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Russia 'teaming up' with allies to help bypass Western sanctions, conference told

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Economic sanctions against Russia are working but could be “even more effective”, a conference in Brussels was told.

It heard that Russia is managing to partly bypass sanctions with the support of allies such as Iran.

That is one reason why EU member states “could do more” to make sanctions work more effectively, the event was told.

Since Russia invaded Ukraine a wide range of measures have been announced to limit its ability to pay for the war. Western countries have targeted wealthy individuals, banks, businesses and state-owned enterprises.

Sanctions targeting its exports include the European Union saying it will ban all imports of oil brought in by sea from Russia by the end of 2022.

The UK will phase out Russian oil imports by the end of 2022, Germany has frozen plans for the opening of a major gas pipeline from Russia and the EU said it will halt Russian coal imports.

However, the conference on Tuesday was told Russia may, in part, manage to “circumnavigate” sanctions by “teaming up” with allies like Iran.

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Later, they met senior EU officials and civil society members. Among those taking part were the presidents of the Bilateral European Chambers of Commerce and Industry in Turkey.

A keynote speaker, Berlin-based economist Rebecca Schonenbach, CEO of Veto! For the Rule of Law, said there was “clear evidence” that sanctions were having some effect, not least with fresh news that Russia is “hunting for high-tech semiconductors and other equipment to help replenish supplies” to allow the war in Ukraine to continue, she said.

“This shows that Russia is running out of weapons and needs to replenish them by finding new suppliers for components,” she said.

There have also been reports this week that Russia is buying millions of rockets and artillery shells from North Korea to support its invasion of Ukraine,

She argued that the technology sector is the “one area where sanctions can hurt Russia the most”, largely because of its “basic” domestic technology.

She said some, notably Iran, can help Russia to “counter and evade” economic sanctions, for example, by supplying it with high tech equipment such as drones, military components and by signing “energy swap” agreements.

“They are teaming up with each other against democracy and the rule of law,” she commented.

Schonenbach, who has a detailed knowledge of Russia having worked there in the 1990s, said the West had “under estimated countries located far from Europe” but that the invasion of Ukraine and Russian aggression elsewhere had underlined the danger of this policy because countries like Russia and Iran will continue to be hostile. According to her, similar to Russia, Iran has been active in Europe and targeting the Iranian opposition and European citizens.

One solution, she argues, is for EU member states to introduce “Magnitsky” laws.

Such legislation is named after Sergei Magnitsky who died in a Russian prison cell when he was just 37 after uncovering a $230 million tax fraud perpetrated by officials in his own government.

She told the event at Brussels press club that adopting such laws would allow countries in Europe to unilaterally sanction certain individuals and their families, adding, “This would hit the Iranian regime hard.”

She added, “Both President Putin’s daughters live in the West and his 2nd mistress lives in Switzerland. This is a pattern we see with all dictators and elites: they keep their populations in the dark while they send their own to live in the West. This is also the case for Iran.”

“Yes, energy is a current problem but that can be solved. For me, one of the biggest problems is that dictators are allowed to operate and have real influence right here within Europe.”

Propaganda, she said, was also something the West had to act against, adding, “Cutting off gas supplies as Russia is threatening to do will increase the energy supply problem but, remember, energy prices were rising well before the invasion of Ukraine.

“To link the war with energy supply issues is all part of the Russian narrative: that the West is evil and has created its own (energy) problems.”

Schonenbach, an expert in extremism and terrorist financing, said that in the West the war in Ukraine was still not seen “as a personal threat” to the personal well-being of citizens.

But she cautioned, “If Ukraine loses this war that will only serve to strengthen dictatorships. President Putin invaded Ukraine because the successful years and economic growth in Russia were over and he needed to find an external enemy. 

“He is now trying to get Russians to unite against him though it is hard to determine how much support he actually has and we don't know who will replace him.

“He is surrounded by 10 to 20 oligarchs  and those who are not loyal often end up dead - falling from windows has become a popular form of death for such people. 

“But you cannot kill everyone so we in the West need to help strengthen the Russian opposition. We have seen the benefits of this in Ukraine but this is currently missing in Russia and Iran.”

She also voiced concern about a “brain drain” in Russia, saying, “About 100,000 have left Russia and these are the young, well-educated generation. You also should remember that an estimated 80 percent of those under 40 can access You Tube even though it is banned in Russia. These people need our support.”

On energy and Europe’s continued dependency on Russia for gas and oil, she said, “This will be the big issue this coming winter and is one reason why our governments need to act now in order to diversify energy markets like Japan has done so that we become less dependent on Russian energy.” She added, “we cannot see Iran as an alternative to diversify our energy sources while Russia and Iran are close allies.”

She predicted: “We are going to see a lot of money cascading down from governments in Europe in the coming months to help people pay their energy bills but despite real energy supply issues I am confident people in Europe will not freeze in their homes this winter.”

To suggest otherwise, she argued, was to “feed into Russian propaganda”.

She explained: “Russia is trying to blame this (current energy supply problem) on Western sanctions but that is just not true. Problems with energy supplies will not be solved just by lifting sanctions. We have structural problems that the West needs to work on but that has nothing to do with Russia.”

She insisted: “Sanctions should certainly stay in order to keep the Russian regime weak.

“But the problem with sanctions is that we there are usually loopholes. For example, every country that wants to can evade sanctions via countries like Iran. One way to stop this from happening is to publicly pressure those companies that help countries evade sanctions.”

Another speaker was Kambiz Ghafouri, director of KGM Media and an expert on Iran domestic and foreign policy, who said: “The question is can Iran, a smaller country than Russia, help Russia to evade sanctions and the answer is yes it can.

“In fact, it has 40 years experience of this sort of thing and has been successful in countering sanctions in the past. But if this happens it means Russia can connect to the international markets via Iran.”

He added: “Iranian people are struggling because of sanctions and the regime is not popular with Iranians. But we in the West need to open our eyes more to the violations taking place in Iran. If we do then something might change.

“Are these countries inter connected? Well, they are not equal and Russia is more powerful and bigger than Iran but,yes, they are inter connected and Iran is helping. For example, it has recently been sending drones to Russia  which are used in the war in Ukraine.”

He also said the war had consequences for a major nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA). Iran was ready to accept the conditions until the Ukraine invasion, he said.

“Iran then backed off from signing it and raised its demands in very close co-ordination with Russia,” he said.

“The West is rightly scared of Iran's access to a nuclear weapon but the way it has tried to stop Iran has not been successful so far.”

He added: “If the West wants to stop Russian aggression by sanctions it cannot continue to give cash to Iran, its ‘brother.’

“When a country wants to circumvent sanctions then what I would call the "dark markets" are a safe haven for them. A more effective strategy should be multi dimensional involving closer monitoring of sanctions.

“There is an alliance between these countries so we have to come up with a strategy to cut these links. Sanctions have hit Iranians badly but not the regime in Iran."

He too said “Magnitsky” laws would “ensure sanctions hit the regime”.

The event was organized by the Brussels-based European Foundation for Democracy.

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