measures put in place by the Biden administration.³ The EU has continued to raise the price of aggression for Russia, adopting several sanctions packages in 2025, with the latest 20th sanctions package being adopted in April 2026.

The level of sanctions pressure on Russia is unprecedented for such a large economy integrated into the global economy.⁴ Yet the Russian economy has proved to be more resilient than many expected. Russia has exported more than $1 trillion worth of fossil fuels since the start of the full-scale war, and it continues to have access to critical goods and technology necessary for sustaining the war effort.⁵ As Russia has adapted to the restrictions imposed by the sanctioning coalition — including by sanctions evasion with the help of companies in third countries — there has been increasing attention to sanctioning the enablers of Russian aggression.

North Korea has supplied Russia with millions of artillery rounds, and its soldiers have fought on the front lines in the Kursk region, while Iranian support has been crucial in Russian drone production, with the Iranian-designed Shahed kamikaze drones massively used in strikes across Ukraine.⁶ These two key enablers directly involved in the war effort are special cases, as the countries are already under significant sanctions pressure (with the reimposition of JCPOA-related sanctions against Iran by the UN in September 2025 adding to that). The extensive sanctions against Belarus are also unique and stem from the country’s complicity in facilitating Russian aggression, with many of the sanctions on Russia and Belarus aligned to thwart possible evasion.⁷

Besides these special cases, new jurisdictions that have rarely or never featured in sanctions lists are involved in the trans-shipment of sanctioned goods to Russia, host financial institutions facilitating payments between Western banks and blacklisted Russian banks, or are enabling the continued operation of inadequately insured aging tankers in carrying Russian oil. These evasion channels are shifting sanctions policy further toward action against these enablers of Russia, in parallel to imposing further restrictions on Russia directly.

While the US has a long history of applying sanctions on actions abroad and making use of secondary sanctions, the EU has criticized this approach, even adopting blocking statutes to defend European economic operators from them.⁸ But as Russia’s war against Ukraine drags on, the political will to sanction Russia’s enablers is growing, and the EU is increasingly adopting restrictions that could be viewed as secondary sanctions (even if in legal terms they are not). 

US sanctions have long been considered more potent than EU ones, given the nature of the international financial system and the widespread use of dollar payments. The US Treasury’s sanctions list is a powerful tool, as implementing sanctions is mandatory not just for US citizens and companies registered there, but for all transactions processed via the financial system of the US (including US dollar payments). Secondary sanctions go even further and target those economically involved with actors under primary sanctions. In a similar fashion, EU sanctions can still reach beyond the EU’s jurisdiction, posing reputational risks and influencing those operators in third countries who are strict about due diligence and compliance, but they have considerably less effect on third-country operators than US sanctions do. The US also has a wide-ranging sanctions enforcement capacity, while EU sanctions are implemented and enforced by the member states, not a single supranational authority.

This paper will look into actions by the EU and the US in sanctioning the enablers of Russia in third jurisdictions. The research will consider restrictions on trade and finance, and sanctions on Russia’s oil exports, as well as the efficiency of various strategies to tackle sanctions evasion. Based on these findings, the paper will offer policy recommendations for further action.

Trade Sanctions: Stopping the Trans-Shipment of Sensitive Technology

Western countries have imposed massive trade sanctions to curb Russia’s military-industrial output, banning the export of military and dual-use technology and other items contributing to Russia’s industrial capacity. Beyond that, they have imposed financial (blocking) sanctions against countless Russian military factories, which should cut all business ties between them and Western companies. Yet Russia continues to have access to sensitive technology and other components, which are in huge demand by its military-industrial complex, via third jurisdictions, where companies are involved in the transshipment of such goods. As noted by a report by the US-China Economic and Security Review Commission, companies (often shell companies) in China and Hong Kong play an especially important role in this.⁹

In response, the EU and US have targeted some of the companies involved, mainly by hitting them, or the people behind them, with full blocking sanctions or milder restrictions, such as a ban on or licensing requirement for exporting dual-use technology to those companies.

The EU has established a list of companies that are part of or support Russia’s military-industrial complex.¹⁰ Although it contains primarily Russian companies, an increasing number of third-country operators involved in shipping sensitive technology to Russia have been added in recent years (from mainland China, Hong Kong, Turkey, the United Arab Emirates, and Central Asian countries, to name some of the most prominent jurisdictions).¹¹ As a consequence, the EU has prohibited the export of dual-use goods and other sensitive technology to those companies. The EU has also established a framework to impose full financial sanctions on companies in third countries that are involved in circumventing EU sanctions, although the rigorous evidentiary threshold required to impose sanctions in the EU means it has been used rather sparingly.¹² These sanctions have a far greater scope and, in essence, cut off the sanctioned companies from doing business with EU members and freeze their assets located in the EU.

The US has also used its Bureau of Industry and Security’s (BIS) Entity List to restrict the export of sensitive high-tech equipment to many Russian and third-country operators. Like the equivalent EU list, most entries related to Russia’s war of aggression against Ukraine are Russian companies, but many third-country entries appear for their support of Russia’s war effort. The US has used full financial sanctions far more extensively than the EU against third-country operators, with hundreds of companies under full blocking sanctions for supplying Russian companies with sanctioned goods used in the military industry. Notably, the State Department’s announcements have specified the value of the supplied goods as well as the periods when the trans-shipments took place.¹³

Viewing the situation purely in terms of numbers, companies involved in trans-shipping sanctioned goods make up the bulk of third-country designations on the sanctions lists of the US and the EU. Tellingly, in the summer of 2024, BIS moved to allow entire addresses to be added to the list in an effort to thwart the frequent use of shell companies in some jurisdictions to evade restrictions imposed on specific companies.¹⁴ In Hong Kong, particularly, corporate structure and ownership can be obscured and new companies can be set up or dissolved swiftly to facilitate transshipping of sanctioned goods.¹⁵ Designating specific addresses helps in further disrupting trans-shipment schemes, as setting up shell companies relies on intermediaries who offer registration services for specific addresses, but it falls short of decisively stopping the trans-shipment of sanctioned goods.¹⁶

Still, designating companies involved in the transshipment of sanctioned technology to Russia does make a difference. It disrupts supply chains that have been set up to continue procurement of high-tech components for Russia’s military industry, forcing malicious actors to find new channels of sanctions evasion. Setting up these elaborate circumvention schemes can be costly and time-consuming, often concocted under the direction or with the support of Russian intelligence services.¹⁷

Such designations also serve to warn Western producers and suppliers of electronic components and other goods necessary for Russia’s military industry that they should be wary of certain jurisdictions when exporting their goods. Some countries have so many companies under Western sanctions that Western companies step up their compliance checks when doing business there. Sanctions designations also help Western diplomats spell out for their third-country counterparts which companies there are evading sanctions, and how. And too many designated companies in a given jurisdiction can be an embarrassment, prompting those governments to take action.

The limitations on sanctioning individual companies raise the possibility of sanctioning entire industries in third countries, which so far has not happened.¹⁸ In a first step in that direction, the EU in June 2023 cleared the way for banning the export of certain goods to certain third countries, if other measures have failed to prevent those goods systematically reaching Russia via that jurisdiction. While member states were hesitant to put the “anti-circumvention tool” to use, it was activated with the 20th sanctions package in April 2026, banning the export of certain sensitive technology to Kyrgyzstan. The EU thus acknowledged that, despite other measures, the high risk of sanctions circumvention persists. Overall, this indicates the breaking of a taboo in EU policy against targeting entire industries in third countries.

Financial Sanctions: Cutting the Financial Channels between Russia and the West

Sanctions on the financial industry can also help disrupt the transshipment of sanctioned goods. In parallel with the goods physically moving among jurisdictions, payments usually flow between the West and Russia via third-country intermediaries due to wide-ranging sanctions against the Russian banking sector. The more difficult it is for those payments to be made, the more complex channels must be used to allow the transfers to happen. As with intricate supply chains, setting up these payment channels takes time, effort, and money.

Much of the legislative effort of the EU and US so far regarding sanctions against the financial sector of Russia’s enablers has gone into establishing a legal basis for sanctioning foreign financial institutions that assist in circumventing existing sanctions.

The EU has introduced criteria that allow it to sanction institutions connected to Russian financial messaging systems (SPFS, SBP, Mir) or those that process transactions for sanctioned trade operations. Throughout 2025, various institutions were sanctioned under these criteria. The EU started off with designating a few Belarusian banks, then expanded to Chinese, Kyrgyzstani, Kazakhstani, Tajikistani, Azerbaijani, and Laotian banks (including subsidiaries of Russian banks in those countries). The lifting of sanctions on two regional Chinese banks in 2026 is a notable move, as the banks halted all settlements with Russia after being sanctioned. This exemplifies the direct effect EU sanctions have on changing the behavior of FFIs.

Under the Biden administration, the US repeatedly widened the criteria for allowing it to target foreign financial institutions. First, in December 2023, it authorized sanctions on institutions involved in significant transactions related to Russia’s military-industrial base. Then, in June 2024, it broadened the definition of Russia’s military-industrial base to include an extremely wide array of people and organizations previously sanctioned. Still, only Keremet Bank in Kyrgyzstan has so far been caught in the wider net, for facilitating cross-border transfers on behalf of a sanctioned Russian bank with deep ties to Russia’s military-industrial complex.¹⁹

The importance of a legal framework for sanctioning foreign financial institutions should not be underestimated. Together with loud and clear public messaging, it sends a signal to financial institutions around the world looking to evade sanctions and assist Russia in its war effort. Judging from various news reports, such signaling can be enough to limit payments between banks in Russia and third countries.²⁰ This deterrent effect can fade over time, as institutions devise new schemes or payment channels, or if sanctions are not actually levied and market operators get bolder in carrying out their transactions. But devising new schemes soaks up money and time, which, without a doubt, hinders Russia’s war machine.

As traditional financial institutions in sanctioning countries face tighter regulations and those in third jurisdictions limit transactions due to the threat of secondary sanctions, malevolent actors have turned to cryptocurrencies to evade sanctions. That is a problem for enforcement agencies, as crypto transactions are further removed from traditional financial institutions.

The sanctioning coalition is taking steps to limit sanctions circumvention via cryptocurrencies, including schemes set up by Russia in other jurisdictions. Notably, the Treasury Department sanctioned entities and people related to Grinex, the reconstituted version of Garantex, a cryptocurrency exchange notorious for criminal transactions that was disrupted by US, Finnish, and German investigators in March 2025.²¹ In addition to Grinex, among the targets was Old Vector, which issued a ruble-backed stablecoin. Both companies were registered in Kyrgyzstan but were clearly linked to Russian efforts to circumvent restrictions on payment channels.²²

Energy Sanctions: Curbing Russia’s Oil Revenues

One key pillar of Western sanctions against Russia since the start of the full-scale invasion has been to curb the energy revenues that are crucial to funding Russia’s war effort, focusing especially on oil exports. According to the Center for Research on Energy and Clean Air, Russia’s oil exports from February 2022 to April 2026 brought in more than 800 billion USD.²³ It is easy to see why the sanctioning coalition has focused on limiting the revenues Russia earns from oil exports—oil makes up a large portion of Russian revenues, and even a proportionally modest impact can have a serious impact in absolute terms. The US banned the import of Russian oil in March 2022, and the EU followed suit with a ban on the seaborne import of Russian oil in December 2022.²⁴

At the end of 2022, G7 partners also agreed to cap the price for Russian crude oil and oil-product exports to third countries, looking to leverage the widespread use of Western services, especially insurance, in shipping Russian oil and oil products. The aim was to avoid yanking Russian oil off the global market, which would risk instability, but to ensure that Russia would earn less than under normal circumstances. In response, Russia started sending oil to third countries via a “shadow fleet” of aging tankers with questionable, if any, insurance and murky ownership, sailing under flags of convenience and using shady shipping practices. By now, the shadow fleet carries the vast majority of Russian crude exports, flouting the price cap.

Sanctioned shadow fleet tankers cannot call at ports of the sanctioning countries, and they cannot use a wide variety of services provided by companies registered there, most importantly, protection-and-indemnity insurance. These restrictions complicate tanker operations — especially given that prior export routes from Russian European ports into Europe have been replaced by lengthy voyages to China and India — but sanctions themselves cannot stop sanctioned tankers from loading Russian oil and traveling to a non-sanctioning country to offload it. 

With its major role in Russia’s oil exports, the shadow fleet has become a prime target of Western sanctions against third countries, as these vessels are not under direct Russian ownership and do not fly the Russian flag. Initially, the US added more tankers to its sanctions list than the EU, but in 2025, the Europeans added hundreds of vessels and now far outpace the US. 

The EU has also moved beyond targeting individual tankers to sanction other operators involved in the broader shadow fleet ecosystem. This move has caught up various companies managing or operating shadow fleet tankers, as well as companies operating the flag registries of some countries that offer flags of convenience to shadow fleet tankers. With the last few sanctions packages, the EU has also started targeting refineries and oil traders involved in processing and trading Russian crude oil.

Sanctions against different nodes of the shadow fleet ecosystem have had mixed results. Designations of tankers themselves is effective because they are difficult to circumvent: Even if a vessel’s name, flag, or ownership changes, its unique identifying number issued by the UN’s International Maritime Organization stays the same. Sanctioning tanker owners or operators is less efficient, as it is easy to periodically transfer ownership to newly created shell companies. For example, one address in Dubai reportedly housed more than 60 front companies managing shadow fleet tankers, with no evidence of the companies physically operating in that location.²⁵ Tracing the frequently changing ownership of tankers previously controlled by the Russian government via state-owned shipping company Sovcomflot reveals that as management companies are sanctioned, vessels are transferred to newly created front companies.²⁶

Perhaps the most forceful measures are targeted sanctions on the demand side of the Russian oil trade, against refineries in third countries that accept shipments of Russian crude and process it into oil products. Continued imports into the EU of such oil products made from Russian crude have been described as a back-door way to fund the Kremlin’s war chest.²⁷ The EU closed this loophole in January 2026 with the 18^th sanctions package, which banned such oil products.²⁸

The EU has also targeted certain companies in China and India that are major refiners of Russian oil and thus provide revenue to the Russian government. In July 2025, it sanctioned Nayara Energy, an Indian company partially owned by Russian state-owned oil giant Rosneft. In October, designations of the Liaoyang Petrochemical Company and Shandong Yulong Petrochemical Company — significant buyers of Russian oil in China — followed. The results have been clear, as non-Russian suppliers have canceled contracts and severed financial ties with the blacklisted companies, forcing changes of corporate structures and rerouting of both import and export flows.²⁹ Coupled with US designations of oil majors Rosneft and Lukoil as well as the imposition of a secondary tariff on India for continued imports of Russian oil, these sanctions widened the discount between Brent and Urals blends. This dynamic shifted with the closure of the Strait of Hormuz, which significantly increased the demand for Russian oil, thereby surging the price of Ural even past that of Brent.³⁰

In any case, while oil producers have often offered short-term discounts to keep business after additional sanctions pressure, they can hardly afford to offer long-term discounts,  which would significantly diminish their investment possibilities. The global decline in oil prices in 2025, coupled with additional sanctions pressure from the US and the EU, resulted in a large federal budget deficit for Russia, with mineral extraction tax lagging substantially behind year-on-year.³¹ In 2026, however, Russia has clearly profited from the Iran war, which has driven up the  price of oil globally.³² The price of Urals crude doubled from $45 per barrel in February to over $90 per barrel in April.³³

Beyond the implications of the Iran war, a few things about oil sanctions remain unclear: How much can those sanctions reduce Russia’s oil revenues? Could prices for Russian oil be pushed lower with stronger enforcement of the price cap or a complete ban on providing maritime services for tankers carrying Russian oil? The US’s longtime hawkish strategy on Iran demonstrates that even aggressive targeting of vessels, refineries, and traders cannot shut down oil exports. Further, conflicting policy goals in other fields can make (sanctioned) Russian oil more attractive, as evidenced by the US loosening up restrictions on the transfer of sanctioned Russian oil to alleviate the price shock stemming from the closure of the Strait of Hormuz.

Conclusion and Policy Recommendations

Western sanctions against Russia have become a major pillar of the policy response to Russia’s war of aggression against Ukraine. Implementing tough measures to limit Russia’s access to critical goods and technology, sever financial ties between Russia and the G7+ coalition, and cut Russian energy revenues has proved a challenge, given Russia’s prewar integration into the global economy. Yet the unprecedented sanctions imposed on Russia and its enablers have to some degree achieved their goals. As evidence of sanctions pressure on the Russian economy, it is extremely telling that sanctions relief is among the top demands of Russia in any discussions over a negotiated end to the war of aggression.

Although the US has long employed secondary sanctions, the EU has been less willing. So it’s notable that various measures in recent sanctions packages have been directed toward operators in third jurisdictions, although the EU has stopped short of calling these sanctions secondary. Given the threat that Russia’s war of aggression poses to the future of European security — European leaders often call it existential — it should come as no surprise that the EU is setting precedents, with sanctions policy reaching toward extraterritoriality and employing secondary sanctions further than before, even though it has previously criticized the US for doing so. In targeting third jurisdictions, wider political considerations come into play, of course, perhaps even more than for the US. As EU sanctions require that each member agrees to them, the special interests of one member can shape the sanctions policy of the whole union.³⁴

Although both primary sanctions against Russia and secondary sanctions on its enablers have constrained Russia’s ability to continue the war of aggression against Ukraine, there is clear room for further action and leverage not yet used. Therefore, we offer the following recommendations for policymakers:

Add new designations on a continuing basis, including (secondary) sanctions on systematic enablers of sanctions circumvention

Given the adaptation of Russia and its enablers, tactics of sanctions evasion are constantly evolving. The sanctions response should be dynamic as well, to reflect emerging trends of evasion and to target additional entities both in Russia and in third jurisdictions. This would also reinforce the restrictions in place already, making them more difficult to circumvent. Regular addition of sanctions signals political will to keep and increase the pressure on Russia, to puncture the Kremlin’s belief that time is on its side. It also sends a clear signal to jurisdictions, enabling sanctions circumvention that consequences will follow. Being on a sanctions list can scare away potential business, given the implied threat of secondary sanctions and the size of their penalties, but a long pause in imposing penalties can embolden actors to continue transactions with sanctioned parties.

Employ designations targeting third-country operators together with diplomatic outreach efforts.

It is clear that sanctions on operators in third countries do not significantly stop sanctions circumvention by themselves (at least in the current number and in the sectors currently targeted). However, they offer specific examples in diplomacy with those countries that sanctioning countries will not tolerate circumvention. Having numerous blacklisted companies in your jurisdiction can become an embarrassment that some countries may want to avoid. Issues of sanctions circumvention should become an integral part of broader diplomatic relations with third countries. In certain sectors and with certain countries, a clearer choice should be presented — do they wish to continue business with the G7+ coalition or with Russia? Expectations to governments of the third countries must also be clearly worded, and it should be made clear that ongoing sanctions circumvention would not be tolerated and further restrictions would follow. 

Follow emerging trends and act based on new information.

As the landscape of sanctions evasion is not static, policymakers should study emerging trends of circumvention, including new methods, new jurisdictions, and new companies involved, when considering further action. When new jurisdictions not prominently linked with sanctions evasion pop up, they can be quickly exploited if no steps are taken to limit these activities. Regarding the shadow fleet, newly emerged flag states or new destinations of oil for sanctioned vessels indicate new targets for additional sanctions leverage. Furthermore, the use of new transaction methods such as cryptocurrency indicates the need for the sanctions coalition to act, to close alternative payment channels with Russia by which sanctions evasion would otherwise be possible. This may require strengthening the capacities and capabilities of national authorities working on sanctions enforcement and analytics, in addition to improved information sharing both nationally and transnationally.

Focus designation efforts more on financial institutions, for whom continued economic ties with G7+ coalition jurisdictions are important.

The bulk of third-country operators sanctioned so far for their role in Russia’s war of aggression against Ukraine are companies involved in the transshipment of sanctioned goods. While these designations serve as good compliance indicators for risky jurisdictions, they have not had a significant direct impact in limiting this behavior. Therefore, designation efforts could focus on established operators — especially in the financial sector — as access to Western financial markets and the ability to continue business with counterparts in the sanctioning coalition remains important. It is also more difficult to circumvent such restrictions, compared with trade sanctions, by merely creating a new front company.

Follow new sanctions frameworks and criteria with designations, to maintain credibility and deterrence.

Evidence so far confirms that new frameworks and criteria for sanctioning certain actors have an effect, especially threats of secondary sanctions on financial institutions. But if sanctions are not forthcoming, that effect dilutes over time, as the possible economic benefit of continuing risky business outweighs the sanctions risk. To maintain a longer-lasting impact and send signals of credibility, designations should follow.

Articulate a clear strategy for reducing Russian oil revenues, with enforcement measures to implement it.

All G7 members except the US lowered the price cap for Russian crude oil in 2025. The EU and the UK have also sanctioned significant numbers of shadow fleet tankers and some refineries importing Russian crude. The US has stuck with a higher price cap and not sanctioned any Russian shadow fleet vessels or refineries during the Trump administration, but the US has imposed blocking sanctions on oil majors Rosneft and Lukoil. The oil price cap may have outlived its time, particularly as the Iran war has disrupted the global energy market. With flows through the Strait of Hormuz blocked, oil prices have become increasingly volatile. As discussions over a possible maritime services ban for transporting Russian oil continue, the question remains: to what extent can sanctions still meaningfully affect the amount and price of Russian oil exports, either via the price cap or a total services ban? In either case, additional enforcement measures — systematic sanctioning of the shadow fleet, including the whole ecosystem of operators involved in the trade — should be employed consistently to implement the chosen strategy. Having a clearly worded strategy to communicate to third countries continuing imports of Russian oil would also prove useful, especially if the threat of secondary sanctions looms large. 

Offer off-ramps and incentivize behavior changes to escape sanctions.  

Imposing sanctions is not the ultimate goal by itself, but rather a tool to reach a favored outcome. If there is no doubt that sanctioned people or entities have changed their behavior, lifting sanctions (partially or fully) should be an avenue for policymakers to pursue. In the 20th sanctions package, the EU delisted two regional Chinese banks (previously sanctioned for facilitating sanctions circumvention) that stopped all Russian settlements. It also introduced the possibility of granting derogations to the sanctioned Nayara refinery in India, facilitating a reduction of the intake of Russian crude oil. These are encouraging signals for other sanctioned companies whose restrictions are not permanent, should they change their behavior.

Aim for maximum possible overlap of restrictions across the sanctions coalition.

The wider the group of countries implementing certain restrictions, the more impact the restrictions have. Harmonization of sanctions lists and measures closes possible loopholes that malevolent economic operators can abuse, but also sends a stronger signal of intent and unity to third countries.

Don’t neglect primary sanctions when increasing sanctions pressure on Russia’s enablers.

Additional designations of companies operating in the military-industrial complex are important, as new companies emerge and existing companies not previously operating in the civilian sector can switch to it. All in all, operators in third jurisdictions are more wary of dealing with sanctioned companies than unsanctioned ones. Updating the primary sanctions lists also creates the legal possibility to target the enablers involved in third countries and reduce possible ambiguity that might surround continued business ties. That can also force some degree of compliance of Western companies that check the background not only of their clients, but also of the clients of their clients.

About the Author

Mihkel Märtens was a Baltic-American Freedom Foundation Fellow at the Center for European Policy Analysis, where he was researching the use of sanctions against Russia’s enablers. In Estonia, he serves at the Ministry of Foreign Affairs as Desk Officer for the Department of Sanctions and Strategic Export Control. He has been involved in negotiations of numerous EU sanctions packages against Russia. He has previously worked as a foreign news editor in Estonia and has completed his military service in the Cyber Command of the Estonian Defense Forces.

Acknowledgements

The author wishes to acknowledge the generous support of the Baltic-American Freedom Foundation, which made the author’s visiting fellowship – and research for this report – at CEPA possible.

CEPA is a nonpartisan, nonprofit, public policy institution. All opinions expressed are those of the author(s) alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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15. Ayres, Graham, and Lyndi Tsering. “China’s Facilitation of Sanctions and Export Control Evasion.” U.S.-China Economic and Security Review Commission Staff Research Report. U.S.-China Economic and Security Review Commission Staff Research Report, November 14, 2025. https://www.uscc.gov/sites/default/files/2025-11/Chinas_Facilitation_of_Sanctions_and_Export_Control_Evasion.pdf. [↩]
16. “Investigating Address-Only Entries on the BIS Entity List.” Sayari, May 16, 2025. https://sayari.com/resources/blg-investigating-address-only-entries-on-bis-entity-list/. [↩]
17.  Allison, Olivia, and Gonzalo Saiz Eruasquin. “Track and Disrupt: How to Counter Sanctions-Evasion Networks.” Rusi.org, November 10, 2023. https://www.rusi.org/explore-our-research/publications/commentary/track-and-disrupt-how-counter-sanctions-evasion-networks; Alecci, Scilla. “Russia Secretly Bought Western Tech to Protect Nuclear Subs.” International Consortium of Investigative Journalists, October 23, 2025. https://www.icij.org/investigations/russia-archive/russia-secretly-acquired-western-technology-to-protect-its-nuclear-submarine-fleet/; US Department of Commerce Bureau of Industry and Security. “Commerce Cuts off Russian Procurement Network Evading Export Controls,” December 13, 2022. https://www.bis.gov/press-release/commerce-cuts-russian-procurement-network-evading-export-controls. [↩]
18. The EU’s ban on transit of high-tech components to third countries through Russia could be viewed as one, as it has banned trade between the EU and certain third countries by means of the quickest and cheapest trade route (transit via Russia). Another such measure is the requirement for EU exporters selling sensitive technology abroad to contractually prohibit their re-export to Russia. [↩]
19. U.S. Department of the Treasury. “Treasury Disrupts Russia’s Sanctions Evasion Schemes.” U.S. Department of the Treasury, January 15, 2025. https://home.treasury.gov/news/press-releases/jy2785. [↩]
20. Sezer, Can, Nevzat Devranoglu, and Dmitry Zhdannikov. “Exclusive: Turkish-Russian Trade Hit by Fresh US Sanctions Threat.” Reuters, February 19, 2024. https://www.reuters.com/markets/turkish-russian-trade-hit-by-fresh-us-sanctions-threat-2024-02-19/; Reuters. “Exclusive: Banking Bottleneck Causing Six-Month Delays for Russia-China Payments, Sources Say.” Reuters, April 4, 2024. https://www.reuters.com/business/finance/banking-bottleneck-causing-six-month-delays-russia-china-payments-sources-say-2024-04-04/.  [↩]
21. U.S. Department of the Treasury. “Treasury Sanctions Cryptocurrency Exchange and Network Enabling Sanctions Evasion and Cyber Criminals,” August 14, 2025. https://home.treasury.gov/news/press-releases/sb0225; Chainalysis. “International Action Dismantles Notorious Russian Crypto Exchange Garantex – Chainalysis,” March 10, 2025. https://www.chainalysis.com/blog/russian-exchange-garantex-dismantled/. [↩]
22. Trmlabs.com. “Russia Leveraging Kyrgyzstan’s Crypto Ecosystem to Evade Sanctions | TRM Blog,” 2025. https://www.trmlabs.com/resources/blog/russia-leveraging-kyrgyzstans-crypto-ecosystem-to-evade-sanctions; Ernist Nurmatov, Merhat Sharipzhan, and RFE/RL’s Kyrgyz Service. “State Silence Fuels Fears Kyrgyz Crypto Boom Busting Russia Sanctions.” RadioFreeEurope/RadioLiberty. RFE/RL, July 13, 2025. https://www.rferl.org/a/kyrgyzstan-grinex-crypto-currency-russia-sanctions-evasion/33470887.html. [↩]
23. Centre for Research on Energy and Clean Air. “Financing Putin’s War on Europe: Fossil Fuel Imports from Russia during the Invasion of Ukraine,” n.d. https://energyandcleanair.org/financing-putins-war/. [↩]
24. Pipeline imports of Russian oil into the EU are not under sanctions. [↩]
25. Roslund, Riku, and Jyri Hänninen. “MOT Paljasti, Kuinka Venäjä Piilottaa Varjolaivojen Omistajat – Ulkoministeri Valtonen: ”Jättimäinen Ongelma”.” Yle Uutiset, March 3, 2025. https://yle.fi/a/74-20146422. [↩]
26. Hilgenstock, Benjamin, Oleksii Hrybanovskii, Anatoliy Kravtsev, Borys Dodonov, Yuliia Pavytska, and Nataliia Shapoval. “Assessing Russia’s Shadow Fleet: Initial Build-Up, Links to the Global Shadow Fleet, and Future Prospects,” 2024. https://kse.ua/wp-content/uploads/2024/06/Global-Shadow-Fleet-June-2024.pdf. [↩]
27. “Sanctions Update: EU and UK Tighten Restrictions on Russian Oil and Provision of Software to Russia.” Latham & Watkins LLP, August 18, 2025. https://www.lw.com/admin/upload/SiteAttachments/Sanctions-Update-EU-and-UK-Tighten-Restrictions-on-Russian-Oil-and-Provision-of-Software-to-Russia.pdf; Partsvania, Vakhtang. “Closing the ‘Back Door’: EU Intensifies Fight against Oil Sanctions Evasion – Riddle Russia.” Riddle Russia, July 24, 2025. https://ridl.io/closing-the-back-door-eu-intensifies-fight-against-oil-sanctions-evasion/. [↩]
28. Harvey, Robert, and Julia Payne. “What Are the EU’s New Rules on Banning Fuel Imports Made from Russian Crude?” Reuters, October 16, 2025. https://www.reuters.com/sustainability/boards-policy-regulation/eu-publishes-rules-ban-close-back-door-russian-oil-2025-10-16/. [↩]
29. Chen Aizhu, Li Yap, and Florence Tan. “How Sanctions Made a Showpiece Chinese Refinery’s Western Partners Run for the Exits.” Reuters, November 27, 2025. https://www.reuters.com/business/energy/how-sanctions-made-showpiece-chinese-refinerys-western-partners-run-exits-2025-11-26/. [↩]
30. Reuters Staff. “Russian Urals Oil Price Tops Brent for First Time in Indian Market, Traders Say.” Reuters, March 6, 2026. https://www.reuters.com/business/energy/russian-urals-oil-price-tops-brent-first-time-indian-market-traders-say-2026-03-06/; Sharma, Rakesh, and Yongchang Chin. “Russia Oil Offered to India at Deep Discount after US Sanctions.” Bloomberg.com. Bloomberg, November 24, 2025. https://www.bloomberg.com/news/articles/2025-11-24/russian-oil-offered-to-india-at-deep-discount-after-us-sanctions; Reuters Staff. “Russia’s Urals Oil Price Discount Widens to 23% in November, Central Bank Says.” Reuters, November 27, 2025. https://www.reuters.com/business/energy/russias-urals-oil-price-discount-widens-23-november-central-bank-says-2025-11-27/. [↩]
31. Re:Russia. “Oil Prices Have Fallen: Next Year, Russia Is Very Likely to Have to Live with Oil Prices in the Range of $40–45 per Barrel,” August 12, 2025. https://re-russia.net/en/analytics/0368/. [↩]
32. Goodley, Simon. “Russia Earned €6bn from Fossil Fuel Exports since Start of Iran War, Data Suggests.” the Guardian. The Guardian, March 12, 2026. https://www.theguardian.com/world/2026/mar/12/russia-fossil-fuels-revenue-us-israel-war-iran-data. [↩]
33. Сергей Вакуленко. “Бенефициар войны. Какие выгоды получает Россия от закрытия Ормузского пролива.” Carnegieendowment.org, March 27, 2026. https://carnegieendowment.org/ru/russia-eurasia/politika/2026/03/russia-oil-iran-war-consequences. [↩]
34. Contrary to foreign policy decisions (as is the case with adopting sanctions), energy policy remains a policy pillar in which decisions are taken with qualified majority voting (QMV). Recent EU decisions to phase-out of Russian energy imports within the REPowerEU framework indicate that significant decisions can be taken without the unanimous support of member states, but unless all member states agree otherwise, sanctions will remain an area where decisions will continue to be taken unanimously. [↩]