Brussels targets the family circle of the oligarchs to prevent them from evading sanctions | International

Brussels contemplates hitting the relatives of the oligarchs already sanctioned to prevent them from taking advantage of possible holes or leaks in the sanctions applied so far, but is reluctant to go further in its reprisals against Moscow for the time being. Five weeks after the start of the Russian invasion of Ukraine and after a European summit dominated by energy issues and without tangible results in terms of sanctions, the European Commission is multiplying its contacts with the allies these days to fine-tune a fifth package of sanctions. Or almost better – to use the terminology used in the Community Executive – an “intermediate package” focused on reinforcing the four blows already dealt against Russia so far, to prevent companies, oligarchs and their relatives who have been beaten from evading the measures and the Central Bank of Russia can carry out transactions using its gold reserves. Meanwhile, behind the scenes, he continues to work on a larger package for the hypothetical event that there is a need to respond to a chemical or similar attack ordered by the Russian president, Vladimir Putin.

To date, sanctions and war have caused EU trade with Russia to shrink to a quarter of its pre-war size, according to internal figures at the Commission. In 2021, trade between Russia and the community bloc totaled 257 billion euros. The effect on the Eurasian neighbor begins to take its toll on the other side of Putin’s curtain. “The Russian economy is contracting at a faster rate than it has since 1998, when it stopped paying its debt,” said Adewale Adeyemo, US deputy secretary of the Treasury, in a public appearance from Brussels on Tuesday. On this side, the effects are also noticeable in the form of galloping inflation driven by energy prices, which in Spain has shot up to 9.8%, the maximum since 1985.

Adeyemo has been visiting the community capital, where he has met with the European Commissioner for Finance, Mairead McGuinness (on Tuesday) and with the Economy Commissioner, Paolo Gentiloni (on Wednesday) with the aim of fine-tuning and coordinating the next steps. “The key is to ensure the effective and complete application of sanctions in all jurisdictions. This is a priority and it is a work in progress”, said McGuinness with the American. “We are very focused on circumvention,” Adeyemo added.

After the appointment, the United States has dealt this Thursday a new blow to Moscow online with the aim of covering escape routes. This time it is the technology companies that are in the spotlight: the Treasury Department has identified 34 organizations (21 companies and 13 individuals) associated with the alternative networks that Moscow is using to circumvent the effects of the retaliation imposed in the first weeks of the conflict. The new measures – from companies that illegally procure equipment for the Russian military to the country’s largest chipmaker – speak to the challenges of attacking the operations of banks and the movements of oligarchs in a world that is interconnected and in which traditional financial and supply channels have been partly replaced by others, more opaque and difficult to trace, reports Iker Seisdedos.

“There are several holes that we are working on,” admit sources from the Commission. Among the plans is to act on relatives of certain oligarchs and on companies, to avoid maneuvers or money transfers aimed at hiding their wealth and evading reprisals. To date, 877 people, including the Russian president, his foreign minister, Sergei Lavrov, and more than 30 members of the economic elites close to the Kremlin, as well as 62 companies, are subject to an asset freeze under the sanctions regime of the European Union. People have also been banned from traveling to the EU, except for Putin and Lavrov, in case an eventual diplomatic channel opens up.

Another of the formulas that the EU is considering is to try to detect essential components for Russia and establish remote-controlled prohibitions on the export of these critical products. It does not rule out acting in cryptocurrencies either, which some Russians could be using to wade through EU bans, as the president of the European Central Bank, Christine Lagarde, denounced last week.

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Among the Twenty-seven, some countries have expressed concern that two very close neighbors that aspire to join the EU one day, Turkey and Serbia, act as possible cracks in retaliation. Turkey is the only NATO member not participating in the sanctions against Russia.

In Brussels they are aware that the measures being considered do not have the attractiveness of other rounds; but they believe in the potential of adding a myriad of small adjustments, which also includes the mandate of the G7, after its meeting in Brussels last Thursday, to coordinate the “responses related to the evasion of the measures, including those related to the gold transactions of the Central Bank of Russia”, whose reserves in the EU have been frozen.

offshore companies

Opaque global financial networks are one of several holes through which sanctions are diluted with a cloak of legality. A recent investigation by EL PAÍS confirmed the link between 40 Russians sanctioned by Brussels and 27 companies offshore assets that appear in public records.

“We must ensure that those providing services – financial, legal and otherwise – to oligarchs to facilitate sanctions evasion are fully aware of the risks they are running. We will investigate each and every effort to breach our sanctions legislation and breaches will have consequences,” Commissioner McGuiness said a couple of weeks ago, on the brink of the second working meeting of a special EU division created to coordinate the application of sanctions against Russian and Belarusian oligarchs.

Dubbed “Freeze and Seize”, this task force brings together members of the Commission, the Member States, Eurojust (EU Agency for Criminal Justice Cooperation) and Europol (police cooperation) to facilitate the exchange of information and coordinate the 27 capitals to seize and, where appropriate, confiscate the assets of the oligarchs. “It is up to the Member States to apply the sanctions,” clarifies a spokesman for the Community Executive.

The EU has also multiplied its contacts with the allies to close possible cracks and coordinates its work with the G7 (Germany, France, Italy, Canada, the United States, the United Kingdom and Japan) and Australia through another recently created division, called REPO (English acronym for Russian Elites, Proxies and Oligarchs).

Never before has the community bloc followed up sanctions so surgically or displayed such close cooperation with third countries (including the financial sanctuary of Switzerland) to ensure their effectiveness.

Among the most notorious blows against this economic elite and its most intimate circles is the name of Polina Kovaleva, 26, sanctioned by the United Kingdom as a “stepdaughter” of Sergei Lavrov, despite the fact that there is no direct link between them. : She is the daughter of the sentimental partner of the Foreign Minister, who is still married to another person, according to Russian dissident media.

Kovaleva has lived in the UK for years; In 2016, at 21, when he was a student with no known income at the English university of Loughborough, he bought a flat in the luxurious London neighborhood of Kensington for 4.4 million pounds (5.2 million euros). ). “This sends a strong signal that those who benefit from association with those responsible for Russian aggression are within the scope of our sanctions,” the British government warned next to his name in a statement.

Shortly before being sanctioned, last week, Maria Pevchikh, an investigator from the anti-corruption foundation of the Russian opponent Alexei Navalni, denounced through social networks the “glamorous” life of this young woman whose “Instagram history seems like an endless vacation”.

The EU has also already tested its ammunition against the family of some powerful Russians: on March 9, it was the turn of Formula 1 driver Nikita Mazepin, 23, son of Dmitry Mazepin (also sanctioned), owner of the group Uralchem, a Russian manufacturer of chemical products, such as mineral fertilizers and ammonia. “Since Uralchem ​​sponsors the Haas Formula 1 team, Dmitry Mazepin is the main sponsor of his son’s activities in said team,” the sanctions document details. A few days before, Haas terminated his contract with the sponsoring company and with the driver (and son of the owner of the company).

Galina Pumpyanskaya (56 years old) and Alexander Pumpyansky (34 years old), wife and son of Dmitry Pumpyansky, director of Pipe Metallurgical Company, one of the world leaders in the manufacture of gas and oil pipelines, also appear on the community blacklist, considering them “ associates” to the sanctioned businessman.

And Lavrov’s circle has also been reached from Brussels: the EU has included in its nomenclature the son-in-law of the foreign minister, Alexander Vinokurov, 39, a businessman with interests in food retail, pharmaceuticals, agriculture and infrastructure; married to Ekaterina Vinokurova, Lavrov’s scion; and son of Semen Vinokurov, who was director of the public company “Capital Pharmacies” and whom the EU considers “one of the main businessmen of the Russian pharmaceutical industry”.

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