The European Union’s sanctions regime against Russian oligarchs, touted as a decisive response to Moscow’s aggression in Ukraine, has been criticised for its contradictory and largely symbolic nature.
While personal sanctions on oligarchs—such as asset freezes and travel bans—often dominate headlines, as noted in a report by EU Observer, they represent only the bare minimum necessary to address the issue. The failure to extend these measures to include their businesses and core assets critically weakens their impact.
This selective approach not only raises doubts about the EU’s commitment to applying meaningful economic pressure but also highlights a concerning emphasis on public relations over achieving substantive outcomes.
Sanctioning Individuals, Not Their Assets
Demonstration for prolongation of EU sanctions on Russia organised by myself in 2015
On the anniversaries of the EU’s limited sanctions following Russia’s annexation of Crimea and invasion of Donbas in 2015, I organised demonstrations around Brussels’ Schumann Roundabout to advocate for the extension of those modest sanctions imposed by the EU.
While these measures carried symbolic weight, they ultimately failed to deter Putin from launching a full-scale invasion of Ukraine in February 2024.
In retrospect, the inadequacy of these early sanctions may have even emboldened him, underscoring the profound consequences of the EU’s half-hearted approach.
The current sanctions regime places disproportionate emphasis on targeting individuals while largely overlooking the broader economic networks and corporations that sustain the Kremlin’s war effort—the proverbial “elephant in the room.”
By focusing on high-profile oligarchs and freezing personal assets, necessary actions in themselves, the EU garners media attention and public support, but this strategy too often neglects the systemic financial flows that enable Russian aggression. Many oligarch-owned enterprises continue to operate unchecked, generating significant revenue and undermining the intended impact of personal sanctions.
A glaring example of this inconsistency was highlighted in a recent Reuters investigation into Russian billionaires whose chemical factories directly support the war effort. The report revealed how these factories produce essential materials for explosives and other military applications, generating billions in revenue while remaining untouched by EU sanctions.
By disproportionately focusing on individual sanctions, the EU overlooks the pivotal role these industries play in supporting Russia’s military infrastructure. This failure to target industrial contributors not only diminishes the effectiveness of the sanctions but also leaves significant loopholes, enabling the Kremlin to circumvent restrictions and sustain its war effort.
This duality highlights a critical flaw in the sanctions regime. Personal sanctions are intended to disrupt the wealth and influence of oligarchs tied to the Kremlin. However, as long as their corporate holdings remain profitable and integrated into global supply chains, the practical impact of such measures remains limited.
Oligarchs may lose access to their yachts and luxury homes in Europe—a move that may satisfy public sentiment—but their core financial interests, and by extension their political influence, remain largely untouched.
The Role of European Dependence
A key indicator of the shortcomings in EU sanctions is the unexpected resilience of the Russian economy. While initial forecasts predicted a sharp contraction under the weight of Western measures, these projections have consistently fallen short. Instead of the anticipated double-digit decline, the Russian economy in fact grew by 3.6% in 2023 and by another estimated 3,9% in 2024—growth rates that surpass those of many developed and emerging economies.
Russia’s economic performance has been bolstered by key indicators, including GDP growth, stable household incomes, and low unemployment rates. President Vladimir Putin has highlighted these metrics as proof of the nation’s economic strength. Domestically, these figures support his narrative of resilience in the face of Western pressure, while internationally, they are presented as evidence of Russia’s capacity to adapt.
Putin has framed these achievements as a validation of the country’s economic strategies, aiming to persuade partners in Asia and Africa of the credibility of Russia’s development model. Interestingly, reports suggest that Chinese officials are examining Russia’s economic approaches, signalling their interest in adopting elements of this perceived resilience.
Europe’s dependence on Russian commodities has created a striking paradox. Despite imposing sanctions on individuals and select industries, the EU continues to import substantial quantities of Russian energy, metals, and other critical resources. These imports, deemed vital for maintaining European industrial operations, inadvertently sustain the revenue streams that finance the Kremlin’s war efforts.
By failing to address these contradictions, the EU risks undermining its credibility. If Europe is to effectively counter Russian aggression, it must make difficult decisions that prioritise long-term security over short-term profits. Despite its stated ambition to reduce dependency on Russian energy, the EU continues to import significant quantities of oil, gas, and raw materials from oligarch-owned enterprises. These imports are critical to the functioning of European industries, and sanctioning them would come at a steep cost to member states.
This dependence creates a paradox: while the EU seeks to weaken Russia’s economic foundation, it simultaneously sustains it by purchasing the very products that fund the Kremlin’s war machine. This contradiction not only undermines the credibility of the sanctions but also raises uncomfortable questions about Europe’s willingness to prioritise principles over economic pragmatism.
In all fairness, it is not only the EU that bears responsibility for the ineffectiveness of sanctions. The United Kingdom and the United States have also faced criticism for failing to implement comprehensive measures that would disrupt the Russian economy’s ability to fuel the war effort against Ukraine.
While both Ukraine’s allies have introduced a range of sanctions, gaps in enforcement and selective targeting have allowed key revenue streams to remain intact. Notably, the most effective sanctions to date were applied by the outgoing Biden administration in January 2025, targeting Russia’s so-called shadow fleet—a network of vessels used to bypass oil export restrictions. This decisive action stands out as an exception in an otherwise inconsistent global sanctions strategy.
Russian Corporations Supporting the War Effort
A growing body of evidence highlights the critical role of Russian corporations in sustaining the Kremlin’s war effort, with many continuing to operate globally despite sanctions. Several investigations have revealed the extent to which these entities provide essential resources and funding for the conflict in Ukraine.
As previously mentioned, a Reuters investigation revealed that chemical factories owned by Russian billionaires manufacture essential materials used in explosives and other military applications. These facilities generate billions in revenue and have largely escaped the reach of EU sanctions.
Similarly, a Disclose NGO report detailed how European aerospace giants such as Airbus and Safran continue purchasing Russian metals essential for manufacturing, indirectly fuelling the Kremlin’s war machine.
Another report by The Washington Post exposed how Russia’s titanium exports, primarily through corporations like VSMPO-AVISMA, remain vital to global aviation supply chains. Despite the war, Europe and other regions have hesitated to impose strict sanctions on this critical raw material due to its strategic importance.
An investigation by Investigate Europe has highlighted the EU’s dependence on imports of critical raw materials, including nickel, aluminium, and palladium, much of which is sourced from Russian corporations such as Nornickel, which is not currently sanctioned, and Rusal, which is rumoured to be targeted in the EU’s 16th sanctions package. These metals are integral to European industries, including green technology and automotive manufacturing.
Finally, questions in the European Parliament, such as E-000068/2023, highlight the EU’s reluctance to sanction Rosatom, despite its key role in Russia’s military-industrial complex, including nuclear weapons production.
The persistent flow of revenues from these corporations underscores the limitations of the EU’s sanctions regime. By failing to address these industrial contributors, the EU inadvertently enables the Kremlin to maintain its war machine, highlighting the need for a more comprehensive and consistent sanctions strategy.
Overview of Russian Export Revenues by Industry and Corporation in 2023
Russia’s export revenues have been largely driven by the following industries and corporations:
- Energy: Oil and gas remain the cornerstone of Russian exports, with companies like Gazprom and Rosneft generating hundreds of billions in revenue annually. Despite sanctions, Russian energy exports have been redirected to non-Western markets, while Europe continues to purchase significant quantities.
- Estimated revenue (2023): $350 billion from energy exports, with a large share from crude oil and natural gas.
- Metals and Mining: Companies like Rusal and Nornickel dominate aluminium, nickel, and palladium exports, which are critical to global supply chains.
- Estimated revenue (2023): $60 billion from metals exports.
- Diamonds: Alrosa has sustained its position as the world’s largest diamond miner, with much of its output finding buyers in India and the Middle East.
- Estimated revenue (2023): $4 billion from diamond exports.
- Military Equipment: Corporations such as Uralvagonzavod and the United Shipbuilding Corporation continue to produce tanks, ships, and other military hardware, bolstered by significant state subsidies. Although these industries contribute less to Russia’s export revenues, they are integral to the country’s military capabilities, directly supporting its defence infrastructure and operational readiness.
- Agriculture: Russia remains a top exporter of wheat and fertilisers, with corporations such as PhosAgro and UralChem profiting from the global demand for food and agricultural inputs.
- Estimated revenue (2023): $40 billion from agricultural exports.
These revenues highlight the resilience of Russia’s key industries despite sanctions. The Kremlin has adapted by fostering stronger trade ties with countries in Asia, Africa, and the Middle East, enabling it to bypass Western restrictions and maintain funding for its war effort.
The following graph illustrates Russian export revenues by industry from 2019 to 2023:
Note: The above figures are based on available data and estimates from reputable sources, including the World Bank and Statista.
Note: The above figures are based on available data and estimates from reputable sources, including the World Bank and Statista.Sanctions as Public Relations tools
The EU’s sanctions regime has faced significant criticism for its lack of thorough due diligence, as evidenced by instances where sanctioned oligarchs have successfully challenged these measures in European courts. Several cases have exposed procedural shortcomings and inadequate evidence that led to sanctions being overturned, revealing critical weaknesses in the EU’s ability to enforce its policies effectively.
These lapses not only undermine the credibility of the sanctions framework but also allow individuals with alleged ties to adversarial regimes to escape restrictions, raising serious questions about the robustness and preparedness of the EU’s approach.
Such outcomes not only weaken the impact of the sanctions but also embolden other sanctioned individuals to mount legal challenges. The potential for future compensation claims, which could ultimately be paid using taxpayers’ money, adds a troubling dimension to the issue. This inability to apply even limited sanctions properly casts doubt on the EU’s capacity to enforce meaningful economic restrictions.
Sanctioning oligarchs is an essential step in curbing Russian influence, but it represents only the bare minimum of what is required. While these targeted measures are symbolic and impactful in isolating key individuals, they fall short of addressing the broader economic structures and networks that sustain the Kremlin’s power. The EU’s emphasis on high-profile figures may project solidarity with Ukraine and signal decisive action to European citizens, but without tackling systemic dependencies and financial flows, sanctions remain a limited tool rather than a comprehensive strategy.
This inadequacy is further compounded by the lack of transparency and consistency in enforcement across member states. While some countries actively seize the assets of sanctioned individuals, others cite legal or bureaucratic hurdles to justify inaction. Loopholes such as golden visa programmes and weak regulations on asset ownership transfers enable oligarchs to bypass restrictions, significantly undermining the sanctions’ effectiveness. These shortcomings expose critical vulnerabilities in the EU’s approach, highlighting the urgent need for a more unified and robust framework.
A Coherent Strategy Needed
If the EU is serious about using sanctions as a tool to pressure the Kremlin, it must address the glaring contradictions in its approach. A coherent strategy would involve extending sanctions to include the businesses and assets that generate revenues for targeted individuals. This would require member states to prioritise collective security over short-term national interests.
Additionally, the EU must prioritise enhanced enforcement mechanisms and improved due diligence to close existing loopholes and strengthen the sanctions regime. This includes rigorous vetting processes to ensure that sanctioned individuals are accurately identified and their assets comprehensively traced.
Greater transparency in asset tracking, consistent implementation across all member states, and deeper collaboration with international partners are all essential to dismantling the financial networks that sustain sanctioned individuals. Without these measures, the effectiveness of sanctions will remain compromised, limiting their ability to achieve meaningful impact.
Europe will soon need to make a critical choice between prioritising short-term economic profits and ensuring its long-term security. This decision will define the EU’s credibility in confronting Russian aggression and safeguarding its own strategic and security interests.
Optics Over Outcomes: The EU’s Sanctions Dilemma
The EU’s current sanctions regime against Russian oligarchs reflects a troubling blend of hypocrisy and strategic posturing. By targeting individuals while allowing their businesses to thrive, the EU undermines the effectiveness of its own measures and risks turning sanctions into little more than symbolic gestures.
Without a more comprehensive and transparent approach, the EU’s efforts risk being perceived as a superficial attempt to placate public opinion rather than a serious challenge to Russian aggression. The question remains: is the EU willing to match its rhetoric with action, or will it continue to prioritise optics over outcomes?
Read also:
Rosatom: Why should the Russian nuclear sector be sanctioned? (Part 1)
Rosatom: why should the Russian nuclear sector be sanctioned? (Part 2)
